Analysis+of+economic%2C+policy%2C+and+business+support+framework+in+partner+regions

F.A.T.E.

From Army To Entrepreneurship

Context Analysis

TABLE OF CONTENT

INTRODUCTION .................................................................................................................................................................. 5 ITALY - Friuli Venezia Giulia Region ................................................................................................................................... 8

1. ANALYSIS OF THE ECONOMIC CONTEXT ................................................................................................................ 8 1.1 Regional economy ................................................................................................................................................. 8 1.2 Sectoral focus ...................................................................................................................................................... 20

2. ANALYSIS OF THE POLICY FRAMEWORK ............................................................................................................. 33 2.1 Institutional framework ...................................................................................................................................... 33 2.2 Regulation and Support measures for SME ........................................................................................................ 36

With reference to innovation, the strategy adopted by the Region of Friuli-Venezia Giulia is to develop

synergies between the research system and the enterprises, in order to improve competitiveness through

technology transfer. .............................................................................................................................................. 45 2.3 EU assistance for supporting SMEs ..................................................................................................................... 49

3. ANALYSIS OF THE BUSINESS SUPPORT ORGANISATIONS CONTEXT ................................................................... 57 3.1 Mapping of the existing institutions/associations/various structures ................................................................ 57

4. CONCLUSION ........................................................................................................................................................ 72 1. ANALYSIS OF THE ECONOMIC CONTEXT .............................................................................................................. 76

1.1 Overview of the economic-entrepreneurial context (at regional level) .............................................................. 76 1.2 Main sectors........................................................................................................................................................ 80 1.3 Analysis of emerging potentials (sectors) at regional level ................................................................................ 85

2. ANALYSIS OF THE POLICY FRAMEWORK ............................................................................................................. 87 2.1 Institutional framework ...................................................................................................................................... 87 2.2 Regulation and Support measures for SME ........................................................................................................ 88 2.3 EU assistance for supporting SMEs ..................................................................................................................... 90 2.4 EU assistance for brownfield restructuring ......................................................................................................... 92

3. ANALYSIS OF THE BUSINESS SUPPORT ORGANISATIONS CONTEXT ................................................................... 93 3.1 Mapping of the existing institutions/associations/various structures ................................................................ 93

4. CONCLUSION ...................................................................................................................................................... 104 SLOVENIA: Mura - Murska Sobota ................................................................................................................................ 107

1. ANALYSIS OF THE ECONOMIC CONTEXT ............................................................................................................ 107 1.1 Overview of the economic-entrepreneurial context (at regional level) ............................................................ 107 1.2 Main sectors...................................................................................................................................................... 110 1.3 Analysis of emerging potentials (sectors) at regional level .............................................................................. 112

2. ANALYSIS OF THE POLICY FRAMEWORK ........................................................................................................... 113 2.1 Institutional framework .................................................................................................................................... 113 2.2 Regulation and Support measures for SME ...................................................................................................... 113 2.3 EU assistance for supporting SMEs ................................................................................................................... 117 2.4 EU assistance for brownfield restructuring ....................................................................................................... 121

3. ANALYSIS OF THE BUSINESS SUPPORT ORGANISATIONS CONTEXT ................................................................. 122 3.1 Mapping of the existing institutions/associations/various structures .............................................................. 122

4. CONCLUSION ...................................................................................................................................................... 125 GREECE: Drama – Kavala ................................................................................................................................................ 127




4. CONCLUSION ...................................................................................................................................................... 158 HUNGARY: West - Transdanubian Region ..................................................................................................................... 161

1. ANALYSIS OF THE ECONOMIC CONTEXT ............................................................................................................ 161 1.1 Overview of the economic-entrepreneurial context (at regional level) ............................................................ 161 1.2 Main sectors...................................................................................................................................................... 167



4. CONCLUSION ...................................................................................................................................................... 199 ROMANIA ....................................................................................................................................................................... 200

1. ANALYSIS OF THE ECONOMIC CONTEXT ............................................................................................................ 200 1.1 Overview of the economic-entrepreneurial context (at regional level) ............................................................ 200

2. ANALYSIS OF THE POLICY FRAMEWORK ........................................................................................................... 216 2.1 Institutional framework .................................................................................................................................... 216 2.2 Regulation and Support measures for SME ...................................................................................................... 218


4. CONCLUSION ...................................................................................................................................................... 223 SERBIA -Vojvodina.......................................................................................................................................................... 225




4. CONCLUSION ...................................................................................................................................................... 236 CROATIA - Osijek-Baranja County.................................................................................................................................. 238




4. CONCLUSION ...................................................................................................................................................... 311 BOSNIA AND HERZEGOVINA – SARAJEVO CANTON ..................................................................................................... 314

1. ANALYSIS OF THE ECONOMIC CONTEXT ............................................................................................................. 314 1.1 Overview of the economic-entrepreneurial context (at regional level) ............................................................ 314

1.2 Main sectors...................................................................................................................................................... 318 1.3 Analysis of emerging potentials (sectors) at regional level .............................................................................. 319

2. ANALYSIS OF THE POLICY FRAMEWORK ............................................................................................................ 324 2.1 Institutional framework .................................................................................................................................... 324 2.2 Regulation and Support measures for SME ...................................................................................................... 325 2.3 EU assistance for supporting SMEs ................................................................................................................... 330 2.4 EU assistance for brownfield restructuring ....................................................................................................... 331

3. ANALYSIS OF THE BUSINESS SUPPORT ORGANISATIONS CONTEXT ..................................................................... 332 GENERAL CONCLUSIONS OF THE CONTEXT ANALYSIS .................................................................................................. 337

INTRODUCTION

Every partner has been asked to provide a context analysis following these instructions:

1. ANALYSIS OF THE ECONOMIC CONTEXT

1.1 Overview of the economic-entrepreneurial context (at regional level)

The Project Partner is asked to provide a comprehensive picture of the regional economy by filling Table 1 and

by explaining in a short text (10.000 characters approx.) the main features of the economic context in terms of

sectorial specialization, natural resources, transport infrastructure. In this respect the PP will have to specifically

address every thematic group of indicators(ex: foreign trade, labour, industry) delivering a brief report of main

features, of recent trends and of gaps/problems. The PP is asked not to perform a simple comment to the data but to

provide supplementary in deep information and analysis, also taking into account the results of the interviews carried

out.

Information Sources: Regional Plannings/programmes, Regional reports, economic overviews, web, interviews

1.2 Main sectors

The PP will have to deliver a specific focus for each (4.000 characters approx.) of the 3-4 leading local/regional

sectors. For each sector the PP is asked to provide a set of data: n° of active enterprises, SME quota, enterprises birth

rate and mortality rate, trends of production levels, trade data (import, export, main trade partner), productivity,

employment, FDI etc. (see Table 2) .

The PP will have to deliver a brief analysis of each sector focusing in particular on aspects as the degree and

the needs of innovations in the sector, the use of locally (or foreign) developed patents and technology, the level of

connection/cooperation with research centres/institutions, the territorial concentration, the presence of FDI in the

sector, the dependence of the sector on FDI (are FDI the driving force of the sector?), the presence of a production

district. The PP will have to assess the limits and opportunities as well as the main needs and requirements of the

sector to foster further development both in terms of volumes (if needed) and (particularly) in terms of competitiveness

(research, innovation).

Information Sources: Regional reports, economic overviews, web, interviews, statistical databases

1.3 Analysis of emerging potentials (sectors) at regional level

The PP will have to assess the presence on the territory of emerging sectors which still cannot be considered as

main sectors, with a specific attention to HI-Tech/high value added sectors. The PP will have to focus on the

development dynamics of these sectors. In this respect the PP is asked to provide some evidence about the driving

forces of the emerging sectors: presence of a research centre or university, presence of a company or group of

companies, FDI inflow favoured by attraction policies implemented by national or local authorities, presence of specific

development plans, presence of incubators, BSOs, etc..

The PP will have to list existing industrial/entrepreneurial zones for brownfield/greenfield investment and

assess their saturation level in order to evaluate the need for new zones.

Information Sources: Regional reports, economic overviews, web, interviews of key actors

2. ANALYSIS OF THE POLICY FRAMEWORK

2.1 Institutional framework

The PP will have to provide a description of the administrative institutional framework in terms of

decentralization of competences and resources with a particular reference to economic development management in

order to provide a detailed picture of competencies and responsibilities in the relevant field.

Information Sources: web, interviews

2.2 Regulation and Support measures for SME

The PP will have to provide detailed information about SMEs support policies (laws and programs at national

and regional level, incentives and funds), start up and spin off regulations (laws and programs at national and regional

level, incentives and funds), FDI attraction schemes at national and regional/local level, support measures or

programmes (incentives and funds) for Hi-Tech/high value added companies and innovation projects, programmes and

laws instituting or supporting the development of incubators or BSOs. The PP is asked to point out existing gaps in

these fields (incubators, BSOs, entrepreneurial environment, FDI attraction, advanced sector growth fostering) and to

assess intervention priorities.

Information Sources: web, interviews, databases of laws/regulations/policies

2.3 EU assistance for supporting SMEs

The PP will have to provide detailed information about specific activities supporting SMEs, start-ups, spin offs,

incubators and BSOs, developed within EU assistance schemes and EU cohesion policies. In this respect, the PP should

analyse national and regional Operative Plans, verify the presence of the relevant themes within specific priorities and

measures of the plans, assess the funds allocated to the relevant actions/measures and evaluate to what extent the

plans have been realised so far. The PP is asked to provide some basic information about fund allocation procedures

and about the implementing bodies.

Information Sources: national and regional operational plans, web, interviews

2.4 EU assistance for brownfield restructuring

The PP will have to provide detailed information about priorities and measures relative to brownfield

restructuring within existing national and regional Operative Plans in terms of allocated funds, planned and already

realized operations.


3. ANALYSIS OF THE BUSINESS SUPPORT ORGANISATIONS CONTEXT

3.1 Mapping of the existing institutions/associations/various structures (trade-associations,

research centres, chambers of commerce, incubators, innovation and technology centres/parks, centres of

excellence….)

The PP will have to provide a description of the regional BSOs framework in order to give a detailed picture of

competencies for each BSO, types of services and consulting addressed to SMEs and start ups (who does what, how)

and highlight strengths/weaknesses of the BSO’s regional system, lack of specific support services and existing

networks.

In addition, for each BSO, PP will have to fill in the table 3.


4. CONCLUSION

PP has to provide an overall summary of the previous chapters and to highlight the main features

(opportunities, limits, needs, points of strength, potentials...) of the analysed context. (2 pages)

ITALY - Friuli Venezia Giulia Region


1.1 Regional economy

Table 1:

2004 2005 2006 2007 2008

STRUCTURE

GDP (mln Eur) 31.415,9 32.532,7 33.962,3 35.380,6 n.a.

GDP ( y/y) 0,5 2,1 2,2 1,9 O,2

GDP per capita PPP (Eur) 25.300 26.200 27.500 n.a.

n.a.

Structure GDP (%):

Agriculture 2,2 2,2 2,2 2,3 n.a.

Industry 27,7 27,5 27,9 27,6 n.a.

Services 70,0 70,2 69,8 69,9 n.a.

Industrial output (y/y)

2,0 0,9 4,4 5,4 -4,6

N° active companies

102.378 102.456 102.397 101.097 100.423

Total turnover (mln Eur)

n.a. n.a. n.a. n.a. n.a.

% of SME turn./Total Turn


SME per sectors (%):

Agriculture n.a. n.a. n.a. n.a. n.a.

Industry n.a. 99,8 99,8 n.a. n.a.

Services n.a. 98,7 98,8 n.a. n.a.

EMPLOYMENT

Total employment (.000)

500 504 519 522 522

% SME emp. on tot. emp.


Employm. per main sector:

Sector A (%) Services 64,2 %

Services 62,5 %

Services 63,4 %

Services 63,4 %

Services 63,6 %

Sector B (%) Industry 32,8 %

Industry 34,7 %

Industry 33,8 %

Industry 34,1 %

Industry 33,7 %

Sector C (%) Agriculture 3,0 %

Agriculture 2,7 %

Agriculture 2,8 %

Agriculture 2,5 %

Agriculture 2,5 %

Value added per employed (Eur) 85.459 86.556 85.997

n.d.

(industry without constr.)

n.d.

Average gross wage (Eur) 1,653 1,721 1,796

Unit labour cost (Eur)


Labour productivity (y/y) (nominal) 2,0% 1,3% -0,6%

n.d. n.d.

Unemployment (%)

3,9 4,1 3,5 3,4 4,3

Unemp. per educat. Level:

Primary n.a. n.a. n.a. n.a. n.a.

