7_Loncar, Marinkovic.indd 327Lončar, J. and Marinković, V. Hungarian Geographical Bulletin 64 (2015) (4) 327–344.DOI: 10.15201/hungeobull.64.4.7 Hungarian Geographical Bulletin 64 2015 (4) 327–344. Analysis of socio-economic indicators in the context of the regional development of Eastern Croatia Jelena LONČAR1 and Veni MARINKOVIĆ2 Abstract The main goal of this paper is to analyse socio-demographic processes in Eastern Croatia. We focus especially on the structure of particular economic activities as well as population, which should be the basis of regional development. We have used several demographic and economic indicators to determine the changes that have taken place in the region. Trends in population change in the last decades, the share of industrial and agricultural workers in legal entities, the share of employed and unemployed persons in cities and munici- palities, as well as the inactive population in fi ve Eastern Croatian counties are examined. Also, agricultural indicators have been analysed, as this is one of the most important economic activities in this area. Thereby, an overview of the main trends in regional development of this area has been given, although some of the data were unavailable at the local level. Altogether, the authors have analysed 126 local units (22 cities and 104 municipalities) within fi ve counties of the Eastern Croatian region. Keywords: population change, regional development, economic indicators, Eastern Croatia 1 Department of Geography, Faculty of Science, University of Zagreb, CR-10 000 Zagreb, Phone: + 00 385 1 4895 426. E-mail: jloncar@geog.pmf.hr 2 Project assistant. University of Zagreb. E-mail: marinkovic.veni@yahoo.com Introduction The region of Eastern Croatia belongs to the underdeveloped group of regions according to the index of development (Ministartsvo regionalnog … 2010). For this reason, the im- plementation of regional development poli- cies has great signifi cance. Regional development is a broad term but it can also be seen as a general eff ort to re- duce regional disparities by supporting em- ployment and wealth-generating economic activities in such regions. In the past, regional development policy tended to try to achieve these objectives by means of large-scale in- frastructural development and att racting in- ward investment. However, previous policies have failed to reduce regional disparities sig- nifi cantly and have not been able to help in- dividual lagging regions to catch up, despite the allocation of signifi cant public funding. The result has been under-used economic potential and a weakened social cohesion, which is noticeable in the area today (www. oecd.org). According to Hansen, Higgins and Savoie (1990) regional development policy usu- ally implies all deliberate activities that the government implements with the goal of changing spatial distribution of economic and social phenomena like population, in- come, government incomes, manufacturing of diff erent goods and services, transporta- tion infrastructure, social infrastructure and political power (Hansen, N. et al. 1990). Also, it can be said that regional economic development can be seen as both a product and a process. It is a product of economic de- velopment as well as a process, for example in the case of industry support, infrastruc- ture, the labour force and market devel- opment (Stimson, R.J. et al. 2006). Hence, Lončar, J. and Marinković, V. Hungarian Geographical Bulletin 64 (2015) (4) 327–344.328 cities, towns, counties and all local entities in the global economy have the challenge and opportunity of craft ing their own economic destinies (Blakely, E. and Leigh, N.G. 2009). In the Republic of Croatia, the process of establishment of a regional development concept can be traced back to its occurrence in Yugoslavia aft er World War II. through the changes of fundamental principles and approaches to regional development policy that took place in the period of Croatian independence and at the beginning of the European integration process. Based on the characteristics of regional development policies during each period, major defi cien- cies and consequences for today’s structural problems can be identifi ed. Also, the comparison of Eastern Croatian indicators (consisting of the Slavonian and Baranjan regions) with indicators from some other neighboring regions, such as northeast- ern Bosnia and Herzegovina or Voivodina, would be interesting because they have similar characteristics, but such an analysis would be very diffi cult to achieve. In the first place, since Bosnia and Herzegovina has complex administrative divisions it is impossible to att ain the data that would be comparable with those in other countries. One possibility is to take the data for the whole Republika Srpska (the northeastern part of Republika Srpska borders with Slavonia and Baranja) and for the District of Brčko, and compare it with Eastern Croatian cities and municipalities. But in this case, the area does not have simi- lar characteristics and would not be compa- rable. Also, the land utilisation data in the region of Voivodina (Serbia) are not from the same year as those used in this paper, which means that they are incomparable with the data for Eastern Croatia. Theoretical and methodological framework The problems of regional development and regional policy are two of the most impor- tant issues in Croatia today. They are part of governmental strategies for economic growth and recovery, but they are also the focus of scientists of diff erent affi liations. Policy mak- ers should be able to view economic and social realities through the lens of the cor- rect geographic scale to identify appropriate policy packages (OECD 2014). The authors will try to emphasise the importance of strategies and development plans in the context of regional development as identifying and promoting connections be- tween economic, environmental and social goals, which should be beyond administra- tive boundaries (OECD 2014). Also, as data for Croatia as a whole is usually analysed in most scientifi c papers, authors consider that detailed analysis at the level of regions, and especially at the level of cities and munici- palities, is necessary to fully understand the economic-geographic processes that charac- terise this area. Accordingly, we try to ana- lyse demographic and economic problems at the local level, as they are more obvious than those at the county or state level. In an att empt to establish to what extent changes in population and economic-geo- graphic conditions have infl uenced the re- gion of Eastern Croatia, we have established three hypotheses: 1. The contemporary characteristics of de- mographic structures and trends are consid- ered as one of the most important limiting factors of regional development in the region of Eastern Croatia. 