Cross Border Programme - Croatia | Bosnia and Herzegovina

Economic description

Most eligible counties within the programming area are confronted with the grave consequences of the war and serious economic and financial difficulties. Evidences gathered from different sources show widespread socio-economic disparities. This was mostly caused by lack of communication among different subjects involved in data delivering i.e. municipal bodies, in charge of economy, are not provided with the actual data on certain economic entity, by judicial organs-municipal courts or by tax authorities. The overall level of economic development of the programming area is very low compared with the EU27 average. The area is characterized by its low GDP, the predominance of the agricultural sector, the lack of investments and the undercapitalization of local businesses. A number of factors explain the area’s poor economic performance. These include a high degree of dependency on agriculturally based employment and income, and an under-representation in the higher value added business sectors. The area has not enjoyed the economic and wider benefits of inward investment to the same degree as other regions.

In order to make best use of regional comparative advantages which are linked to natural resources, the structure of the economy in programming area is oriented towards tourism (particularly the Adriatic counties), wood industry, metal working industry, agriculture and processing industry, tobacco industry, textile, leather goods and footwear industry.
Orientation on these groups of industries enables specialization according to comparative advantages and thus increases competitiveness of programming area. Analyzing the industry potential and having in mind global trends it becomes evident that the future of producers in programming area lies in increasing productivity by means of increased investment in R&D, innovation, use of new technologies, enhanced cooperation with scientific institutions, integration of science, technology and production and different ways of connecting with partners and leading producers on the global market in order to ensure availability of resources and access to foreign markets. Furthermore it is necessary to specialize as much as possible in high value-added products, to move from products with a low degree of processing to those with a high degree of processing, to emphasize training and life long learning of employees, to develop networking and clusters that would connect producers, enable the development of brands and adopting of international standards.