Secondary (vocat. or else)


Tertiary (university)


FOREIGN TRADE

Import of goods (mln Eur)

5.002 5.235 5.626 6.670 7.464

1. good category (SITC 2digit)

67. Iron e steel 574 mln



67. Iron e steel 1.101 mln

67. Iron e steel 1.557 mln

2. good category 78. Road Vehicle

305

28. metallif. ores metal scrap

281

68. nonferrous metals

378

74. general industrial

machinery and equipment, n.e.s., and

machine parts, n.e.s. 418


587

3. good category 28. metallif. ores metal scrap

284


263


305


405




Export of goods (mln Eur)

9.886 9.643 11.074 12.413 13.150

1. good category(SITC 2digit)

82. furniture and parts thereof;

bedding, mattresses,

mattress supp., cushions and

similar stuffed furnishings 1.624 mln



mattress supports,

cushions and similar stuffed

furnishings 1.562 mln



mattress supports, cushions and

similar stuffed furnishings 1.565 mln



mattress supports,


furnishings 1.612 mln

67. Iron e steel

1.658 mln

2. good category 79. other transport



67. Iron e steel


equipment, n.e.s.

1.280


machine parts, n.e.s.

907

machinery and equipment, n.e.s.,

and machine parts, n.e.s.

1.098

1.304


mattress supports,


furnishings 1.500

3. good category 74. general industrial



67. Iron e steel

804

73. metalworking machinery

1.060



machine parts, n.e.s. 1.279



machine parts, n.e.s. 1.339

Trade balance (mln Eur)

4.883 4.407 5.448 5.742 5.686

Main trade partners:

1. partner (county+mln Eur)

Germany 2.126

Germany 2.305

Germany 2.418

Germany 2.671

Germany 2.768

2. partner France 1.499

France 1.201

France 1.287

France 1.628

France 1.344

3. partner United Kingdom 1.360

Austria 866

Austria 962

Austria 1.110

Austria 1.211

FDI inflow (mln Eur)


Main FDI sectors

Sector A (Cumulate data)


Sector B n.a. n.a. n.a. n.a. n.a.

Sector C n.a. n.a. n.a. n.a. n.a.

The Autonomous Region Friuli Venezia Giulia is located in north-eastern part of Italy and is

bordering with Slovenia and Austria. With a land area extension of 7.858 sq/km and a population of

1.222.061 (2007 data) has a population density of 155,5 people per sq/km (197 is the average density of

the 21 NUTS 2 Italian regions). The morphological conformation of the territory is varied as is composed by

the Alp system in the northern part, a hill system along the Alps and along the border with Slovenia and a

plain in the middle that extends to the Adriatic coastline (South) and towards Veneto Region (West). The

territory is administratively divided in 4 (NUTS 3) Provinces (Trieste, Udine, Gorizia, Pordenone) and 219

municipalities (comuni).

Infrastructure

Friuli Venezia Giulia is small in size, but its geographical location has taken on a new strategic value

with the enlargement of the European Union. In terms of transport infrastructure Friuli Venezia Giulia has a

considerable gap in terms of capacity in “european terms”. This deficit is qualitative rather than

quantitative. In particular the road and rail networks are still waiting investments. The realization of the

high speed rail network are just part of future plans in FVG, while the widening of the motorway

“backbone” Venice-Trieste, that with its two lanes is considered a bottleneck along the east-west road-

routes, is slowly entering the executive phase.

The motorways network is more than 200 km long and mainly consist of the West-East stretch

Venezia – Trieste - Slovenia1 of the Pan-European Transport Corridor V (Barcelona – Kiev), of the branch to

Udine, Tarvisio and the border with Austria and two shorter branches to Gorizia and to Pordenone. There

are two truck ports in Gorizia and Fernetti, both on the border with Slovenia and directly linked with the

Italian and Slovenian motorway network.

The railways network consists of around 500 kilometres of track, with the two twin-line

“backbones” Venice/Mestre – Trieste and Trieste – Udine – Tarvisio which was recently modernised

between Udine and Tarvisio, with a capacity of 220 trains per day and the possibility of transiting at 200

kilometres per hour.

The ports of Trieste, Monfalcone and Porto Nogaro are the three most northerly ports of the

Mediterranean and can handle every kind of cargo. Trieste port is the Italian port with the greatest capacity

of covered storage: 500 thousand square metres of warehouses and a surface area of over 2.3 million

square metres (of which 1.6 million in the free port area), 12 kilometres of wharves and a rail “network” of

seventy kilometres of track. With an 18-metre-deep sea floor is one of the very few Adriatic ports that can

dock huge intercontinental cargo-liners. The three ports are linked with the rail and motorway networks.

The regional airport Ronchi dei Legionari (situated 30 km from Trieste and 40 km from Udine) is

directly connected to the motorway network: a dozen airlines operate out of the airport, offering regular

national and international flights which include destinations in Eastern Europe.

The intermodality is guaranteed by the Cervignano Terminal (with a central location in the region),

which has been in operation since 1988 and is capable of handling 350 thousand tonnes of goods per year.

1 This part of the motorway network will be upgraded soon to increase its capacity. The widening from two to a three lane

motorway is in the planning phase.

http://www.cemt.org/topics/paneurop/corridors.htm

http://www.sifvg.it/english/index.html

http://www.interportocervignano.it/inglese.htm

Economic structure

The structure of the economy is typically post-industrial, with a neat prevalence of the services

sector, which participates with a quota of over 69% to the formation of the regional value added. The

primary sector’s contribution to the Value added formation is 2,3% while industry (construction included)

contributes with a 27,6% quota. In 2006 the per capita GDP at PPS was 27.500 Eur, 116,5% of the EU

average. In the last years the regional economy proved to be more dynamic than the national economy as

GDP growth has been well above national levels.

The agriculture forestry and fishing sector’s contribution to the regional’s value added has been

stable in the last decade with a quota next to 3%. In the last years this quota has been slightly eroded as the

sector’s growth rates remained stable while the growth of the tertiary accelerated. The most

representative product of the Friuli plain are cereals, in particular corn, while the prevalent culture of the

east hill system and the southern part of the plain are vineyards. Cattle breeding has an important role in

the agricultural sector as well as meat and milk production.

The services sector contributes to the formation of the regional value added with a 70% quota,

which has been stable over the last period. Financial intermediation and insurance are well developed and

Trieste is well known for being home of some important national and international groups (ex. Generali).

Financial intermediation, real estate intermediation and business services together contributes by 26% to

the V.A. of FVG (2000 data). Trade, tourism, transport and communication services contributes by 23,9% to

the formation of the V.A. of FVG (2000 data). The Tourism sector has developed well in last decades. In

2008 tourist arrivals totaled 1.954.605 with 8.880.902 registered overnight stays. The quota of foreign

tourist’s overnights was 42% in 2008. Sea resort of Lignano and Grado account for almost 75% of all tourist

overnights while mountain resorts account for nearly 17% of the total. Public administration, health,

education and social services account for 19,9% of the regional V.A. (2000 data).

In line with the tertiaryzation trends, the contribution by the manufacturing sector to the

formation of the regional value contracted from 20,5% in 2000 to 18,2% in 2008. The contribution by single

sub-sectors to the manufacturing value added in 2006, clearly indicates the regional industrial

specialization: machinery & equipment included means of transport (30,5% of the total regional

manufacturing value added), metals and metal products (23,5%), wood and rubber products (22,8%), food

and beverage (6,9%). The first sector, machinery & equipment included means of transport, is mainly

composed by the production of home appliances, machines for industries and the important shipbuilding

industry. The home appliances and the shipbuilding sectors are dominated by two big players, the

Electrolux and Fincantieri, one of the world leaders in merchant and naval vessel construction. In 2008 the

industrial sector was hit by the international crisis and after a long time industrial production recorded a

negative growth (-4,5% compared with 2007). An open economy with an export based industrial sector is

very exposed to the dynamics of the foreign demand that during 2008 started to shrink. Data about new

employment in industry per sectors show which sectors has been hit harder by the crisis. In fact while in

the biennium 2006-2007 nearly all manufacturing sub-sectors registered a growth in yearly new

employment in 2008 most of the subsectors decreased new employment: wood and furniture -31,8%,

metals -33,8%, mechanics -7,5%, rubber and plastic -13,1%. In total, the manufacturing sector recruited

26.910 workers in 2008 with a decrease of -15,5% compared with 2007 levels.

One of the main characteristics of the FVG economy is a entrepreneurial system mainly based on

small and very small enterprises. In fact, the average number of employees per enterprise in the services

and industry sectors was 4,3 in 2006: in the services sector the average number of employees was 3,1 while

in the industrial sector the average number was 7,3. A considerable part of the small enterprises in the

services and industrial sector are craft enterprises. Statistical data for the year 2008 indicates that the

quota of craft enterprises were: 76,3% in industry (67,4% in the manufacturing, 83,4% in the construction

sector), 17,5% in the services sector and 2,9% in agriculture.

Thus, the SMEs represent the 99% of the 100.423 active enterprises at the end of 2008. As far as

the enterprise’s birth rate is concerned, in 2008 the FVG Region is among the five Italian regions that

registered a decrease in the total number of active enterprises (-0,7% compared to 2007). The 2008 data is

not an isolated data as this negative trend has been steady in the last ten years with a contraction of about

4,8% in the enterprise population (in 1997 there were 105.500 active enterprises). In the last decade the

changes were not just quantitative. In fact the enterprises population has undergone structural changes in

terms of single sector’s quotas, rendering the regional productive structure more similar to the overall

national. In particular, the main changes were registered by the agriculture forestry and fishing sector that

experienced a noticeable decrease of the number of active enterprises from 30.067 in 1997 to 19.139 in

2008. Thus, the quota of enterprises operating in this sector decreased from 28,5% in 1997 to 19,1% while

in the same period at national level the quota decreased from 23,5% to 17,2%. The other sectors remained

more or less stable in terms of quotas, with variations that compensated the contraction in the primary

sector. Statistical data reveal a slight growth trend in the construction and services sectors and a slight

contraction trend in trade and manufacturing sector. In 2008 the regional trade sector accounted for 23,5%

of the active enterprises and this quota has remained stable in the last ten years and few point below the

national average. In 2008 more than 15.000 enterprises were active in the construction sector

representing a quota of 15,4% of the entire regional enterprise population (13,5% at national level), while

the manufacturing sector weights 12,3% in terms of enterprises population and has been stable over the

last decade and slightly above the national average.

All the above mentioned data clearly indicates some important peculiarities of the FVG’s economy:

the average dimension of enterprises in terms of employed are small or very small (both in industry and

the service sector), the average dimension of FVG enterprises is smaller than the Italian average, compared

to the Italian average the form and the capital structure of the companies is more traditional (family

business). These elements, that for a long time has been regarded as a strength of the Italian widespread

enterpreneurship model, in the last decade has turned into a weakness. In fact, in a time of growing

international competition, small and very small companies usually are suffering from: undercapitalization,

difficult generational turnover, lack of managerial skills, high dependence on single buyers etc.. Companies

coping with such problems usually find it more difficult to internationalize, to finance investments, to

analyze their competitive position on the markets etc.. In short, the operational flexibility that is one of the

advantages given by the dimensional factor is not supported by an adequate strategic flexibility that means

the capacity to modify some strategic aspects of the companies as products, markets, organizational

processes and structures, ownership, management.

Despite the above mentioned problems that are being talked with some success, the FVG economy

is dynamic and is part of the so called Italian North-East (Trentino Alto Adige, Veneto and Friuli Venezia

Giulia regions) that is one of the driving areas of the national economy. The productive base is mainly

export oriented and the foreign trade data in table 1 are self evident: the export (13,1 billion € in 2008)

nearly doubles the imports(7,5 billion € in 2008) with a trade surplus that in 2008 reached 5,7 billion €.

Thus, nothwistanding existing dimensional problems, the regional productive system has so far been able

to consolidate a remarkable presence on international markets. The foreign trade results are due to the

presence of some succesfull big enterprises as well as to a vast number of SMEs concentrated in specific

areas with particular productive specializations. This system of widespread entrepreneurship in specific

areas brought to the development of productive districts. Nowadays FVG has ten different productive

districts: coffe, chair production, piasentina stone, digital tech, food, thermo-mechanics, cutlery,

mechanics, furniture, shipbuilding.

The innovation potential and capacity of the regional productive system is good if compared to

other Italian regions but insufficient if compared to some other EU regions. Table 2 data taken from the

2006 European Regional Innovation Scoreboard (2006 RIS), the last regional innovation scoreboard,

indicates the position of FVG among EU 25 NUTS 2 regions and among Italian regions in terms of innovation

capacity. The RRSII - Revealed Regional Summary Innovation Index is calculated on the basis of seven

indicators and is calculated as the weighted average of the re-scaled values of the other two indexes (RNSII

and REUSII)2. The RRSII index locates local leaders in terms of innovation capacity and performance by

taking into account the region’s relative performance within the EU and the region’s relative performance

within the country.