2. There are signifi cant demographic and economic structural diff erences between the local administrative units of Eastern Croatia, among which larger cities stand out especial- ly as the cores, and smaller, demographically and economically weaker municipalities rep- resent the rural periphery of this region. 3. The advantages of Eastern Croatia for stronger regional development have not been fully utilised. This especially refers to agri- culture as one of the most important tradi- tional and contemporary activities, primarily due to the favourable natural conditions in this area. 329Lončar, J. and Marinković, V. Hungarian Geographical Bulletin 64 (2015) (4) 327–344. Analysing offi cial data from the Croatian Bureau of Statistics, we try to gain insights into the main features of demographic and economic trends in the area of Eastern Croatia through: The characteristics of Eastern Croatian population dynamics and structures, ana- lysed through general population trend from 1953 to 2011 on the regional level, the index of population changes in the period of 1953–2011 at the local level and the in- dex of ageing in 2011, in order to indicate the main demographic trends in this area. The number and share of employed per- sons in industry in legal entities at the local level. The percentage of (un)employed persons at the local level. The inactive population in the counties. Regional development policies in Croatia The att empt to establish a regional develop- ment policy at the beginning of Croatian in- dependence was based on determining the areas with a preferred position within the state. In the 1990s, Croatia did not have a coherent regional developmental strategy, concept or policy. The territory of 20 coun- ties, 268 cities and municipalities (49% of the total number of local units) was specifi ed by 4 acts of parliament as areas of special state care. These acts were: the law on special areas under government protection (NN 44/96), the law on hilly-mountainous areas (NN 12/02), the law on islands (NN 34/99) and the law on the reconstruction and de- velopment of the City of Vukovar (NN 44/01) (Starc, N. and Rašić, V. 2003). However, the eff ects of the above laws were not at the ex- pected level, as it has been indicated by the contemporary economic and social trends. The fi rst signifi cant document on the issue of regional development in Croatia was The concept of the regional economic development of Croatia, published by the Economic Institute on the initiative of the Ministry of Economy in 1999 (Čavrak, V. 2002). – – – – The awareness of the importance of re- gional development in overall Croatian de- velopment was increasingly strengthened at the beginning of the European integration process in 2001. Croatia has further increased activities in the fi eld of regional development by adopting new legislature and strategic documents and also by establishing new in- stitutions. Accepting the concept of European regional policy, which enabled the use of pre-accession funds intended for regional development projects, a special institution was established in 2008 that should partici- pate in achieving a more balanced regional development. It was based on the sustainable management of natural resources. Also, the Agency for Regional Development was es- tablished in the same year to implement re- gional development programs and projects. Although in terms of regional develop- ment, Croatia has been conceptually and institutionally moved away from its initial phase, the expected impact is still lacking. Many analyses indicate contemporary diver- gent trends in the concentration of popula- tion and the economy, which is the casein the Eastern Croatian region as well. Means of regional development Main means of regional development include the adopted legal acts and the development strategic documents that prescribe and de- fi ne the objectives and measures of regional development policy. The basis of regional de- velopment policy is defi ned by the Regional Development Law (NN 153/09)3. It deter- mines the goals and principles of regional development management in Croatia. It pre- scribes necessary planning documents, ap- points competent state entities and classifi es the development stages of diff erent spatial units. Also, the law prescribes the adoption of regional planning documents at the national level (Regional Development Strategy of the 3 At the end of 2013, a draft of the Regional Development Law was introduced to the public as an update to the former Regional Development Law enacted in 2009. Lončar, J. and Marinković, V. Hungarian Geographical Bulletin 64 (2015) (4) 327–344.330 Republic of Croatia, 2011–2013) and regional level (county development strategies). It is also in line with practice and requirements that derive from Croatian pre-accession ob- ligations towards the EU. This law poses a few very important facts: 1. Induct the practice of partnership as the main method of working to shape regional development policy and as the basic institu- tional structure that will enable participatory work methods such as this. 2. Introduce a unique model of evaluation and classifi cation of regional and local units according to degrees of development and a unique system of criteria for the selection of areas with developmental diffi culties. 3. Defi ne the main planning documenta- tion that programmes regional development through conciliating and unifying develop- ment in the entire Croatian development policy. 4. It clearly defi nes the role and responsi- bility of regional development policy host at the state level. 5. It clearly defi nes the role and responsi- bility of regional development policy host in conception and leadership. 6. It institutionalises the principles and management of regional development policy and introduces unique terminology. 