Indicators Italy Friuli Venezia Giulia

Knowledge workers and graduates in Science & Engineering (S&E) 56 55

Life long learning participants 64 79

Public spending in R&D 82 90

Private spending in R&D 45 47

Employment in medium and high-Tech Manufacturing 109 127

Employment in high tech services 95 80

Patents applications at the European Patent Office (EPO) 57 87

RNSII (Regional National Summary Innovation index)

0,49

0,50

REUSII (Regional European Summary Innovation index) 0,42 0,42

RRSII (Revealed Regional Summary Innovation index) 0,44

Source: European Regional Innovation Scorebord (2006 RIS) – November 2006

The European Regional Innovation Scorebord (2006 RIS) reveals that in terms of RRSII, Friuli Venezia

Giulia ranked 95th among 208 EU 25 NUTS 2 regions with a 0,44 score. The EU RRSII mean was 0,54. Three

Italian regions ranked better (Lazio 44th wits a 0,57 score; Lombardia 71st with a 0,49 score; Emilia Romagna

81st with a 0,47 score) and one (Liguria 94th and a 0,44 score) shared the same result.

As for the Innovation capacity and potential is concerned, different analysis convene that at

national level the FVG is one of the leading regions in terms of base research, in terms of human resources3

and R&D public spending. Nevertheless, as Italy is ranked low on EU level in terms of innovation capacity,

the national average cannot be considered a valid indicator in broader international terms. Anyway, two

2 RNSII (Regional National Summary Innovation index) s defined as the relative average of the regional innovation indicators

compared to the average overall country's indicators while REUSII (Regional European Summary Innovation index) is defined as the relative average of the regional innovation indicators compared to the average of the European Union.

3 Particularly researchers in research centers, on the other side the scolarization level (secondary and tertiary) of the active

population, although higher than the national average, is lower than in bordering countries. A positive trend regards the increasing

incidence of graduates in science and engeneering that in the last years grew to some extent above the EU average levels.

universities, some important international research centers (ex. SISSA – International School for Advanced

Studies; ICTP - International Centre for Theoretical Physics; Synchrotron Light Laboratory ELETTRA;

Unido/ICS - International Centre for Science and High Technology) and technologic parks of national and

international importance (ex. Area Science Park of Trieste and Scientific Park “Danieli” in Udine), form a

relevant regional research potential. On the other side there are some critical elements that penalize the

region’s innovative potential as in particular a low level of private spending in R&S, scarce patents

applications and a deficit in the regional technology balance of payments4. These critical factors indicates

that the technology transfer process is still too weak. Most of the hi-tech SMEs are concentrated next to,

or better are working within existing technological parks and thus have very strong links with public

research institutions. In this respect the role of tech-parks is of primary importance but their spin-off and

spillover effects are still spatially too concentrated/limited. There are few big enterprises with strong R&S.

The reasons for this weak transfer can be found both in the research centers whose activities are

sometimes too distant from real SMEs needs but also in some structural deficiencies of the enterprises

sector itself . In particular, enterprise’s demand for innovation and research is low, mainly due to the fact

that the regional productive base is still dominated by traditional sectors that for some decades managed

to foster their competitiveness just through an increasing territorial specialization, a sort of innovation

without research model. Nowadays this model is not suitable to cope with global competition.

Furthermore, the dimensional factor play again a role as most of the small and very small enterprises do

not have the internal competencies to take advantage of existing know-how and technologies. Currently

the AREA Science Park is involved in creating a network of centres throughout the region which operate as

“driving belts” between the demand for innovation originating from businesses and the supply provided by

the technological and scientific system. The first of these centres was established at San Giovanni del

Natisone, in the “chair producing” industrial district. Furthermore, with the backing of and with the aim of

fostering and supporting the process of management and technological innovation, the regional

administration backed the establishment (1989) of Agemont, an agency for the economic development of

mountain regions. The mountain area still suffers from marginality and its negative demographic trends

human resources has been.

4 In 2005 the technology balance of payments of the region FVG was -35 millions Euro and in the last decade was mainly negative. A

negative balance indicates that the territory is a net buyer of technology: ex. patents, inventions, rights, trade marks etc..

http://www.elettra.trieste.it/

http://www.ics.trieste.it/

http://www.agemont.it/age_en/agemont.htm

Labor

In terms of human resources, FVG region has a mixed score. In fact, on the one side the regional

economy can rely upon a significant number of highly qualified resources, but this asset cannot be fully

exploited as the high tech enterprise sector in FVG is developed less than it is on average at national level.

The economic growth registered in the last five years has favored positive trends in the labor

sector. Unemployment reached record “physiological” low levels (3,4% in 2007) in the last period while

activity rates grew (68,5% in 2007) thanks to an increase in female occupation. These trends has

deteriorated in 2008 as the international financial and economic crisis hit the regional economy. As far as

the sectoral occupation is concerned, in the last five years data show a slight yet steady decline of the

occupation in industry and agriculture while positive trends in the services sector seem to compensate the

trends in the primary and secondary sectors. The ongoing crisis seem to further strengthen these trends.

In 2007 foreigners constituted the 12,8% of the total stock of employed in the region: 46% in the

services sector (mainly domestic services and restaurants), 29% in industry (in particular metals, mechanics

and wood), 14,3% in construction and 10,4% in agriculture and fishing. Immigrant workers have been

crucial for the development of the regional economy as the demand for immigrant workers grew steadily in

the last decade but in 2008 the immigrant component, in particular the non EU component that is the

biggest immigrant component, was the most hit by the crisis.

Foreign trade

As mentioned above, the regional productive system has so far been able to consolidate a

remarkable presence on international markets. FVG region is a net exporter, with exports that nearly

doubled imports in recent years. In fact exports represent 172% of imports in 2008. Table 1. data show

that both import and export flows grew rapidly in the considered period. In 2008 exports growed by to

5,9% in nominal terms, slowing down from the 12,1% growth rate reached in 2007. Notwithstanding the

slowdown caused by a general contraction of the foreign demand caused by the international crisis, the

FVG export performance in 2008 has been superior to that of nearby Italian regions (-0,5% north-east) and

Italy as a whole (0,3%). Imports registered a slowdown too, growing by 11,9% in 2008 after a 18,6% in

2007. Trade balance was stable at 5,7 billion euro in 2008.

As far as the product categories in foreign trade flows is concerned, FVG exports mainly furniture,

base metals as iron and steel, special and general machinery and other transport equipment (ships). The

category other transport equipment is subject to big yearly oscillations as production cycles of big ships are

long. On the import side, FVG imports raw materials as metalliferous ores, iron and steel, road vehicles, non

ferrous metals and general machinery.

In 2008 exports of iron and steel industry grew considerably, while furniture returned to a

downward trend confirming some structural problems. The machinery and electric equipment and optical

products sectors stagnated while export of food and beverage contracted markedly. The EU markets are

the main destination of FVG exports, accounting for 56% of total exports of the region in 2008. Exports to

EU markets decreased by 3,5% compared to 2007, in line with the overall national trend (-3,7% the

contraction of Italian exports towards EU). Exports to Euro area countries -2,4% decreased less than exports

to non Euro EU countries (-6,8%). In terms of single trade partners, Germany is by far the most important

both in export and import, followed by France, Austria, Russia, Slovenia and the United Kingdom and China.

Among FVG main trade partners, France and China register the most uneven results as the first is a strong

export and weak import partner, while China is strong just as import partner. Trade flows with United

Kingdom are subject to fluctuations as times of ship deliveries varies significantly. The other main trade

partners have more equilibrated flows. Nevertheless, FVG have a trade surplus with all the main trade

partners, China excluded.

With the beginning of the EU enlargement process and the enlargement itself, the relevance of new

member states increased in terms of FVG foreign trade flows. In the 2000-2008 period FVG exports and

imports with new EU member countries from eastern Europe more than doubled. In terms of market

quotas, the quota on total FVG exports of exports to the ten new EU members from eastern Europe grew

from 7,9% to 12,8% between 2000 and 2008 while imports quota grew from 13,1% to 16,7%. In the same

period, the quota on total FVG exports of exports to western Balkan countries grew from 3,4% to 5,0%

while the imports quota diminished from 3,6% to 3,2%. Exports to the above mentioned east European

markets are concentrated in the FVG traditional productive sectors: furniture and semi finished parts of

furniture, general and special machinery, electric equipment, iron and steel and metal parts. On the import

side, FVG imports from new EU member states mineral ores, wood and furniture parts, iron and steel and

special and general machinery while from and western Balkan countries mineral ores, wood and furniture

parts.

The International crisis is having a considerable impact on FVG foreign trade flows. In the first half

of 2009 total exports decreased by 23,3% compared to the same period of the previous year (from 6,8 to

5,3 billion Euro), while imports decreased by 32,9% (from 3,7 to 2,5 billion Euro). In terms of geographic

distribution of trade, contractions were homogeneous between the different areas: exports towards EU 27

contracted by 23,3% in the first six months compared with the same period of the previous year while

imports from EU 27 decreased by 35,1%; export toward New member states decreased by 26,7%, while

imports contracted by 35,1%, exports toward western Balkan countries contracted by 23,4% while imports

contracted by 36,8%. None of the traditional export or import markets collapsed more than others. As far

as the product composition of trade flows is concerned, none of the sectors has collapsed and the product

composition resembles largely the pre crisis composition. If we consider quarterly trade data, in the second

quarter there was a remarkable upturn in terms of flows compared with the first quarter.

1.2 Sectoral focus

Mechanics

Table 2: to fill in for each of the ¾ leading sectors

2006 2007 2008

N° active enterprises n.a. n.a. n.a.

SME quota (% on total) n.a. n.a. n.a.

Total turnover (mln Eur) n.a. n.a. n.a.

Output volume (y/y) n.a. n.a. n.a.

Employment (n°) n.a. n.a. n.a.

Av. gross wage (Eur) n.a. n.a. n.a.

Unit labour cost (Eur) n.a. n.a. n.a.

Productivity (y/y) n.a. n.a. n.a.

Value added per employee (Eur) n.a. n.a. n.a.

Import (mln Eur) 827 1.220 1.237

Main import partners:

1. Germany 204

Germany 310

Germany 286

2. France 71

Hungary 88

China 113

3. China 53

China 84

France 90

Export (mln Eur) 3.867 4.674 4.725


1. Germany 346

France 462

Germany 422

2. Spain 269

Germany 444

Russia 303

3. France 265

Russia 262

France 300

Trade balance (mln Eur) 3.040 3.454 3.488

FDI in the sector (cumulate mln Eur) n.a. n.a. n.a.

Mechanics is one of the more representative sectors of Friuli Venezia Giulia’s manufacturing. As it

appears from foreign trade data, the sector’s export accounts for 36% of total FVG export. Geographically

the sector is concentrated in Udine and Pordenone Provinces, although in Trieste Province there are few

big players (ex. Wartsila production plant– world leader in marine motors). The sector is no exception to

the general characteristic of a productive base mostly made up of SMEs, though a difference that emerges

is the presence of several important big players (ex. Zanussi-Electrolux, Luvata, Rhoss), most of them

foreign owned. A significant quota of operating SMEs grew as spin-offs of these big enterprises and are

working in close cooperation with them as outsourcers. The most representative subsectors are: metal

working (light carpentry), special machinery, general machinery (household electrical appliances, cooling

and heating systems, generators, automotive, metal products or parts, industrial general and special

machinery). The growing cooperation between the different subsectors rendered possible not only to

optimise competencies and quality vertically along single subsector’s productive chains, but also

horizontally within specific phases of production of different subsectors. The territorial concentration in the

Pordenone Province and in the nearby area of Udine Province leaded to the development of two districts

(mechanics in Pordenone and Thermoelettromechanics in the so called Medio Friuli - western part of the

Udine Province) that in 2009 merged to constitute a single organized district (COMET-distretto della

componentistica e termoelettromeccanica).

Although the sector generally reached very high quality standards, the growing global competition

together with a deteriorating international economic climate put in evidence several weakness factors.

Weaknesses are largely related to the average small dimension of the enterprises. In fact, small

enterprises are highly dependent on the big players operating within the territory both in terms of turnover

and in terms of technological capacity. Working on order as outsourcers for big enterprises generally

renders small enterprises poor innovators as technology is being supplied by big players that usually are

also the main buyers if not the sole buyers. Therefore small firms do not need to develop an in house

innovation capacity nor they have the resources to do so. Although their production is based on a high tech

platform, usually such firms find it very difficult to escape this job on order-trap and to develop an

autonomous growth path both in technology and market terms. Small firms typically have low export

levels as they do not need nor they have the resources generally to be operative on foreign markets.

Strong exports figures shown by statistical data are realized mostly by big enterprises and less by the

medium sized enterprises.

In the last decade, the increasing global competition, the stiffening of market conditions and at last

the recent International financial and economic crises had a negative impact on the big enterprises. Small

companies that are mainly highly dependent on “big’s health” resulted severely affected, in particular

during the last year.

As interviews showed, small entrepreneurs wish to become more independent both in terms of

market/buyers and in product/technology development, but as they refer, their efforts to reach both goals

has been generally unsuccessful because they are short of resources (that must be employed in

production), and because they have an insufficient knowledge of foreign markets. As they point out, their

main advantages and strengths lie in the high flexibility given by small dimensions and in the hi-tech

production technology. As far as foreign trade is concerned, SMEs generally indicates that the formation of

consortia should be the instrument to bridge the dimensional gap. However, as executives of sectoral

districts pointed out, competition among the vast population of SMEs operating in the same sector on the

same territory is so high that turning cooperation ideas into reality is usually a very hard task.

As far as “institutional” support is concerned, small firms point out that eligibility criteria of

available instruments sometimes turn to be too high for small firms, especially in terms of capital and

financial adequacy5.

The ongoing financial and economic crisis has generally brought SMEs to adopt a mere “fight for

survival” agenda, while at the same time is contributing to form a new strong awareness of the need for

strategic changes in their business model. A part from a desperate call to the banks to restore the normal

credit activity, which is generally considered the main problem in the short run, SMEs point out two specific

needs: a support for the development of their innovation capacity; a direct support in accessing foreign

markets. As observed, usually SMEs are as good in producing as they are weak in terms of commercial

capacity. Some of them pointed out that they have problems in communicating their quality

At the moment the District organization can answer only partially to these needs. In fact it develops

innovation projects not customized on single company’s needs but projects whose results must be directed

to the majority of the district members: for example, energy saving in the refrigeration machines sector or

the promotion of the lean production model (Toyota model) to increase efficiency. The District is working

within the Polo Tecnologico di Pordenone and is involving in its projects several existing laboratories. The

organization does not manage any credit line and the only funds it manages are those relative to single

project’s budgets usually financed by the regional administration. As far as the potentials and perspectives

of the sector is concerned, from the District point of view the ongoing crisis is accelerating the “natural

selection” process among the enterprises population. The hi-tech production platform and the skill

developed are the main assets on which SMEs should count. The skills matured in working with advanced

materials and precision techniques so far, could be an opportunity to promote a sectoral re-orientation6.

5 As an example, the general condition to obtain resources available through a regional law to promote the internationalization

process was the yearly doubling of the turnover.

6 The biomedical sector is regarded to be one of the main opportunities.

Wood-Furniture


2006 2007 2008


SME quota (% on total) n.a. n.a. n.a.







Value added per employee (Eur)

n.a. n.a. n.a.

Import (mln Eur) 444 468 381


1. Austria 94

Austria 92

Austria 75

2. Croatia 54

Croatia 53

Croatia 48

3. Slovenia 42

Slovenia 52

Slovenia 35

Export (mln Eur) 1.689 1.757 1.637


1. Germany 282

United Kingdom 309

United Kingdom 259

2. United Kingdom 267

Germany 257

Germany 219

3. France 219

France 224

France 211

Trade balance (mln Eur) 1.245 1.288 1.255

FDI in the sector (cumulate mln Eur)

n.a. n.a. n.a.

Furniture production is one of the traditional specializations/sectors of the national and regional

manufacturing. The sector is made of two subsectors, wood and furniture, which are quite different in

terms of trends and markets. Furniture in particular is one of the four pillars of the so called Made in Italy

together with textile/fashion, food and industrial machinery. Although the trade balance of the sector is

extremely positive, during the last years the sector faced a decreasing internal demand and most recently,

a sharp decrease in the international demand caused by the ongoing financial and economic crisis and a

prolonged weakness of some key markets (Russia in particular).

Unfortunately statistical data are just partially available. The sector is territorially concentrated in

the province of Udine and the province of Pordenone. A part from few big actors, most of the enterprise

population in this sector is composed by small and medium enterprises. There is poor evidence of FDI

presence.

Small enterprises usually have developed a very specialized production. This extreme

fragmentation of the production process is at the same time the strength and the weakness of the sector.

In fact, on the one side this extreme specialization rendered possible to reach a top end quality in terms of

processing and workmanship while keeping costs and prices at a competitive levels. On the other side this

parcellization/smallness bring about several weaknesses. First of all small dimensions render difficult for

the enterprises to develop a sufficient R&D. Although the technological level is generally very high if

compared to other international competitors as well as compared to other national furniture districts, the

competitive margins are subject to a gradual erosion if not continuously nurtured. Usually there are few

bigger players that can afford a better R&D while smaller or micro players tend to copy the bigger ones. An

effective cooperation with research centres is thus wished. Secondly, the Italian and the European system

of protection of the intellectual property is deemed disastrous. Small enterprises cannot afford financially

and timely very expensive trials to legally pursue third parties. SMEs thus seem not to have any protection

in this field. Thirdly, small and micro enterprises find it very difficult to internationalise especially in terms

of new market search. The Italian network of institutions that should be assisting the SME in foreign

markets is largely ineffective compared to other Eu countries (ex Germany). Fourth, although the financial

network and the instruments rendered available at home are considered sufficient, export finance and

insurance is not effective. Thus SME cannot afford to participate to large international contract

procurements (alone or as a group) because they simply cannot afford to take all the risks.

To overcome the “dimensional problem”, in the last decades some enterprises have aggregated in

groups in order to benefit from a better coordination of the production cycles and as well as to develop a

common access strategy to foreign markets. Notwithstanding the efforts of the BSOs to promote

aggregations, this path was chosen by a minority of enterprises as competition within the sector is still

strong.

In terms of governance, the family businesses have poor diagnostic capacity to understand their

competitive positioning on the markets or to optimise the administration of the business. Furthermore,

small SMEs that usually base their quality and cost competitiveness on a simple “work very hard” model,

have no idea of marketing techniques and often do not exploit support instruments offered by institutions

simply because they have no time as production takes it all. Is the middle sized enterprise, with a

developed organizational structure and more resources that can employ resources to exploit institutional

support programmes.

This weakness elements together with difficult international market conditions that characterized

the last decade brought a long-lasting negative trend in export. Along with the strong negative impact of

the international crisis and its direct effects on the international demand, in 2009 the regional furniture

sector is facing serious problems on the important Russian market, that in 2008 was the fourth most

important export market totalling 180 million euro. In April 2009 the Russian administration has

augmented by 50% the import duties on imported furniture and wood products.

Sector experts believe that the sector has good chances to maintain their roots on the regional

territory and continue to develop, as the quality level reached cannot be easily reached by other

international competitors, in particular Asian competitors. However, to maintain this competitive

advantage a permanent innovation and research process must support production. A recent survey on the

wood and furniture Metadistrict in the Triveneto region (Veneto Region, Trentino Region and Friuli Venezia

Giulia Region)7 carried out by Fondazione Nord Est, points out how the ongoing crisis is having a direct

impact on all considered parameters (production, turnover, orders, sales on foreign markets, occupation,

capacity utilization, stocks, raw material prices) which all register negative trends. At the moment

enterprises tend to respond to the great uncertainty by reducing its capacity utilization and just to a lesser

extent by reducing occupation. The survey reveals a high degree of consciousness among entrepreneurs,

that the crisis is having long-lasting structural effects both on the enterprises and on the consumers. In this

respect the entrepreneurs stress that the enterprises that will “survive” will have to start a new

development path based on an internal reorganization and on a new approach to the markets necessary to

meet the expected changes on the demand side as for example a reduction in consumer spending and a

growing demand for environmental friendly products (energy saving and biocompatible products). As far as

the perceived weaknesses is concerned, the survey confirms that the main critical factors stems from the

dimensional problem as our analysis pointed out. This factor limits the capability of operating on foreign

market activity and thus new relationships between enterprises are seen as a necessity. Gaps are perceived

also in terms of brand image. Traditional competitive factors as quality-functionality, price, delivery must

be upgraded with new factors as product innovation, quality-safety, design, brand-image new tech and

7 The Wood and furniture production of the three Triveneto regions represent one half of the entire national furniture

production.

biocompatibility. Grouping and cooperation, especially for small enterprises, seem crucial in order to access

foreign markets and to access the growing “contract” market.

Shipbuilding


2006 2007 2008


SME quota (% on total)

n.a. n.a. n.a.


n.a. n.a. n.a.







n.a. n.a. n.a.



1. Germany 13

Slovenia 14

Germany 42

2. Slovenia 19

Germany 11

Slovenia 8

3. Croatia 5

Croatia 7

Croatia 5

Export (mln Eur) 442 448 985


1. Bermuda 364

Bermuda 365

Bermuda 813

2. Sweden 40

Bahamas 68

Cyprus 113

3. Kazakhstan 13

Croatia 9

Croatia 49


383 397 684


n.a. n.a. n.a.

Shipbuilding and yachtbuilding represent two important elements of what in Italy is called “sea

economy” which comprises also maritime transport, ports and logistics, fishing and institutional activities

(navy, coast guard etc.). Both sectors have a strong tradition and are important multipliers as they have

strong links with other sectors: furniture, mechanics, electronics, tourism, etc.).

In Friuli Venezia Giulia shipbuilding has a strong, more than a century long tradition that grew

parallel with the development of port and maritime transport activities traditionally concentrated in

Trieste. Nowadays, after the collapse of public shipbuilding in the second part of the 20th century, there is

one single big player in the Region FVG, Fincantieri, a world leader in the shipbuilding industry. Its docks in

FVG based in Monfalcone are mostly dedicated to the cruise ship sector in which Fincantieri is a global

player and leader. Since 1990 the Monfalcone shipyard has delivered 25 cruise ships for a total value of 10

billion USD. As figures suggest, the company’s position in social and economic terms is relevant: 1.800

employees just in the Monfalcone shipyard, 550 suppliers, mostly SMEs with some 200 million Eur of orders

per year.

The yacht building industry in FVG is composite as it comprises building yards as well as design and

engineering firms, refitting companies and support services companies. Many craft enterprises whose

activity by definition statistically does not fit into the sector, turn to work just for the sector.

Notwithstanding the difficulty to conduct a census of such a composite sector, some estimates indicates at

400 the number of companies involved with a total of 2.300 employees and a yearly income of almost 300

million Eur. The sector registered considerable growth rates in last decades and recently attracted

investments from abroad thanks to some stimulating measures implemented by the regional government.

Although we defined it as yacht building industry, the sector in FVG region can count on just approximately

30 yacht/boat-builders, while most of the other companies that are not directly involved in the

construction process, mostly deliver services.

As far as infrastructure is concerned, along its 130 km coastline, FVG region feature a total of

15.000 berths, of which 8.000 equipped in 23 marinas. These data place FVG just behind the two Italian

regions, Sardinia and Liguria, with the highest yachting vocation in terms of production and tourism.

Considering foreign trade flows, the shipbuilding/yacht building sector is of primary importance for

the regional economy as, mainly thanks to the presence of Fincantieri, it represent between 5% to 10% of

regional exports whereas at national level this quota is 1% . Yearly fluctuations in export dynamics are

considerable as delivery time for large ships is usually long and variable.

As mentioned before, Italy is a market leader in both the considered sectors but competitive

pressures are increasing. The strong growth scored in the last decade rendered the sectors attractive for

newcomers (especially in yacht-building) while existing producers tended to expand and develop their

productions. The current crisis pushes operators to move from more traditional segments to more

sophisticated ones, trying to foster their competitive advantages through research and innovation. In the

last period the regional administration together with key actors of research, maritime and shipbuilding

sectors promoted several projects in order to foster investments in Research, Technology and Development

and develop industrial innovation in the “sea economy”. The final goal is to develop tools for the

development of the so called regional maritime cluster.

The projects implemented so far are:

STARNETregio project (2008-2010) has been conceived to increase the overall capacity of regional

players in the regions Friuli Venezia Giulia (Italy), Slovenia and the County of Rijeka (Croatia) to invest in

RTD and carry out research activities concerning the marine industry (more specifically in shipbuilding and

port equipment), intended to strengthen the marine-sector scientific and technological basis, innovation

and business basis, sharing suitable innovation practices and policies aimed to manage and raise a network

of Marine Research driven Cluster. This endeavour will be achieved by encouraging and supporting, within

involved regions, the performance of "regional research-driven clusters", associating universities and

research centers (RTD), enterprises (industry cluster) and public regional authorities (PA), and enhance

coordination and cooperation among these regions.

RINAVE, the “Consorzio per l’alta ricerca navale” (herein after referred as RINAVE), is a non-profit

consortium, established in May 2006 as the first step towards the creation of DITENAVE, the Technological

Marine Cluster of the region Friuli Venezia Giulia. The main objectives of the Consortium are to stimulate

and to organize cooperation among the shipbuilding industry, research centers and universities, exploiting

existing knowledge, competencies and technical equipment and to promote, carry out and manage

common research projects in the fields of architecture and engineering relevant for the marine cluster.

DITENAVE is the Technological naval and nautical district, set up by the FVG administration in 2009

together with Universities, SMEs, large industries (Fincantieri), Science Parks, Financial Institutions and

some SMEs present on the territory, with the general aim to develop a network of managed relations in

order to support technical and economic competitiveness of companies operating in the naval and yacht

building (nautic) sectors with particular reference to innovation, research and education.