7. For more effi cient planning and monitor- ing of the functionality of regional policy, it identifi es the central electronic base of devel- opment projects. In the Strategy of Regional Development (2010), regional development policy is de- fi ned as the entirely adjusted agglomerate of goals, priorities, measures and activities aimed at strengthening the competition of regional and local units according to principles of sustainable development and decreasing regional inequali- ties according to the degree of development. The Regional Development Policy in Croatia is defi ned by specifi c laws and it is mostly fo- cused on the local level. Also, part of the non-specifi c assistance is included in the law on government sup- port for agriculture and fishery (Law on Government support for Agriculture and Rural Development); the law on the promo- tion of investment; and the law on the pro- motion of development for small entrepre- neurship. These three laws are not only for areas facing diffi culties in development, but also for the Republic of Croatia in general. An important tool for classifying the het- erogeneity and regional diff erences of spatial units in Croatia is the development index. It classifi es administrative units in compari- son with the national average using income per capita, the unemployment rate, citizens’ source income in diff erent counties and/or municipalities, population trends and edu- cational levels as relevant criteria. However, new tools are needed to understand what infl uences the places where people live and work (OECD 2014). Croatian NUTS II classifi cation as EU regional development instrument The Bureau of Statistics determined Croatia’s NUTS classification in 2002 with EURO- STAT’s help and recommendations. All of Croatia is classifi ed as one NUTS I region, while NUTS III regions are counties and NUTS V entities are cities or municipalities. However, problems occurred during the de- termination of NUTS II regions, because the county level (NUTS III) was too small and the level of Croatia as a whole (NUTS I) was considered to be too big. On the other hand, most European regions are monitored and analysed at the NUTS II level. Regional de- velopment and the use of the EU structural funds are expected at this level. It is also a basic framework for the implementation of regional policy and the standard level of data availability. Through a new statistical classifi cation in 2012 by the Ministry of Regional Development and EU funding bodies, Croatia was divided into two NUTS II regions: Continental and Adriatic Croatia. Continental Croatia con- sists of 13 counties (Zagreb, Međimurje, Varaždin, Krapina-Zagorje, Bjelovar-Bilogora, Koprivnica-Križevci, Virovitica-Podravina, 331Lončar, J. and Marinković, V. Hungarian Geographical Bulletin 64 (2015) (4) 327–344. Osij ek-Baranja, Požega-Slavonij a, Slavonski Brod-Posavina, Vukovar-Sirmium, Karlovac, and Sisak-Moslavina counties) and the City of Zagreb. It has 64.1 percent of the 27 EU countries’ GDP. Adriatic Croatia consists of 7 counties (Lika-Senj, Primorje-Gorski Kotar, Istria, Zadar, Šibenik-Knin, Split-Dalmatia and Dubrovnik-Neretva counties), and has 62.1 percent of the 27 EU countries’ GDP. This kind of statistical division enables the use of resources from the Structural Funds with the highest benefi ts to all Croatian re- gions. Also, it facilitates the implementation of development projects following the same rules in the entire territory of the Republic of Croatia (Ministry of Regional Development and EU funds). Observed in terms of European NUTS II classifi cation according to the division from 2012, Eastern Croatia be- longs to the statistical region of Continental Croatia, which has about 62 percent of the 27 EU countries’ GDP. However, it is generally known that Eastern Croatian counties have a signifi cantly lower average GDP because other, more developed counties of Central Croatia also belong to this NUTS II region (City of Zagreb, Zagreb County etc.), which raise the average. Demographic characteristics as a factor of economic development As population is the most important factor of regional development planning, it is neces- sary to consider recent demographic proc- esses and structures in terms of identifying the main problems and to evaluate popula- tion resources in the Eastern Croatian region. Large diff erences between particular parts of Eastern Croatia are expressed in terms of population, especially between urban and rural areas, mostly as a result of ‘de-agricul- turisation’, ruralisation and industrialisation aft er World War II. Today, according to the 2011 Census, there are about 806,000 people living in the fi ve counties in the Eastern Croatian region. The Eastern Croatian region’s population trend since World War II has indicated two diff er- ent stages of population development. The fi rst is characterised by the increase in the total population of Eastern Croatia until 1991 and the Homeland War. Since then a period of depopulation has taken place. However, the stagnation or decline in population was recorded in some counties in the 1981 Census (Virovitica Podravina and Požega-Slavonia counties), indicating that the process of shrinkage had already started. The entire region of Eastern Croatia, as well as all its counties, has recorded a signifi cant loss of population in the last three decades, the most intensive periods being the inter- censual periods of 1991–2001 and 2001–2011, during which the region of Eastern Croatia lost about 170,000 people. In the last inter- censual period the population decline of Eastern Croatia were about 85,000 people in total, which is about 9.6 percent of the total population of Eastern Croatia in 2001. At the same time, natural decline, together with the increased emigration of working and repro- ductive age groups, has led to a noticeable deterioration in the age-sex population struc- ture of Eastern Croatia (Wertheimer, A. and Živic, D. 2003 (Figure 1). Negative changes in the population in the last three decades has resulted in a decline of Fig. 1. Population of Eastern Croatia 1953–2011, by counties. Source: 1857–2001 Censes, 2011 Census, www.dzs.hr Lončar, J. and Marinković, V. Hungarian Geographical Bulletin 64 (2015) (4) 327–344.332 more than 170,000 inhabitants in the region of Eastern Croatia (in the 2011 Census only Dragalić in Slavonski Brod-Posavina county had minimal population growth in relation to the 2001 Census). The main causes of such an unfavourable state are the consequences of the decline in birth rates, increased mortal- ity rates, emigration, adverse economic con- ditions and the consequences of war in the region of Eastern Croatia. Peripheral rural areas have suff ered especially as the process of “village senilisation” has been emphasised with the emigration of younger age groups (Cifrić, I. 2003). In this way, the development potential of Eastern Croatia has been signifi - cantly reduced. The demographic changes of the Eastern Croatian local units are presented by the in- dex of changes in the number of residents in the period of 1953–2011 in order to show the intensity and spatial distribution of depopu- lated areas, as well as the areas of popula- tion increase within the local units. The index values of less than 100 indicate depopulated areas in the period of 1953–2011 (Figure 2). Mainly, these are rural municipalities that are more distant from the urban centres