Even though the DITENAVE project’s general plan has been appreciated in principle by a great

majority of sectoral actors that identify it as the potential starting step of an organized production chain,

several has expressed some skepticism about the project’s capability of generating positive effects on the

SMEs population. In fact, they fear that the project could turn to be too focused on the needs of large

actors, in particular Fincantieri, and that the majority of small firms operating in the sector would scarcely

benefit from the project. However, since the DITENAVE district has been “launched” recently and is

entering nowadays the operational phase, it seem too early to have any evidence of its effects or internal

dynamics. Some operators pointed out that the FVG nautic sector is so fragmented in terms of

production/services and in terms of average dimensions of companies, that it would need some form of

coordination also on local level, ex. local districts. This local district should have the double role of fostering

cooperation and coordination among sectoral actors at local level and being the counterpart of the

Regional District. A limited number of local coordination bodies (districts) in areas with high specific

vocations should thus act also as a sort of transmission belt of regional projects. In fact it seems quite

difficult that very small firms could find resources to participate in complex innovation and research

projects. There is evidence that small entrepreneurs generally tend to satisfy their innovation and research

needs by turning to their relations networks, searching for solutions among other SMEs rather than turning

to existing research centers. Developing research projects within research centers with the support of

public funds could be very costly in terms of time in particular for SMEs, jeopardizing the time to market of

innovation processes. Furthermore, interviews revealed a general skepticism towards the capability of

public entities and their different support actions to effectively support the sector, in particular small and

very small firms.

A general weakness of the SMEs that apply also to the nautic sector is the poor marketing capacity.

Marketing support together with better credit access and conditions are the two main hopes expressed by

entrepreneurs and not seem to be just related to the ongoing crisis.

To foster new SMEs creation and to bridge the problem of a too conservative banking sector,

entrepreneurs wish the development of an institutional merchant banking. As far as incubators is

concerned, there seem to be some awareness of the possible positive effects for the sector, especially if

incubators would guarantee not just logistics and infrastructure but also support services and if these

entities would be managed by the same companies involved. However, although in principle the incubation

of new companies is perceived positively, there are fears about new competitive pressures this could bring.

LATISANA municipality

Half of the 8.000 equipped berths available along the regional coastline are concentrated in the

small territory of the municipalities of Latisana and the nearby municipality of Lignano. The 7 operating

tourist ports have the peculiarity that are inland ports, as they are located in the lagoon and thus are

considered very safe. The marina’s infrastructures were developed just behind a stretch of the regional sea

coastline with a strong touristic vocation and tradition. The territory of the Municipality can be well

considered one of the landmarks in leisure boating not just at regional but also at national and European

level. In fact, in the last twenty-thirty years this small territory has been chosen by many renewed national

and international boatyards as their commercial and assistance centre for the Adriatic sea basin. Today,

many central and north European boat owners choose the commercial and service facilities offered in this

territory as their stepping stone for their leisure activities in the Adriatic. In the Municipality of Latisana

operate approximately 30 brokers.

Parallel with the growth of the commercial side, a strong nautical services sector grew vigorously in

order to meet the growing demand. This sector is multifaced, made up of small or micro craft enterprises,

mostly family businesses. The set of offered services is complete: refit and repair boatyards, carpentry and

mechanic services, electric and electronic services, sail and rigs services, upholstery, etc.. Local source data

indicates that just in the territory of Latisana more than 500 people work in the sector. In the last years the

national and international leisure boating sector grew rapidly and produced important spillover effects on

the territory. Although the ongoing financial crisis hit the sales of new boats, the assistance and refitting

sector seem less exposed.

One of the peculiarity of the local “maritime sector” is the absence of boatyards producing new

boats. This is considered a weakness by local operators as the knowhow on the territory should be better

exploited through the development of boat production. In other words, the value added potential still

waits to be capitalized. Furthermore, a potential production would take full advantage of the existing

marketing skills and structures.

As far as the maintenance and refitting sector is concerned, the two representative organizations of

the craft businesses operating in the sector, CNA – Confederaziona Nazionale Artigianato and

Confartigianato, pointed out some characteristics and existing problems that the local sector is facing.

The nautical sector in the Latisana Municipality shares with other sectors of the regional economy

the dimensional problem of the companies as most of them are micro enterprises. Small family craft

businesses are very flexible in terms of response to demand but are too small to set an autonomous

development path for their services/production supply. Furthermore, training and updating of the limited

human resources employed turn to be difficult and costly as bring to the halt of their activity. Technical

and technological skills and competencies are usually high but innovation capacity is low as small and micro

firms cannot afford investments in structures-infrastructures, as project departments, that would lead to

innovation. Nowadays, boats and yachts are getting very complex and technologically advanced products

so that the lack of project development capacity by small firms is increasingly perceived as a limiting factor.

Three seems to be the emerging needs to foster further development and to bridge existing limiting

factors:

Render the existing fragmented services supply system more organized and organic

Further stimulate the commercial activities of the territory fostering its landmark role in

the Adriatic

Development of boat/yacht construction

Particular relevance should be given to point n°1 as it seem pivotal also for the development of the

remaining points. To bridge the response on demand business model8 that its characterized by a poor

control over demand dynamics and by a high degree of fragmentation, an organized services supply chain

should be developed. This organized chain should progressively become the trademark of the specific

specialization of the territory acting as a demand attraction factor. An organization that would favor SMEs

networking and aggregation should provide structures, infrastructure and services (ex. project

development capabilities, technical offices, training, etc.) that could serve small and micro enterprises that

otherwise could not develop such capacities in house.

A district should be the form of territorial organization for the nautical sector in the Latisana

territory. Although recently a Technological Naval and Nautical District - DITENAVE has been set up at

regional level and sector operators in the Latisana territory hope to benefit from the new organization in

terms of technological transfer promotion, there is a high level of consciousness that the high

fragmentation of the sector in micro units need not just regional forms of coordination but also local forms,

especially in territories with a high sectoral specialization. Furthermore, a local district should take fairly

8 As we have seen in previous sectoral analysis, the response to demand offer model of business is one of the most

common weakness factor in many economic sectors with high SME incidence and bring to similar problems either in

manufacturing either in the services sector.

better advantage of regional instruments and programs rather than single micro and small enterprises

would do.

The pilot action of the project should thus focus on these needs and provide a first organizational

support in the setting up phase.

Point 2 and 3 seem to take full advantage of the better organization of the service sector that could

be given by a district or some other form of organization/coordination at local level and thus further

confirm the positive potential impact on the territory of a new organizational form fostering the

development of the nautical sector.



Friuli Venezia Giulia Region is one of 21 Italian NUTS 2 regions. Its territory is divided in 4 NUTS 3

provinces (Gorizia, Udine, Trieste and Pordenone) and 219 municipalities (comuni). Friuli Venezia Giulia is

one of the four Italian regions (the others are Sicily, Trentino Alto Adige and Valle d’Aosta) that for different

economic, political and cultural reasons have a special status of autonomy. In particular, Friuli Venezia

Giulia has been given this special autonomy for historical-political- economic reasons mainly due to the fact

that after World War II FVG was bordering to the “iron curtain”, and for cultural reasons relative to the

ethnic pluralism on its territory.

The Special Statute of Autonomy confers legislative powers in important areas for the government

of the Region. While abiding by the Italian constitution and national law as a whole, Friuli Venezia Giulia can

promulgate its own laws in sectors such as the environment, health, industry, scientific research, culture

and housing. The Regional Council is the supreme representative body, being elected by universal suffrage

every five years. The Council is responsible for the formulation of laws and providing political orientation

for and checks on the work of the regional Executive. The president of the executive is directly elected by

universal suffrage every five years.

As formulated in article 4 and 5 of the Statute of the Autonomous Region Friuli Venezia Giulia, the

Region, ex art 4: “ in harmony with the national Constitution, with the general principles of the juridical

system of the Republic, with fundamental standards of socio-economic reform and the international

obligations of the State, as well as respecting the interests of the nation and its other Regions, shall have

legislative authority in the following areas: 1) the regulation of Regional offices and agencies and of the

financial and legal status of their personnel; 1-bis) the regulation of local agencies and their respective

districts; 2) agriculture and forests, land reclamation, regulation of minimum cultivation units and land

division, irrigation, farm and land improvement, zootechnics, the fishing industry, the mountain-area

economy, the forestry corps; 3) hunting and fishing; 4) pasturage and wood-cutting on public land; 5)

establishment and maintenance of land records; 6) trade and industry; 7) craft industry; 8) markets and

trade fairs; 9) roads, aqueducts and public works under local and regional management; 10) the tourist

and hotel trade; 11) transport on cablecar and bus, tram and trolley-bus lines under regional management;

12) town planning; 13) mineral waters and hot springs; 14) cultural, recreational and sports institutions;

museums and libraries under local and regional management.”

Ex Art. 5 :”In observance of the general limits indicated in Article 4 and in harmony with the

fundamental principles established in the laws of the State in specific areas, the Region shall have legislative

powers in the following areas: 1) supervision of referendums as laid down in Articles 7 and 33; 2) the

levying of regional taxes, as laid down in Article 51; 3) authority to review, as laid down in Article 60; 4)

public institutions of charity and aid; 5) supervision of public services under regional management and

performance of those services; 6) establishment of savings banks, rural loan funds and local or regional

agencies for financing economic activity in the Region; 7) establishment of local or regional agencies to

study programmes of economic development; 8) mines, quarries and peat bogs; 9) acquisition of property

for public use, excluding works of national government responsibility; 10) coaster trade shipping lines

between regional ports; 11) local, city and rural police; 12) use of public waters, excluding large-scale

sources; hydraulic works of categories 4 and 5; 13) post-compulsory school vocational and trade training;

school aid; 14) health and hygiene, health and hospital care, treatment for the physically and mentally

disabled; 15) cooperatives, including their supervision; 16) public housing; 17) place-naming; 18) fire

services; 19) food supply; 20) natural disaster prevention and relief. “

The Region have the right to adapt the provisions of the laws of the Republic to its own specific

needs, issuing integrating measures in the following areas: 1) nursery schools, primary schools and middle

schools; 2) employment, social security and social work; 3) antiquities and the fine arts; conservation of the

countryside, flora and fauna; the other areas in which the laws of the State confer this right upon the

Region.

In 1997 a new national law, reformed the Italian administrative system introducing the so called

sussidiarity principle which establish that the administrative structure nearer to the citizen (Municipality)

must manage public life, while higher administrative levels (Provinces, Regions, State) are competent over

matters that cannot be carried out at local level. This reform, together with the implementation of a first

phase fiscal federalism, has in fact reduced the differences between special autonomous regions and

ordinary regions. In order to preserve/upgrade and adapt its special status to the new conditions brought

about by Eu enlargement and the new challenges of a changing international economic environment, The

regional administration has drawn a new Statute that has been sent to the national Parliament to be

discussed.

The regional Administration sets its development objectives through a strategic planning. The

strategic plans are set up with the participation of all the components of the regional administration. The

six year strategic plans set the objectives, while three year operative plans turn strategic long term

objectives into medium term operative objectives and set yearly expected results. Parallel to the Strategic

plan, the administration sets a Legislative plan functional to the accomplishment of the strategic objectives.

From 2007 onwards, a new financial planning scheme has been introduced: the so called new Economic

and financial regional program is made up of a regional policy program, a financial law and of a multiannual

budget and annual budgets.

The programming process of the regional administration is based upon the principle of “negotiated

programming” in order to coordinate the activities of the regional authority with other stakeholders at

European, national, regional and local level. The operative instruments of the negotiated programming are:

Institutional Program Understanding (the national administration and the regional administration

agree on a set of priorities of common interests to be pursued in a specific period);

the Framework Program Agreement (it’s the instrument to render operative the Institutional

Program Understanding; the framework program agreement involves the local stakeholders involved in the

different objective/plans);

The framework Agreements with the Provinces (agreements with each of the 4 provinces and the

regional Administration in order to coordinate actions within the regional development plan)

Framework agreements (the regional administration and other public or private entities agree and

coordinate actions of public interest).

Other instruments are the Territorial Pacts and the Area Agreements.


As for the supporting measures for SMEs, at national and regional level, there are specific

incentives and measures to support start ups and to foster industrial research, innovation, competitiveness

and internationalisation measures. In addition, special anti-crisis measures have been established to

encourage restructuring and innovation in the enterprises.

This chapter will divide and file the measures according to the area of competence (national-regional) and

the topic of intervention.

2.2.1 National level

2.2.1.1 Start ups and new entrepreneurship

With regard to incentives for start up and excluding measures addressed to innovative and high

technology start ups (see chapter related to innovation), there are 2 specific laws supporting female and

young entrepreneurship.

Female Entrepreneurship

The Law for female Entrepreneruship (L. 215/92), aims to promote equality and equal opportunities

between men and women in economic enterprises activities, in particular to promote the female

entrepreneurship, to train and qualify the professionalism of women entrepreneurs, to facilitate credit

access to businesses owned or mostly owned by women, in particular in innovative sectors.

The law 215/92 (art. 3) established the Fund for the development of female entrepreneurship, funded by

the Ministry of Industry, Trade and Crafts.

The assistance granted by Law 215 depends on various factors, like the type of investment and the region

which produces the program.

The financial support provides capital grants up to 50% of the cost of purchased equipment during the start

up, or up to 30% of costs of purchased services to increase productivity and organizational innovation.

The Fund is financed jointly by Ministry and singles regions.

Regions may enter into appropriate agreements with public and private entities that are reliable,

experienced and present in the territory of the region.

Generally speaking, the access to and the management of the fund is carried on by the territorial

competent Chamber of Commerce.

The Chamber of Commerce in addition to the duties of managing the fund, have also to promote it, through

a Committee for female entrepreneurs.

Beneficiaries are individual and cooperative enterprises with the following requirements:

1) small business

2) Management must be predominantly female, in the case of a partnerships or a cooperative the women

participation must not be less than 60% of the structure, while for the others companies at least 2/3 of

shares must be owned by women, and also the administrative body must be formed by at least 2/3 of

women.

The activities funded must address one of the following areas:

1) start up of new enterprises;

2) buying out or renting existing enterprises for at least 5 years;

3) innovative business projects, related to the technological and organizational innovation of products;

4) services intended to increase productivity, innovation, to seek new markets, development of quality

systems, techniques of production.

Investment amounts from 60.000 Euro till 400.000 Euro.

Young Entrepreneurship

Law 95/1995 promotes extraordinary measures for the promotion and development of young

entrepreneurship.

Beneficiaries are young people who form a new enterprise, with a legal form; the head, administrative and

operational offices of the company must be in the areas of law enforcement.

Companies must consists of persons aged between 18 and 29 years, and must be already established but

not have commenced operations at the time of the submission of the application.

The law for young entrepreneurship sets a limit of investment of € 2.582.284,50 and the facilitation is done

through free grants contributions or soft loans.

The law recognizes facilitations for young entrepreneurship up to 90% of total investments, a percentage

that changes according to the territory.

2.2.1.2 Innovation

In Italy, there are two main funds whose resources are addressed to encourage research and

innovation in SMEs: the fund for technological innovation (F.I.T) and the fund for research incentives (FAR).

Funds are managed at ministry level and they financed several types of initiative (projects, cofinancing

ERDF programmes...).

Beside the funds, a network to promote innovation and technology transfer (RIDITT) has been activated by

the Ministry of Economic Development.

Fund for Technological Innovation - FIT

FIT, created by the Law 46/82 and managed by the Italian Ministry of Productive Activities, aims to

fund pre-competitive development activities (activities aiming to develop practical applications of

technology by starting from the results obtained in a previous phase of research). The fund can also finance

initiatives including activities not primarily of industrial research.

Beneficiaries of the fund are:

enterprise carrying out an industrial activity for the production of goods or services, or an activity of

transport by land, water or air;

agro-industrial companies that mainly carry out industrial activities;

Handicraft enterprises;

Research Centers.

Other enterprises identified by the Ministry of Economic Development through notices consortia able to

present also project in conjunction with Research Centres, like universities and research institutes.

The facilitations may be granted in soft loan or direct contribution on the eligible costs and they are

granted after the publication of calls according to the identified priorities.

In 2009, FTI supports start-up projects in high and medium high technology sectors, such as product and /

or process innovations in biotechnology, ICT, innovative materials, robotic systems and green technologies

for energy production. Resources available for the call are 35 million of euro.

Fund for research incentives – FAR

FAR created by the art.5 of the DL 297/99 and redefined by the DL 593/2000, managed and fed by

the Italian Ministry of Education, University and Research (MURST), supports industrial research (the

planned research or critical investigation aimed at acquiring new knowledge, useful for the development or

the improvement of new products, processes or services) and non-dominant pre-competitive development

activities (these are eligible only if necessary for the results of industrial research).

The fund also finances projects within the National Operational Program (NOP), co-funded by the

European Regional Development Fund, the European Social Fund and the Fund for the implementation of

Community Policies.

Beneficiaries of FAR are:

enterprise that carry out an industrial activity for the production of goods or services, or an activity

of transport by land, water or air;

agro-industrial companies that mainly carry out industrial activities;

Handicraft enterprises;

Research Centers;

Other enterprises identified by the Ministry of Economic Development through notices

consortia able to present also project in conjunction with Research Centres, like universities and

research institutes.

Incentives may be granted in soft loan or direct contribution on the eligible costs of the projects

Procedures for allocating funds are different and depending on the type and goal of the eligible activities.

Activities financed following an evaluation procedure consist in projects autonomously presented with the

aim to realize research activities at national level; realize research activities within programs or

intergovernmental agreement for cooperation; realize training activities for researchers and research

technicians of the industry sectors and industrial research centres; realize research activities proposed by

start ups.

Activities financed by the negotiation processes are research and training projects presented for realizing

specific goals and specific programming initiatives.

Activities financed by automatic process are: recruitment of qualified personnel for research, for specific

external orders and contracts of research, for scholarships and for PhD; temporary secondment of public

research staff; bonus for research projects already funded by the European Framework Programs for

Research and Development.

Law 598/94 SME’s Innovation

The Law 598/1994 promotes Italian SME’s investments for technological innovation and

environmental protection, in particular for the purchase of new machinery and equipment. Incentive

consists of a reduction in the interest rate of bank financing and is made operational through the

establishment of regional calls. The maximum incentive amount can reach 70% of the investment plan.

Companies engaged in the following sectors are excluded: steel industry, fisheries, shipbuilding,

transportation, manufacture of sugar, tobacco industry.

Italian Network for the dissemination of innovation and technology transfer to enterprises (RIDITT)

The Ministry of Economic Development has promoted since 2003, the initiative “RIDITT”, managed

by the Institute for Industrial Promotion (IPI), in order to improve the competitiveness of the productive

system through the enhancement and integration of the innovation services supply.

The Italian Network for the dissemination of innovation and technology transfer to enterprises (RIDITT)

provides information and training services and develops pilot projects aimed at promoting innovation and

technology transfer in the production system, with particular attention to the needs of small and medium

enterprises.

The objectives of the network are:

Adjust methodologies and tools for technology transfer to national and international excellence;

Deepen knowledge of drivers and innovation barriers in small and medium companies of different

sectors;

Promote the specialization of national innovation systems around clusters divided in different

technological area;

Stimulate the dawn and growth of new companies able to exploit the results of the research;

Strengthening the infrastructure for the stakeholders of the National Innovation Systems for

sharing at national level, technologies, practices and policies developed in the territory.

For instance, among the active proposals managed and promoted by RIDITT there is EUROTRANS-BIO, 5th

call, running out on 15February 2010, for which 5 million of euro are allocated, in order to promote and co-

finance transnational projects of industrial innovation in all application fields of biotechnology.

2.2.2 Regional level

Interventions in the Autonomous Region of Friulia-Venezia Giulia (FVG) are based on three key

concepts: competitiveness, innovation and internationalization.

The purpose of interventions is to increase business competitiveness, in order to support the international

markets.

2.2.2.1 Competitiveness

In order to increase competitiveness, the Region FVG introduced new industrial policy instruments,

in order to support and encourage the economic development of SMEs, Industrial Districts and Industrial

Development Consortium in the regional territory, promoting the network system, an essential element of

the competitive advantage.

Support and competitive development of SMEs in the Region Friuli-Venezia Giulia (Regional Law 4 / 2005)

In order to tackle the main weakness factors of the regional SMEs [the dimensional problem both in terms

of capitalization and occupation/turnover, family (closed) governance models, low managerial skills, lack of

internationalization processes, scarce knowledge of the target markets], the regional Administration issued

the law 4/2005. Law 4/2005 has introduced in the Regional industrial policy a new long term structural

approach, that turned from a random financing model to an “intelligence acquiring” financing model,

based on strategic consultancy in order to gain competitiveness.

The competitive development projects that are eligible to the law 4/2005 financing must focus on:

Dimensional growth (mergers, cooperation agreements, aggregations);

Internationalization processes in terms of setting of foreign marketing networks, organized and

structured foreign relations;

Reorganization of governance models;

Creation of new enterprises (spin offs, start-ups), diversification processes of existing enterprises with a

special regard to the cooperation with Universities, research centers, Tech parks etc.;

Financial support for the creation of prototypes and test productions;

Aid in the phase of the generational turnover in the enterprises in order to guarantee the development

process continuance;

To fill temporary gaps in managerial skills;

Management of recapitalization processes or propriety reorganization processes also by opening to

new partners;

Internal reorganization processes needed in order to develop new entrepreneurial ideas focused on

renewable energy production or lowering the environmental impacts;

Enhance the social responsibility of the enterprise;

Support to female entrepreneurship.

Implementation of environment quality standards safety-environmental standards.

The instruments that have been set up by the law in order to realize the above mentioned projects are:

strategic consultancy services and enhancement of existing managerial skills,

pro-tempore managers to implement strategic development plans

specific research projects to be developed with universities and private or public research centers

technology transfer mechanisms set up with universities, private or public research centers, Science

and tech parks, Industrial development consortia.

Beneficiaries are: small and medium enterprises also associated, established or withat least an operating

unit, in the Autonomous Region Friuli-venezia Giulia.

Financial resources are distributed by the Regional Financial Agency Friulia s.p.a.. The law set up the “SMEs

competitive development Fund” and the amount that can be assigned to single enterprises varies between

a minimum of 50.000 Eur (20.000 in case of micro enterprises) and a maximum of 500.000 Eur. The

assignment of financial resources is based upon an assessment of the proposed project/action by Friulia

s.p.a..

Promotion of Consortia of Industrial Development (Regional Law 3/1999)

The Region FVG with the law 3/1999 regulates the activities of consortia of industrial development,

and provides them an annual contributions for a period maximum of fifteen years, in order to cover

expenditures and loan rates incurred to take out mortgages with banks with the aim to implement,

complete or develop industrial infrastructure or services in the Consortia area.

In the Region FVG there are nine public economic entities in various geographic areas.

Consortia of Industrial Development in FVG

Consortium for the industrial development of Monfalcone Municipality

Consortium for the industrial development of Aussa-Corno area

Consortium for industrialization of Pordenone's Province

Consortium for the industrial and social development of Spilimbergo area

Consortium for the industrial and hand-crafted development of Gorizia municipality

Consortium for the industrial development of Ponte Rosso

Consortium for the industrial development of Central Friuli

Consortium for the industrial development of Tolmezzo (CO.S.IN.T.)

Consortium for the industrial and economical development of high Friuli (C.I.P.A.F.)

The purpose of the consortia is to promote the conditions necessary for the creation and development of

productive activities in the industry sector, building and managing infrastructure for industrial activities and

promoting or managing business services.

To achieve these objectives, consortia can operate directly or collaborating with other public and / or

private entities.

Industrial Districts and Agencies for the Development of Industrial Districts (ASDI) (regional law 27/1999)

Industrial Districts have been established with the regional law 27/1999, this are areas for the

economic and occupational development and for the promotion and coordination of local initiatives of

industrial policy.

The Industrial Districts recognized in the Region are:

District of Knife

District of Chair

District of Furniture

District of Agro-Food

District of Components and Termoelettromechanic

District of Coffee

District of Digital Technology -Ditedi-

The Agencies for the Development of Industrial Districts, are created in order to support the competitive

development of the enterprises of the different districts.

The ASDI are consortiums of companies with public and private capital, able to providing services to the

companies of the territory.

ASDIs are compose by enterprises located in the district, municipalities, counties, chambers of commerce,

consortia for industrial development, business associations, trade unions, professional associations, the

objective is to ensure a real representation of the actors of the district.

2.2.2.2 Innovation

With reference to innovation, the strategy adopted by the Region of Friuli-Venezia Giulia is to develop

synergies between the research system and the enterprises, in order to improve competitiveness through

technology transfer.

Support to the production and exploitation of knowledge (regional law 26/2005)

The regional law 26/2005 aims to promote training, and employment of human resources of

welfare and public administration sectors.

The actions foreseen by the law are:

a) financing specific training projects in innovation, scientific and applied research, technology transfer

or pre-competitive development activity;

b) supporting the regional university system;

c) granting subsidies to enterprises for contracts with high qualified persons or with persons who

already precariously work in research activities at universities or at public research institutions.

d) supporting programs that aims to encourage the mobility or the temporary posting of staff of

universities and research institutions in enterprises and/or public administrations involved in technology

transfer.

f) promoting activities for female researcher

Measures to support regional industry and to create commercial infrastructure (regional law 47/1978)

The Regional Law 47/1978 aims to promote research and innovation in the industrial structure of

the region.