in Eastern Croatia, mostly in the western and northern parts of Slavonia, especially in Podravina, Posavina and the Western Slavonian micro-regions. The process of depopulation has been the most intensive in these areas, which reduces the possibilities of local and regional devel- opment. It is especially important to empha- sise that 72 percent of all local government units in this macro-region have recorded a population decline over this period. Among them, more than one-third has recorded a decrease of 50 percent or more. For exam- ple, in 2011 the municipality of Čađavica in the micro-region of Podravina had only 27 percent of its 1953 population. On the other hand, index values over 100 represent areas with population increases in the period of 1953–2011. Their spatial distribution indicates the pop- ulation increase bigger urban areas or macro- regional and regional centres, such as the City of Osij ek (163.5%); Slavonski Brod (255.8%); Virovitica (140.7%); Požega (169.9%); Đakovo (150.9%); and Vinkovci (169.5%). Also, areas and municipalities in their surroundings re- corded a population increase, for example, in the Slavonski Brod region there were increas- es in the municipalities of Sibinj (114.8%) and Brodski Stupnik (110.1%); in the Osij ek re- gion in the municipalities of Darda (152.7%), Čepin (155.5%) and Antunovac (106.8%); and in the Vinkovci region in the municipalities of Ivankovo (129.6%), Nuštar (140.6%) and Andrij aševci (130.9%). These data indicate the process of popula- tion concentration in urban centres, mostly in the large macro-region (Osij ek) and other regional and county centres (Slavonski Brod, Požega, Vukovar, Vinkovci and Virovitica) in relation to the remaining rural areas of the region. Only 35 of all local units recorded a population increase in this period and among those three had a doubling of the number of residents while others had less signifi cant in- creases. The macro-region of Osij ek recorded an overall increase of 60 percent compared to 1953, which does not belong to the largest increase compared to other urban areas, due to the advanced suburbanisation process. Another indicator of demographic char- acteristics and the region’s potential is the index of ageing. It represents the ratio of the age group of 0–19 (youth) and over 60-year- olds (senior) (Figure 3). Generally, a population is considered to be elderly if the index of ageing is over 40 (Nejašmić, I. 2006). The ageing index indi- cates that the population of Eastern Croatia is in general very old. It is an especially remark- able phenomenon if considered at the local level. First of all, it is important to empha- sise that no one of the Eastern Croatian local units had an index of ageing less than 40 in 2011. The lowest values or the most favour- able ratio of youth to elderly was found in urban areas and the municipalities in their surroundings (with an index of ageing less than 80). At the same time, the oldest popula- tion was to be found in rural municipalities. In particular, the municipalities and one city 333Lončar, J. and Marinković, V. Hungarian Geographical Bulletin 64 (2015) (4) 327–344. Fi g. 2 . T he in de x of p op ul at io n ch an ge 1 95 3– 20 11 . S ou rc e: 19 53 C en su s an d 20 11 C en su s, w w w .d zs .h r Lončar, J. and Marinković, V. Hungarian Geographical Bulletin 64 (2015) (4) 327–344.334 Fi g. 3 . T he a ge in g in de x of th e Ea st er n C ro at ia n po pu la tio n in 2 01 1. S ou rc e: Po pu la tio n co nt in ge nt s by to w ns /m un ic ip al iti es , 2 01 1 C en su s, w w w .d zs .h r 335Lončar, J. and Marinković, V. Hungarian Geographical Bulletin 64 (2015) (4) 327–344. in Eastern Slavonia (Vukovar, Erdut, Ilok, Lovas, Negoslavci, etc.) had the highest val- ues in the index of ageing, which is a conse- quence of the war and youth emigration . These indicators show the Eastern Croatian region’s demographic potential and prob- lems. The most important demographic indi- cators refl ect the processes of depopulation, regional population concentration and the unfavourable age structure of the population. At the same time, the spatial distribution of these unfavourable processes indicates that bigger urban centres and the municipalities in their surroundings record bett er demo- graphic profi le and structures in comparison with remote rural municipalities. Migration is considered to be an impor- tant key in solving the puzzle of providing a healthy foundation for future economic growth. For those areas that are increasingly confronted with population aging, att racting the fl ow of young people represents the only alternative in the short and medium term (Mazilescu, R. 2012). The biggest problem in this region is the emigration of skilled labour because productive workers move to urban areas that pay higher real wages while the sending/source region becomes less special- ised and less productive (Edwards, M. 2007). Economic-geographic indicators of development As agriculture and industry, especially the food industry, are two traditional economic activities in Eastern Croatia, they will be analysed in the next section of this paper. In the period of the last agricultural census that was held in Croatia in 2003, 27 percent of all Croatian agricultural households were in the region of Eastern Croatia, as well as 43 per- cent of all business entities. Unfortunately, the current situation in the agricultural sector of Eastern Croatia is characterised by small farms, an aging workforce and a small and uncertain market. The involvement in the global agricultur- al market is still too much to expect at this level of agricultural development in Eastern Croatia. In most of the counties in Croatia, in- cluding the counties of Eastern Croatia, most of the utilised agricultural land is up to 5 ha (in some counties up to 50 percent of all uti- lised land). The strategy for enlargement of the parcels should be re-parcelling and land management. In this way, the agricultural sector should be able to grow and have big- ger production and export (Table 1). If the agricultural structure of Eastern Croatian households and business entities are analysed, it is obvious that the number of ag- ricultural households is much larger than the number of business entities. The same applies in the case of utilised agricultural land that is in the hands of households. Data show that utilised agricultural land that is used by agri- cultural households is almost twice as big as the utilised agricultural land used by business entities. This shows that an att empt to make bigger businesses in the agriculture sector in Croatia is still economically risky. Croatian farms are among the smallest in the EU. Besides that, our