Beneficiaries for the realization of projects of research and development are:

a) industrial enterprises;

b) associations or consortiums of enterprises, including cooperatives, made up of industrial enterprises;

c) temporary associations of enterprises (ATI);

d) industrial research and technology transfer centers;

e) consortia between industrial and other public or private enterprises, with a financial participation of than

50 %.

Activities:

1. research and development projects, aimed at developing new products, new processes or new

services, in order to improve products. Research and development projects may provide the installation or

extension of laboratories and research centers.

2. projects of innovation of the organizations

3. subcontracts of industrial research and development contracts by SMEs, to highly qualified

entities.

Initiatives should be conducted in the territory of the region, at the head office or at the operating unit of

the enterprises.

2.2.2.3 Internationalization

In this fields the Region Friuli-Venezia Giulia aims to develop and implement a strategy of relations

with foreign countries to consolidate the businesses activities of the territory. The objective is gather new

growth - economic, social, cultural - opportunities offered by the global scenario, by creating and

strengthening the entrepreneurship culture, highlighting the features of the local production system and

placing it in the socio-economic dialogue between the different countries.

To promote the local production system and make it attractive for foreign markets, several actions are

implemented (Programs for knowledge exchange , Information and communication campaigns, Exhibitions

events, Conferences, seminars and workshops, Missions, hosting of foreign delegations, meetings between

new businesses and potential investors). Beside these actions, there are specific measures addressed to

entreprises.

Incentives for SMEs for the promotion of multi-annual programs abroad

The regional administration provide the Chambers of Commerce, Industry, Crafts and Agriculture of

the Friuli Venezia Giulia with financial resources for multi-annual programs to promote SMEs abroad, with

initiatives aimed to integrate or consolidate the SMEs presence in foreign markets.

Beneficiaries are the SME performing service or mining, processing or production of goods and construction

activities.

Eligible activities are:

- advice for market research in the countries in which the promotional program will be implemented

- Advice for the launch of products in foreign markets

Financing of specific initiatives to commercial promotion abroad and to facilitate the process of

internationalization of enterprises

The Region FVG gives annually to the Chambers of Commerce, Industry, Crafts and Agriculture of

the Friuli Venezia Giulia contributions for the implementation of specific initiatives, aiming at supporting

trade promotion activities abroad and encouraging the process of enterprises internationalization.

Financing actions in the annual framework with the National Institute for Foreign Trade (ICE)

The Autonomous Region of Friuli-Venezia Giulia subscribes annual agreements with ICE, in order to

implement promotional initiatives to support economic development, in terms of internationalization and

promotion of exports, of the regional enterprises.

The Region of Friuli-Venezia Giulia makes use of the local Chambers of commerce, industry, handicrafts and

agriculture, for implementing the measures under its jurisdiction.

2.2.2.4 Anti-Crisis Measures

The Region Friuli-Venezia Giulia has implemented a set of extraordinary measures aimed at

overcoming the problems induced by global financial crisis.

The measures amount at 400 million euros available for enterprises, resources that will be guaranteed, in

the medium/long term period.

The measures are:

- Rotation Funds

- Guarantee Fund

- Bonds

- New EU laws on state aid

Anti-crisis measures introduced by the regional law 11/2009

The regional law n.11 of 2009 introduced some modifications to the law n. 4 of 2005, about the

support and the competitive development of SMEs in the Region Friuli Venezia Giulia, especially for the

incentives for the implementation of development projects for SMEs:

In case of there are variation of projects during the implementation, the contributions are confirmed, when

the variation depends on the situation of economic crisis.

In case the objectives achieved are lower than those expected, the contributions are confirmed

In case of processing or succession in the enterprises, the contributions will be confirmed if the activities of

the enterprises continue without interruption or transformation.

Contributes are granted in advance

New limits introduced for a maximum of 500,000.00 for aids related to the Regulation (EC) 800/2008 and

300,000.00 for aids related to the scheme of de minimis.

2.2.2.5 Regional Finance investment Companies

FRIULIA, Finance investment company

Friulia is the finance investment company of the Autonomous Region of Friuli-Venezia Giulia, and

since 2005 a holding of regional ownership.

Friulia is on the forefront at national level and it is an active partner for the enterprises and the entire

economy of Region FVG.

The share capital of Friulia is 278 million, with a total amounted to over 800 million.

Friulia plays therefore a triple role:

1) Finance investment company:

In order to support new ideas, Friulia takes minority shares in the venture capital of regional enterprises,

and provides assistance and advice to shareholding.

The investment activity of Friulia applies throughout the life cycleof the project, from start-up to

consolidation, to the of Management Buy In (MBI) / Management buy Out (MBO) and internationalization

operations.

In the portfolio of Friulia there are regional enterprises of different sectors, including the sector of the new

technology.

2) Development Agency

As development agency, Friulia is the executive arm of the Region Friuli-Venezia Giulia for the growth of the

regional enterprises system .

Friulia supports the organizations and local governments for territorial development projects and for

project financing, and manages funds and realise EU and regional projects.

3) Group leader of the holding formed by regional company

The shares of Friulia belong for the 80,10% to the Region Friuli-Venezia Giulia, and for the 19,90% to local

and national banks and insurance.


The European Union provides support to European small and medium-sized enterprises (SMEs).

Support is available either directly or through programmes managed at national or regional level, such as

programmes related to the European Union’s Structural Funds. SMEs can also benefit from a series of non-

financial assistance measures in the form of programmes and business support services.

The assistance schemes have been divided into two categories: thematic funding opportunities, designed

and implemented by the European Union, and the Structural funds, managed at national and regional level.

In addition there are other indirect financial instruments, made available via national financial

intermediaries.

2.3.1. Structural Funds

The Structural Funds (European Regional Development Fund [ERDF] and European Social Fund

[ESF]) are Community funding instruments to improve territorial competitiveness. Structural Funds are

designed to help reduce disparities in the development of regions, and to promote economic and social

cohesion within the European Union. The European Commission therefore co-finances regional projects in

the Member States. Some measures foresee that SMEs can be direct or indirect beneficiaries. Nevertheless,

it is important to stress the fact that direct aid to SMEs to co-finance their investments is only possible in

the economically less developed regions (the co-called “convergence” regions). In other regions, priority

has been given to actions having a high leverage effect (e.g. entrepreneurship training, support services,

business incubators, technology transfer mechanisms, networking, etc.), as opposed to direct aid to

individual SMEs.

Beneficiary SMEs of structural funds receive a direct contribution to finance their projects. Programmes

addressed to SMEs are managed and the projects selected at national and/or regional level.

European Regional Development Fund

For the period 2007-2013 the strategy and resources of cohesion policy (European Regional

Development Fund [ERDF], European Social Fund [ESF] and European Cohesion Fund) are grouped into

three priority objectives, with a total allocation of € 308 billion:

ERDF aim is to reduce disparities in the development of regions and to support social and economic

cohesion within the European Union. In order to strengthen the creation and competitiveness of SMEs, the

ERDF co-finances activities in a broad range of areas: entrepreneurship, innovation and competitiveness of

SME (for example entrepreneurial mentoring, innovative technologies and management systems in SMEs,

eco-innovation, better use of ICT); improving the regional and local environment for SMEs in the start-up

and growth phase, business infrastructure an support services for SMEs, regional and local RTD and

innovation capacities, business co-operation and innovation capacities; interregional and cross-border co-

operation of SMEs.

ERDF programmes are not directly managed by the Commission but by national and regional authorities.

These are also contact points for funding applications and project selection.

The instrument used in the Region Friuli-Venezia Giulia is the Regional Competitiveness Operational

Programme (POR).

Regional Competitiveness Operational Programme 2007-2013 (POR FVG)

The Regional Competitiveness Operational Programme (POR) is the programming instrument

prepared by the Region Friuli-Venezia Giulia for the period 2007-2013 and approved by the European

Commission; it defines the fields of the regional territorial development, wich will be financed by European

Structural Funds, and by the State and the Region in the period 2007 - 2013.

Priorities were detected in 6 axis, for a total budget of 303.001.323 euro:

Axis 1 - Innovation, research, technology transfer and entrepreneurship: 138.000.000 euro, 46% of the total

budget, aims to strengthen the enterprises competitiveness.

Axis 2 - Environmental sustainability: 34.850.000 euro, 11,5%of the total budget.

Axis 3 - Accessibility: 40.000.000 euro, 13% of the total budget, aims to develop transports and computer

services;

Axis 4 - Territorial Development: 40.000.000 euro, 13% of the total budget, aims to promote the internal

cohesion and a balanced territorial growth.

Axis 5 - Energy: 38.031.269 euro, 12,5% of the total budget, aims to promote long-term eco-sustainability

of the economic growth and the use of renewable energy sources;

Axis 6 - Technical support: 12.120.054 euro, 4% of the total budget.

With regard to axis 1, the specific operational objectives are:

1) to Support the scientific and technological development of enterprises, in particular:

Encouraging the Industrial Research and the development and innovation of SME’s (Supporting

industrial research and experimental development activities; Supporting projects for innovate

process and organization; Supporting the acquisition of patents and know-how; Providing

consulting services in the innovation fields; Providing general support services; Supporting

patenting and production of other industrial property rights, in relation to the results of the

research and development activities; Supporting feasibility studies and research projects, in order

to obtain facilities by the State and EU)

Supporting industrial research projects with the aim of strength the research and innovation

networks and the clusters of innovation

2) to Support processes of transformation and/or strengthening of the productive structure:

Supporting the competitive development of SMEs (Implementation of research and

development projects; Supporting SMEs to use better the tools of industrial policy;

Improving the technology transfer from Universities, Research Centers and Science and

Technology Parks, and Industrial Development Consortia; Supporting start-up; Providing

incubator and innovative services for enterprises located in the Incubator)

Supporting and financing regional clusters (strengthen enterprises competitiveness

supporting and developing innovation clusters (industrial districts, incubators, etc.))

Supporting SMEs to adopt, use and enhance information and communication technology,

promoting the access to electronic commerce, enabling new sites and upgrading existing

ones. In particular the activities aimed to facilitating the access to electronic commerce.

Within the Axis 1, innovation, research, technology transfer and entrepreneurship, the currently active calls

are:

Call for projects of industrial research in the sector of home automation

Call for projects of industrial research in the sector of molecular biomedicine

Call for projects of industrial research in the sector of shipbuilding and yachting

Joint European Resources for Micro and Medium Enterprises (JEREMIE)

JEREMIE is a joint initiative of the European Commission and the European Investment Fund with

the European Investment Bank.

It aims at improving access to finance for micro to mediumsized enterprises and in particular the supply of

micro-credit, venture capital finance or guarantees and other forms of innovative financing. Special

emphasis is given to support start-ups, technology transfer, technology and innovation funds and micro-

credit. JEREMIE is managed as an integral part of European Regional Development Fund programmes, and

projects will be selected at the relevant national and regional level.

The initiative aims to:

ensure better conditions for the financing of new entrepreneurial activities, through loans

(including micro-credits), venture capital, shareholding and guarantees, with its technical and

organizational support;

contribute to the improvement of national and regional coordination in this area, as well as a more

effective management of public resources and a more appropriate transfer of good practices;

promote a better absorbency of the funds allocated through European programmes.

Generally, the Structural Funds offer financial assistance in the form of free grants contribution.

JEREMIE transforms grants into financial products: SMEs after the use of JEREMIE financial products must

repay the result. The funds can then be used again, this could provide a funds leverage.

The funds made available through the JEREMIE instrument should be used for financing SMEs in fixed and

human capital in the medium and long term, through new projects or modernization/expansion of existing

ones in the following sectors: manufacturing, food and agricultural, environment, services, ITC, etc.

Are not eligible enterprises engaged in the following sectors: property market, banking, insurance or

financial intermediation, arms production, supply or trade, or even other sectors excluded by the EIB or the

EIF. Eligible SMEs must be private or will have entered in the final phase of the privatization process.

2.3.2 Thematic funding opportunities

These funding opportunities are mostly thematic with specific objectives (environment, research,

education) designed and implemented by various Departments of the European Commission. SMEs or

other organisations can usually apply directly for the programmes, generally on condition that they present

sustainable, value-added and trans-national projects.

Co-funding is the general rule: the support of the European Union usually consists of subsidies which only

cover part of the costs of a project.

With regard to funding opportunities in research and innovation the available programs are:

The Seventh Framework Programme for Research and Technological Development (2007-2013)

The 7th Framework Programme for Research and Technological Development has a total budget of

over € 50 billion. This money will be spent on grants to research actors all over Europe and beyond, in order

to co-finance research, technological development and demonstration projects. Grants are determined on

the basis of calls for proposals and a peer review process, which are highly competitive.

In order to complement national research programmes, activities funded from FP7 must have a “European

added value”. One key aspect of the European added value is the transnationality of many actions: research

projects are carried out by consortia which include participants from different European (and other)

countries; fellowships in FP7 require mobility over national borders. Indeed, many research challenges (e.g.

fusion research, etc), are so complex that they can only be addressed at European level.