data show that the number of agricultural workers in most cit- ies and municipalities is below 10 percent, while only municipalities farther from bigger Table 1. Basic agricultural indicators of utilised agricultural land in Eastern Croatia by counties, 2003 County Number of Utilised agricultural land, hectares households business entities total in agricultural households in land business entities Virovitica-Podravina Požega-Slavonia Slavonski Brod-Posavina Osij ek-Baranja Vukovar-Sirmium 19,062 13,521 20,704 41,103 26,316 78 37 109 235 130 83,752 42,548 62,316 184,094 121,078 58,862 31,675 47,377 95,987 84,821 24,890 10,873 14,939 88,107 36, 257 Source: Agricultural Census, 2003 (www.dzs.hr) Lončar, J. and Marinković, V. Hungarian Geographical Bulletin 64 (2015) (4) 327–344.336 cities or regional centres have a population made up of over 30 per cent of agricultural workers. Some of them (Vrbanja, for exam- ple) are more focused on the forestry sector (Figure 4). This result is signifi cant if we take into account that traditionally this is an ag- ricultural area with all the preconditions for the further development of the agricultural sector (ecological cultivation, for example). However, years of neglect and lack of invest- ment that would have improved knowledge in agricultural business, as well as a lack of investment in new technologies and the lack of local communities’ capacity to get more resources from EU funds, have had the result that Croatia imports a signifi cant part of its food products from abroad As Croatia became member of the EU there have been many opportunities for Eastern Croatia’s agricultural sector using EU funds. “The agricultural sector of rural develop- ment satisfi es an economic way of reasoning which turns out to be insuffi cient to enable rural areas to apprehend the new issues of territorial cohesion. In order to contribute to the Lisbon and Gothenburg objectives, rural development strategies should focus on in- novation and the transfer of knowledge and good practices” (Zorzoliu, R. 2012). In general, rural areas should play a more signifi cant part in regional and economic development if the further concentration of population and economic activities in Eastern Croatia are wanted to be avoided. The con- temporary understanding of rural develop- ment involves a comprehensive development with the participation of the community it- self, or the process by which institutions and people from the community are mobilised in order to create, strengthen and stabilise ac- tivities using the resources of the area in the best possible way to achieve stable economic and social development (Greffe, X. 2005). The modern local development policy is based on the OECD approaches and prin- ciples of: qualitative development, a diff er- entiated and unique approach to each local area and the involvement of local stakehold- ers in the creation and implementation of their own development. The main charac- teristic of recent rural development policy is an eff ort to stop the developmental delay of rural areas by effi cient use of all local re- sources. Directing rural development strives to increase the competitiveness of agricul- ture and forestry, improve the environment, landscape, and quality of life in rural areas and diversify the rural economy. The contem- porary rural developmental policy is based on the LEADER approach, which means, “links between the actions in development of the European rural areas”, which is also the method used to mobilise the potential of rural communities. This also includes: 1. Sustainable rural development based on the conservation and balancing of environ- mental, social and economic capital; 2. Approach based on local characteristics, potential, uniqueness and distinctiveness; 3. Bott om-up approach, which means that local stakeholders are involved in taking de- cisions; 4. Establishment of local partnerships (lo- cal action groups) composed of public, civil and economic sectors that seek to identify and implement local development strategy; 5. Innovations to represent traditional val- ues in a new and competitive manner; 6. Integrated, multi-sectoral approach in- volves horizontal, cross-sectorial as well as vertical connectivity, linking local, regional and national institutions in order to achieve sustainable rural development; 7. Networking and connectivity, learning from best practices, exchange of knowledge and experience; 8. Cooperation representing a further step of networking towards the development and implementation of individual projects of two or more LAGs within a country or region. Rural development and the LEADER ap- proach are relatively new concepts in Croatia, dating back to the early implementation of the European model of rural development and the pre-accession IPARD programme in which it was a key instrument. In accordance with it, in 2008 the Strategy of Rural Development 2008–2012 was adopted in Croatia, with the main objectives 337Lončar, J. and Marinković, V. Hungarian Geographical Bulletin 64 (2015) (4) 327–344. Fi g. 4 . T he sh ar e of a gr ic ul tu ra l w or ke rs in to ta l e m pl oy m en t ( in a ll ac tiv iti es ), 20 11 . S ou rc e: Em pl oy m en t a nd W ag es , S ta tis tic al R ep or ts , 2 01 1, ca lc ul at ed b y au th or s Lončar, J. and Marinković, V. Hungarian Geographical Bulletin 64 (2015) (4) 327–344.338 and measures of developing agriculture and rural areas. Through the EU accession, Croatia opened up the possibility of using the European Agricultural Fund for Rural Development (EARDF), fi nanced by the Common Agricultural Policy (CAP), which contributes to achieving the objectives of the Europe 2020 strategy promoting sustainable rural development throughout the European Union. Nowadays, Croatia is implementing the Rural Development Programme 2014–2020 with defi ned measures that outline the eff ec- tive usage of resources from the fund. When analysing industry, it is necessary to say that in this region it has traditionally been based largely on agricultural produc- tion, but “unfortunately”, the percentage of agricultural products that are fi nalised in this region is not known. However, empirically it may be concluded that the insuffi cient degree of completion, which aff ects the levels of em- ployment in the region, aff ects the low level of new investment and economic growth” (Baban, L.J. and Ivic, K. 2003). The most severe decline of industry in this area happened after 1990 when the war caused big damages and the destruc- tion of factories that then stopped operat- ing and were closed. Also, badly managed privatisation and the new rules that capital- ism brought found Croatian industry un- prepared. Under these conditions, the loss of old markets and the lack of new ones almost caused the collapse of industry in Eastern Croatia. In the Republic of Croatia, the number of employed persons in industry decreased aft er the transition and privatisa- tion almost threefold. New jobs in industry in the meantime (reindustrialisation) have not materialised. From the data available, it is obvious that in Eastern Croatia only 5 cities/ municipalities have industrial employment of over 60 per- cent and their economy is mostly connected to the paper and petroleum industries (a re- fi nery in Slavonski Brod). A slightly bett er situation can be found in the area of Western Slavonia with the city of Požega as its cen- tre, while in Eastern Slavonia and Baranja, mostly in cities like Donji Miholjac, Valpovo, Beli Manastir and Županja, industrial em- ployment is above average (more than 30 per- cent). Eastern Croatia in general has an av- erage industrial employment rate of around 22 percent. Today, industry is still the most signifi cant economic activity in this area if the number of employees in industry and other economic sectors are compared (Table 2). The main characteristic of the business life in Croatia is the decline of the working popla- tion, which is a result of negative demograph- ic development, emigration and an ageing of workforce. The necessary policies that should be implemented should take into considera- tion the following goals: an increase of the active population, an increase of the employ- ment rate, as well as an increase of workforce mobility, because the labour market is a major factor in determining the economic growth of an area (Edwards, M. 2007). This is why communities must continuously invest in as- suring a highly skilled workforce (Blakely, E. and Leigh, N.G. 2009) (Figure 5). Analysing the statistics for Croatia as a whole, the number of registered business entities increased by 9.56 percent during the period of 2008–2012, from 263,760 registered business entities to 288,972. The increase oc- curred in all sectors except for public de- fence, compulsory social security, wholesale and retail trade. The largest number of new businesses during the period 2008 to 2012 have been registered in wholesale and retail trade, followed by construction, manufactur- ing and professional, scientifi c and technical activities. Unlike the 9.56 percent increase in the number of registered legal entities, the number of active legal entities in the ob- served period increased only by 1.69 percent, or by 2,224 legal entities (Industrial Strategy for Republic Croatia, 2014). Also, for Croatia as a whole, the long-term unemployment rate of 18.9 percent (in 2012) has been an unsolvable problem for several years. The main problems that the govern- ment also tries to cope with are: the low share of active population, structural inconsistency of supply and demand in professional occupa- 339Lončar, J. and Marinković, V. Hungarian Geographical Bulletin 64 (2015) (4) 327–344. Ta bl e 2 . N um be r o f e m pl oy ed p er so ns in le ga l e nt iti es in so m e e co no m ic a ct iv iti es in E as te rn C ro at ia b y co un tie s, 20 11 C ou nt y A gr ic ul tu re , fo re st ry a nd fi s hi ng M an uf ac tu ri ng W ho le sa le a nd re ta il tr ad e Tr an sp or ta tio n an d st or ag e Pu bl ic ad m in is tr at io n an d de fe nc e Ed uc at io n H um an he al th a nd so ci al w or k V ir ov iti ca -P od ra vi na Po že ga -S la vo ni a Sl av on sk i B ro d- Po sa vi na O sij e k- Ba ra nj a Vu ko va r- Si rm iu m To ta l 1, 15 3 97 0 94 0 4, 10 8 3, 10 0 10 ,2 71 3, 41 5 3, 93 3 6, 57 3 13 ,1 83 4, 84 7 31 ,9 51 1, 95 1 1, 63 1 2, 72 1 10 ,2 17 3, 68 6 20 ,2 06 62 4 59 8 1, 11 8 3, 32 4 1, 60 0 7, 26 4 1, 51 7 1, 52 0 2, 37 8 6, 83 2 4, 57 0 16 ,8 17 1, 75 6 1, 62 7 2, 98 2 7, 64 5 3, 98 8 17 ,9 98 1, 21 6 1, 65 0 2, 40 6 5, 68 3 2, 67 2 13 ,6 27 So ur ce : E m pl oy m en t a nd w ag es , S ta tis tic al R ep or ts , 2 01 1, w w w .d zs .h r tions, the low number of fl exible and adaptable companies and the low utilisation of human potential and resources (Industrial Strategy for Republic Croatia, 2014) (Figure 6). The problem of unemployment persists because the number of unemployed is al- most permanently higher than the demand. Therefore, employers behave as if staff were always available, as reflected in the very low level of investment in employee educa- tion. However, the existence of a structural mismatch has been confi rmed by Croatian Employment Service and research results also indicate a lack of specifi c personnel, the existence of occupations and the lack of cer- tain skills among those who apply for the job. The clustering of the most capable, highly ed- ucated people in the fi eld of services could be a limiting factor for reindustrialisation based on new materials and technologies in terms of increased competition. The planning of necessary resources by us- ing stimulation to select the required interests, determining quotas and adapting educational program needs with adequate fi nancial sup- port can lead to improvements in the structure of knowledge and skills that are necessary for development (Industrial Strategy Republic of Croatia, 2014) (Figure 7). When analysing the active and inactive populations of Eastern Croatia at the county level, it becomes clear that in every county the share of inactive population is over 50 percent and in some cases close to 60 percent (Požega-Slavonia county, for example). The biggest number/share of the inactive popu- lation involves pupils and students as well as retired people. These indicators show a very small worker pool that can’t be the base for economic and regional development and prosperity, especially in periods of economic stagnation or crisis, and it will also infl uence the decline of GDP per capita. If GDP data for the year of 2005 on the NUTS 2 level is compared between the EU and Croatia, the regional GDP in Eastern Croatia according to purchasing power parity is only at 34.5 percent of the EU average (while, for example, the North-western region of Croatia Lončar, J. and Marinković, V. Hungarian Geographical Bulletin 64 (2015) (4) 327–344.340 Fi g. 5 . T he sh ar e of in du st ria l w or ke rs in to ta l e m pl oy m en t ( in a ll ac tiv iti es ) i n 20 11 . S ou rc e: Em pl oy m en t a nd W ag es , S ta tis tic al R ep or ts , 2 01 1, ca lc ul at ed b y au th or s 341Lončar, J. and Marinković, V. Hungarian Geographical Bulletin 64 (2015) (4) 327–344. FF ig . 6 . S ha re o f e m pl oy ed p er so ns p er 1 00 in ha bi ta nt s i n ci tie s a nd m un ic ip al iti es in E as te rn C ro at ia , 2 01 1. S ou rc e: Em pl oy m en t a nd W ag es , S ta tis tic al R ep or ts , 20 11 , c al cu la te d by a ut ho rs Lončar, J. and Marinković, V. Hungarian Geographical Bulletin 64 (2015) (4) 327–344.342 Fi g. 7 . S ha re o f u ne m pl oy ed p er so ns p er 1 00 in ha bi ta nt s in c iti es a nd m un ic ip al iti es in E as te rn C ro at ia , 2 01 1. So ur ce : C ro at ia n Bu re au fo r E m pl oy m en t, w w w .h zz .h r, ca lc ul at ed b y au th or s 343Lončar, J. and Marinković, V. Hungarian Geographical Bulletin 64 (2015) (4) 327–344. is at 64.3 percent of the EU average and the Adriatic region is at 47.6 percent of the EU average). Diff erences in wealth between these three regions can be linked back to the main economic structure, i.e. the share of certain sectors compared to national average. Eastern Croatia is economically very homogeneous, while the other two regions have more het- erogeneous economical structures. Regions with a narrow economic base are more sensi- tive to all economic crises and less competi- tive in comparison with regions that have a broader economic base (Strategy for Regional Development). If we also take into consid- eration demographic structures in Eastern Croatia, the number of active members in the population declines further (Table 3). Conclusions Eastern Croatia is a region with numerous economic and development advantages in comparison to other Croatian regions. Un- fortunately, there are also numerous disad- vantages that have disabled the full use of resources and capacities in this area. One of the biggest problems is depopu- lation and the lack of young and educated people who are usually the ‘engine’ of posi- tive changes and the basis for social and eco- nomic development.. In terms of agriculture and industry, once the traditional sectors in the region of Eastern Croatia, without further fi nancial help from the state and EU cohesion and structural funds, the further restructuring and devel- opment of these activities and investment in new technologies and research will not be possible. Both of these sectors have been in economic crisis for decades. That is why specialised geographical production systems should be developed to serve as a basis for the food industry and the agro-food sector in general. A big part of this production could be used in the tourism sector to a much great- er extent than it is now. In this context, authors can conclude that the first hypothesis is confirmed. As the population is the most important fac- tor of regional and local planning and de- velopment, the unfavourable demographic dynamics and structural characteristics of Eastern Croatia reduce development po- tential in this region, especially at the local level. The second hypothesis in this paper is not confi rmed fully, as indicators show that the whole of Eastern Croatia has similar population and economic-geographic prob- lems. However, at the local level, we have demonstrated that bigger urban centres and municipalities and their surroundings have a bett er developmental position in comparison with remote rural municipalities. The third hypothesis is confi rmed, as population and economic potentials of Eastern Croatia for regional development are not used in a way that would increase regional prosperity and the development of this area. Eastern Croatia’s unique identity might become a signifi cant resource and could be utilised for the further development of re- gional economy in agriculture, tourism or other economic activities. Table 3. Population of Eastern Croatia by current activity status, 2011 County Population, person Employed Unemployed Economically inactive person % person % person % Virovitica-Podravina Požega-Slavonia Slavonski Brod-Posavina Osij ek-Baranja Vukovar-Sirmium 71,344 64,892 131,512 258,226 149,070 24,084 21,948 41,804 95,300 48,894 33.7 33.8 31.7 36.9 32.7 6,662 5,727 15,393 26,363 16,426 9.3 8.8 11.7 10.2 11.0 40,577 37,194 74,288 136,505 83,693 56.8 57.3 56.4 52.8 56.1 Source: Population aged 15 and over by current activity status, age and sex, Census 2011, www.dzs.hr Lončar, J. and Marinković, V. Hungarian Geographical Bulletin 64 (2015) (4) 327–344.344 REFERENCES Baban, L.J. and Ivić, K. 2003. Diversifi kacij a kao bitna strategij a razvitka poljoprivrede i prehrambene industrij e Istočne Hrvatske. In Razvojne perepektive ruralnog svij eta Slavonij e i Baranje. Eds.: Štambuk, M. and Šundalić, A. Zagreb, Institut društvenih znanosti Ivo Pilar, 209–219. Blakely, E. and Leigh, N.G. 2009. Planning Local Economic Development: Theory and Practice. Los Angeles, Sage Publications, 480 p. Čavrak, V. 2002. Strategij a i politika regionalnog razvoja Hrvatske. Ekonomij a 3. 645–661. Cifrić, I. 2003. Iskustva mješovite poljoprivrede: obiteljsko gospodarstvo u tranzicij skim promjena- ma i novim izazovima. In Razvojne perepektive ruralnog svij eta Slavonij e i Baranje. Eds.: Štambuk, M. and Šundalić, A. Zagreb, Institut društvenih znanosti Ivo Pilar, 129–143. Edwards, M. 2007. Regional and urban economics and Economic development: Theory and Methods. New York, Auerbach Publications, 752 p. Greffe, X. 2005. The instrument of good governance. Local governance and the drivers of growth. Paris, OECD Publishing, 39–88. Hansen, N., Higgins, B. and Savoie, D. 1990. Regional Policy in Changing World. New York, Springer Science and Business Media, 311 p. Mazilescu, R. 2012. Patt erns of demographic de- velopment. Procedia. Economics and Finance 3. 1075–1080. Ministarstvo regionalnog razvoja, šumarstva i vodnog gospodarstva 2010. Strategij a regionalnog razvoja Republike Hrvatske, 2011–2013. (Strategy of Regional development of Republic Croatia, 2011–2013) www. mrrfeu.hr Nejašmić, I. 2006. Demogeografija. Stanovništvo u prostornim odnosima i procesima. Zagreb, Školska knjiga, 283 p. OECD Regional Outlook 2014. Regions and Cities: Where Policies and People Meet. OECD Publishing, 291 p. Starc, N. and Rašić, I. 2003. Nevolje s regionalnom politikom. Privredna kretanja I ekonomska politika 95. 47–86. Stimson R.J., Stough R.R. and Roberts B.H. 2006. Regional Economic Development: Analysis and Planning Strategy. Berlin–Heidelberg–New York, Springer, 452 p. Wertheimer, A. and Živic, D. 2003. Demografske promjene u ruralnim područjima Slavonij e i Baranje od 1953. do 2001. godine. In Razvojne perepektive ruralnog svij eta Slavonij e i Baranje. Eds.: Štambuk, M. and Šundalić, A. Zagreb, Institut društvenih znanosti Ivo Pilar, 15–39. Zorzoliu, R. 2012. Regional and sustainable develop- ment in Italy, Procedia. Social and Behavioral Sciences 58. 514–522. Additional sources: Croatian Bureau of Statistics 2011. Naselja i stanovništvo RH 1857–2001 (Census 1857–2001). cd, Zagreb, R. Hrvatska, www.dzs.hr Croatian Bureau of Statistics 2011. Popis stanovništva 2011. Kontingenti stanovništva po gradovima i općinama (Census 2011. Population contingents by Towns and Municipalities). Zagreb, R. Hrvatska, www.dzs.hr Croatian Bureau of Statistics 2012. Robna razmjena RH s inozemstvom po županij ama, gradovima i općinama (Foreign trade in goods of the Republic of Croatia by counties, towns and municipalities). Priopćenje god. XLIX. Zagreb, R. Hrvatska, www.dzs.hr Croatian Bureau of Statistics 2012. Zaposlenost i plaće (Employment and Wages, Statistical Reports), Zaposleni u pravnim osobama po županijama gradovima i općinama. Statistička izvješća. Zagreb, R. Hrvatska. www.dzs.hr Croatian Bureau of Statistics. 2003. Popis poljoprivrede (Agricultural census). Zagreb, R. Hrvatska,. www. dzs.hr Croatian Emloyment Sevice 2011. Mjesečni statistički bilten (Monthly Statistic Bulletin). www.hzz.hr Minisarstvo regionalnog razvoja i fondova EU. www. mrrfeu.hr Ministarstvo gospodarstva 2014. Industrij ska strategij a Republike Hrvatske 2014–2020 (Industrial strategy of Republic Croatia, 2014–2020). Zagreb, R.Hrvatska. www.mingo.hr Ministarstvo gospodarstva RH. Industrial Strategy of Republic Croatia, 2014–2020.(www.mingo.hr) Nacrt zakona o regionalnom razvoju 2013. htt p:// www.mrrfeu.hr/default.aspx?id=1674 OECD, Bett er policies for bett er lives, www.oecd.org www.slavonij a.hr Zakon o regionalnom razvoju (NN 153/09) << /ASCII85EncodePages false /AllowTransparency false /AutoPositionEPSFiles true /AutoRotatePages /None /Binding /Left /CalGrayProfile (Dot Gain 20%) /CalRGBProfile (sRGB IEC61966-2.1) /CalCMYKProfile (U.S. Web Coated \050SWOP\051 v2) /sRGBProfile (sRGB IEC61966-2.1) /CannotEmbedFontPolicy /Error /CompatibilityLevel 1.3 /CompressObjects /Tags /CompressPages true /ConvertImagesToIndexed true /PassThroughJPEGImages true /CreateJobTicket false /DefaultRenderingIntent /Default /DetectBlends true /DetectCurves 0.0000 /ColorConversionStrategy /LeaveColorUnchanged /DoThumbnails false /EmbedAllFonts true /EmbedOpenType false /ParseICCProfilesInComments true /EmbedJobOptions true /DSCReportingLevel 0 /EmitDSCWarnings false /EndPage -1 /ImageMemory 1048576 /LockDistillerParams false /MaxSubsetPct 100 /Optimize false /OPM 1 /ParseDSCComments true /ParseDSCCommentsForDocInfo true /PreserveCopyPage true /PreserveDICMYKValues true /PreserveEPSInfo true /PreserveFlatness true /PreserveHalftoneInfo false /PreserveOPIComments true /PreserveOverprintSettings true /StartPage 1 /SubsetFonts true /TransferFunctionInfo /Apply /UCRandBGInfo /Preserve /UsePrologue false /ColorSettingsFile () /AlwaysEmbed [ true ] /NeverEmbed [ true ] /AntiAliasColorImages false /CropColorImages true /ColorImageMinResolution 300 /ColorImageMinResolutionPolicy /OK /DownsampleColorImages true /ColorImageDownsampleType /Bicubic /ColorImageResolution 300 /ColorImageDepth -1 /ColorImageMinDownsampleDepth 1 /ColorImageDownsampleThreshold 1.50000 /EncodeColorImages true /ColorImageFilter /DCTEncode /AutoFilterColorImages true /ColorImageAutoFilterStrategy /JPEG /ColorACSImageDict << /QFactor 0.15 /HSamples [1 1 1 1] /VSamples [1 1 1 1] >> /ColorImageDict << /QFactor 0.15 /HSamples [1 1 1 1] /VSamples [1 1 1 1] >> /JPEG2000ColorACSImageDict << /TileWidth 256 /TileHeight 256 /Quality 30 >> /JPEG2000ColorImageDict << /TileWidth 256 /TileHeight 256 /Quality 30 >> /AntiAliasGrayImages false /CropGrayImages true /GrayImageMinResolution 300 /GrayImageMinResolutionPolicy /OK /DownsampleGrayImages true /GrayImageDownsampleType /Bicubic /GrayImageResolution 300 /GrayImageDepth -1 /GrayImageMinDownsampleDepth 2 /GrayImageDownsampleThreshold 1.50000 /EncodeGrayImages true /GrayImageFilter /DCTEncode /AutoFilterGrayImages true /GrayImageAutoFilterStrategy /JPEG /GrayACSImageDict << /QFactor 0.15 /HSamples [1 1 1 1] /VSamples [1 1 1 1] >> /GrayImageDict << /QFactor 0.15 /HSamples [1 1 1 1] /VSamples [1 1 1 1] >> /JPEG2000GrayACSImageDict << /TileWidth 256 /TileHeight 256 /Quality 30 >> /JPEG2000GrayImageDict << /TileWidth 256 /TileHeight 256 /Quality 30 >> /AntiAliasMonoImages false /CropMonoImages true /MonoImageMinResolution 1200 /MonoImageMinResolutionPolicy /OK /DownsampleMonoImages true /MonoImageDownsampleType /Bicubic /MonoImageResolution 1200 /MonoImageDepth -1 /MonoImageDownsampleThreshold 1.50000 /EncodeMonoImages true /MonoImageFilter /CCITTFaxEncode /MonoImageDict << /K -1 >> /AllowPSXObjects false /CheckCompliance [ /None ] /PDFX1aCheck false /PDFX3Check false /PDFXCompliantPDFOnly false /PDFXNoTrimBoxError true /PDFXTrimBoxToMediaBoxOffset [ 0.00000 0.00000 0.00000 0.00000 ] /PDFXSetBleedBoxToMediaBox true /PDFXBleedBoxToTrimBoxOffset [ 0.00000 0.00000 0.00000 0.00000 ] /PDFXOutputIntentProfile (None) /PDFXOutputConditionIdentifier () /PDFXOutputCondition () /PDFXRegistryName () /PDFXTrapped /False /CreateJDFFile false /Description << /ARA /BGR /CHS /CHT /CZE /DAN /DEU /ESP /ETI /FRA /GRE /HEB /HRV (Za stvaranje Adobe PDF dokumenata najpogodnijih za visokokvalitetni ispis prije tiskanja koristite ove postavke. Stvoreni PDF dokumenti mogu se otvoriti Acrobat i Adobe Reader 5.0 i kasnijim verzijama.) /ITA /JPN /KOR /LTH /LVI /NLD (Gebruik deze instellingen om Adobe PDF-documenten te maken die zijn geoptimaliseerd voor prepress-afdrukken van hoge kwaliteit. De gemaakte PDF-documenten kunnen worden geopend met Acrobat en Adobe Reader 5.0 en hoger.) /NOR /POL /PTB /RUM /RUS /SKY /SLV /SUO /SVE /TUR /UKR /ENU (Use these settings to create Adobe PDF documents best suited for high-quality prepress printing. Created PDF documents can be opened with Acrobat and Adobe Reader 5.0 and later.) /HUN >> /Namespace [ (Adobe) (Common) (1.0) ] /OtherNamespaces [ << /AsReaderSpreads false /CropImagesToFrames true /ErrorControl /WarnAndContinue /FlattenerIgnoreSpreadOverrides false /IncludeGuidesGrids false /IncludeNonPrinting false /IncludeSlug false /Namespace [ (Adobe) (InDesign) (4.0) ] /OmitPlacedBitmaps false /OmitPlacedEPS false /OmitPlacedPDF false /SimulateOverprint /Legacy >> << /AddBleedMarks false /AddColorBars false /AddCropMarks false /AddPageInfo false /AddRegMarks false /ConvertColors /ConvertToCMYK /DestinationProfileName () /DestinationProfileSelector /DocumentCMYK /Downsample16BitImages true /FlattenerPreset << /PresetSelector /MediumResolution >> /FormElements false /GenerateStructure false /IncludeBookmarks false /IncludeHyperlinks false /IncludeInteractive false /IncludeLayers false /IncludeProfiles false /MultimediaHandling /UseObjectSettings /Namespace [ (Adobe) (CreativeSuite) (2.0) ] /PDFXOutputIntentProfileSelector /DocumentCMYK /PreserveEditing true /UntaggedCMYKHandling /LeaveUntagged /UntaggedRGBHandling /UseDocumentProfile /UseDocumentBleed false >> ] >> setdistillerparams << /HWResolution [2400 2400] /PageSize [612.000 792.000] >> setpagedevice