The Framework Programmes for Research have two main strategic objectives:

to strengthen the scientific and technological base of European industry;

to encourage its international competitiveness, while promoting research that supports EU

policies.

It pays also particular attention to SMEs through the four lines of the program:

"Cooperation": SMEs are actively encouraged to participate in all research initiatives,

specially in Joint Technology Initiatives (JTI).

"Ideas": the research team of SMEs can compete on merit basis.

"People": Encourage greater participation of SMEs in the "Paths and alliances between

industry and universities."

“Capacities”: "Research for SMEs" aims at strengthening the innovative capacity of

European SMEs and their contribution to the development of new products and

technology-based markets.

The indicative budget for the specific actions of SME is about 1,3 billion euro.

Competitiveness and Innovation Framework Programme (CIP)

The “Competitiveness and Innovation Framework Programme” (CIP) is a coherent and integrated

response to the objectives of the renewed Lisbon strategy for growth and jobs. Running from 2007 to 2013,

it has a budget of approximately €3.6 billion.

As regards innovation and information technologies, the CIP comprises two main strands:

a) the Entrepreneurship and Innovation Programme (EIP) aims to improve the conditions for

innovation, such as exchanges of best practices between Member States and actions to improve,

encourage and promote innovation in enterprises. It supports actions fostering sector specific innovation,

clusters, public-private innovation partnerships and the application of innovation management.

b) the ICT Policy Support Programme to which approximately €728 million has been allocated.

The ICT programme aims to stimulate the new converging markets for electronic networks and services,

media content and digital technologies.

2.3.3. Indirect Financial instruments

Most of the financial instruments are only available indirectly, via national financial intermediaries.

Many of them are managed by the European Investment Fund. The financial instruments aim to increase

the available credit to SMEs and to encourage intermediaries to develop credit access for SMEs.

Under the Competitiveness and Innovation Framework Programme (CIP), €1130 million has been allocated

for financial instruments for the period 2007-2013. These are organised under 2 main schemes (high

growth and Innovative SME Facility; SME guarantee facility) which are managed on behalf of the European

Commission by the European Investment Fund (EIF).

High Growth and Innovative SME Facility (GIF)

High Growth and Innovative SME Facility (GIF) aims to increase the supply of equity for innovative

SMEs both in the early stages (GIF1) and in the expansion phase (GIF2).

Objectives of GIF are a) to contribute to the establishment and financing of SMEs by reducing the deficit of

the net capital and the venture capital, which help SMEs in exploiting their growth potential; b) to support

innovative SMEs with a high growth potential, especially SMEs engaged in research, development or

innovation.

GIF shares risk and reward with private equity investors, providing important leverage for the supply of

equity to innovative companies by invests in specialized investment funds (start up funds, regional funds,

funds for specific sectors and technologies, funds linked with incubators, funds and investment vehicles

promoted by business angels, risk capital funds)

The proposals for GIF investments will be examined regularly by the FEI, within the limits of available

budget. SMEs wishing to apply for an equity investment need to contact the funds that have signed an

agreement with the EIF.

The financial contribution provided for GIF is half of the total budget, 1.100 million for the period 2007-

2013.

SME guarantee facility (SMEG)

This tool provides loan guarantees to encourage banks to make more debt finance available to

SMEs, by reducing the banks' exposure to risk. SMEG provides co-, counter- and direct guarantees to

financial intermediaries providing SMEs with loans, mezzanine finance and equity. Four "windows" give

access to funding for:

loan guarantees - guarantees for loans to SMEs with growth potential

microcredit - guarantees for loans of up to € 25 000 to micro-enterprises with up to nine

employees, particularly entrepreneurs starting a business

equity and quasi-equity guarantees - guarantees to existing equity guarantee schemes and

providers of mezzanine finance to support investments in businesses with up to 249 employees

securitisation - guarantees to support securitisation structures to assist financial intermediaries

in mobilising debt finance for SMEs.

http://www.eif.org/guarantees/resources/ec_programme/loan_guarantees/index.htm

http://www.eif.org/guarantees/resources/ec_programme/micro_credit_guarantees/index.htm

http://www.eif.org/guarantees/resources/ec_programme/equity_guarantees/index.htm

http://www.eif.org/guarantees/resources/ec_programme/securitisation/index.htm

SMEs wishing to apply for guaranteed financing should contact one of the financial intermediaries that

have signed an agreement with the European Investment Fund

http://www.eif.europa.eu/

3. ANALYSIS OF THE BUSINESS SUPPORT ORGANISATIONS CONTEXT 3.1 Mapping of the existing institutions/associations/various structures

Chamber of Commerce, Industry, Agriculture and Crafts of Trieste, Udine, Pordenone and Gorizia

Address Piazza della Borsa, 14 - 34121 Trieste Via Morpurgo, 4 - 33100 Udine Corso Vittorio Emanuele II, 47 - 33170 Pordenone Via Francesco Crispi, 10 - 34170 Gorizia

E-mail Trieste:[email protected] Udine: [email protected] Pordenone: [email protected] Gorizia:[email protected]

Legal Status Public agency

Years of activity

Fields of activity Promote and support the general interests of companies and productive sectors; Support the institutional, economic and social realities; Develop the international role of the city; Implement actions that lead, even indirectly, the development of the economy.

Competencies / skills Institutional assets:

Managing enterprises and professionasls registers

Issuing certifications, licenses and authorizations for various activities in Italy and abroad and publication of protest lists Promotional assets:

Supporting the business activities with various services (“New Business”, “Info Point for Internationalization”, etc..)

Supporting studies and sectorial research, the initiatives designed to stimulate and sustain the economic and social development in the province

Providing economic information and training services

Connecting different Institutions, Organizations and Associations, promoting the collaboration and coordination in order to encourage the economic development of the territory.

Direct Beneficiaries of BSO’s activities

Enterprises, citizens

Main activities addressed to SMEs

Supporting SMEs in the research of benefits, grants and funding, especially providing information on various facilities laws at european, national

and regional level. Internationalisation: Aim to support companies that want to achieve the foreign market, especially with compensation for expenses incurred for participation in international initiatives (economic missions, participation in exhibition).

Main activities addressed to start ups

Free advice for the initiation, the development and the consolidation of a new company, in particular general guidelines for supporting start up:

Risk assessment

Legal forms

Business planning

Bureaucratic procedures to start a new business: Set of rules Acts of authorization required Agencies authorized to issue documents or for receipt the complaint

Sources of funding Associated enterprises that are listed in the Public Register of Enterprises overseen by the Chamber; other EU funds for specific projects and areas of intervention

AREA Science Park

Address AREA Science Park – Padriciano Padriciano, 99 - 34149 Trieste - Italy AREA Science Park – Basovizza Basovizza SS 14, km 163,5 - 34149 Trieste - Italy

E-mail [email protected]

Legal Status National Research Body

Years of activity Since 1978

Fields of activity Linkage between the academic world and the industrial sector and between innovation and business; Enhancement of research, regional development, technology transfer, HR training, attracting investment, disseminating scientific knowledge.

Competencies / skills Project management, technology transfer management, HR development, investment attraction, scientific communication and dissemination management


Enterprises, researchers


Highly skilled support to help local entrepreneurs and to help businesses become more competitive by developing innovation projects, such as: Technology Auditing Short-term actions to assess the need for innovation within the business. Identification of potential solutions. Information on patents, document retrival and business intelligence Patent information retrieval and retrieval of documents on topics of scientific, technical and industrial interest. Personalized reports on technological scenarios. Technology monitoring service. Assistance in implementing innovation projects Assistance during the various phases of study, planning and development of innovative solutions, technical and economic feasibility studies, assessment of the impact of innovation on company structure. Support in developing research projects Supporting businesses in developing and refining projects in collaboration with research institutes. Validation of business ideas Identification and checking of technical, normative, organizational and business parameters for new business initiatives. Sector and multisector studies In-depth analysis of state-of-the-art technology and technological trends of widespread industrial relevance. Benchmarking Analysis of company efficiency


Business incubator services with specially equipped units, help in assessing the enterprise concept from technological, commercial, legal

mailto:[email protected]

and economic standpoints, plus financial support with the possibility of funding in the form of seed capital. Carries out individual consultations providing information, orientation and a skills audit aimed at setting up business; Assists in the development phase of the business plan and its implementation, by providing advice and support; Creates an integrated system of seminaries providing information and training on the principal topics relating to spin-offs.

Sources of funding Ministry of Education, University and Research, Autonomous Region Friuli Venezia Giulia, other EU projects

Friuli-Innovation and Science and Tecnology Park L. Danieli

Address Operative Office: via J. Linussio, 51 - 33100 UDINE Italy Legal Office: via Marco Volpe, 8 - 33100 UDINE Italy


Legal Status Science and technology park


Fields of activity To develop essential tools for our territory: excellence-focused science and technology laboratories, joint university-industry laboratories and technology-rich spin-off companies. A structure created to guide industrial-era enterprises into the new age of knowledge.

Competencies / skills Information and Communication Technology (ICT): in order to enhancing the competitiveness of local enterprises; the consolidation of experience has been achieved through a wide range of projects, research initiatives and technology transfers (Techno Seed incubator, ICT Training Centre and Techno Growth accelerator). Biotechnology: a cutting-edge sector that utilises multidisciplinary methodologies and skills; an internationally oriented research centre (IGA), specialises in the structural and functional genomics of living organisms, is active in this sector. Metallurgy: a sector with a large number of territory-based enterprises; In this sector the Laboratory of Metallurgy, Surface Technologies and Advanced Materialsin created, it carries out applied research and it is a new anchor point for metallurgy-industry enterprises and researchers, as well as a centre of education for technicians and researchers. Energy and environment: a sector that offer high-level services to enterprises through a skill pool formed by the teaching staff and researchers, in order to improve the environmental management. Wood: support and promotion to initiatives for new research and technological innovation of ths sector in the region and in Europe.


Researchers, professors and students of regional universities, employers, employees and inventors


Supporting and assist resident enterprises: infrastructure modification according to space and equipment

needs networking with professional associations, research bodies,

potential partners and financiers outsourcing administration and accounts outsourcing technical and logistical functions

Supporting the growth and development of small and micro high-technology enterprises: company check-ups


strength, weakness, opportunity and threat (SWOT) analyses planning interventions and business plan management fostering internationalisation

Promoting the collaboration between enterprises and the scientific and technological research network: identifying innovation needs searching for and identifying the most appropriate technical

and scientific skills identifying innovation options profiling and searching for potentially interested partners activating collaboration and management support for

development projects


Supporting and assist the creation of high-technology enterprises: guidance and training business plan development technological feasibility studies assistance on enterprise creation procedures assistance in fund raising and access to innovative forms of

finance networking, searching for partners and alliances mentoring

Sources of funding

Agemont S.p.A. -Agency for the Economic Development of the Mountain Region- http://www.agemont.it/Portale/Homepage.aspx

Address Via J. Linussio 1, 33020 Amaro (UD) - Italy


Legal Status Development agency

Years of activity since 1989

Fields of activity Creation of new economic initiatives and development of the human and material resources of the mountain region.

Competencies / skills Promotion of the creation of new economic initiatives and encouragement of the development of the human and material resources of the mountain region through:

research and planning activities for the development of new economic activities;

promotion of local entrepreneurs and the attraction of entrepreneurs from outside;

technical and consultancy services regarding organisation and management on behalf of businesses relocating to the mountain region;

the organisation and implementation of training activities and professional refresher corse; financial engineering operations; national and regional community projects with links or effects

concerning the mountain region.


SME and start-up of the mountain region and from abroad in the sectors of: crafts, industry, tourism and retail trade. The interested area concerns local districts within the provinces of Udine and Pordenone, divided into three uniform areas, each of which constitutes a Mountain Community: Mountain Community of Carnia; Mountain Community of Gemonese Canal del Ferro-Valcanale; Mountain Community of Western Friuli.


Technological and Science Park, planned and realised with the aim of supplying advanced services to small and medium-sized businesses and becoming strategic elements for a new model for growth in this mountain region. The Services Centre that plan and manage economic projects, but

http://www.agemont.it/Portale/Homepage.aspx


offers also different services to companies: information provided through information booths; technical assistance to companies through the introduction

into a company of innovative administration tools provided via the administrative engineering laboratories; the spread of innovation and technologies present in the CIT

with regard to the market; search for new companies with a high technological content; search for new opportunities for innovation and development; project management for research projects; operation of the Multimedia Centre and use of the same for

training purposes.


Business accelerator with which Agemont provides the businesses based in the Centre with a series of benefits able to reduce company risk during the start-up phase and create concrete opportunities for young entrepreneurs. The guidelines followed are: the development or broadening of new areas of research; the development of the instruments required to spread

information throughout the region the reinforcement of the role of “incubator”, to encourage the

birth and development of new companies. Instruments of financial engineering able to support the start-up and strengthening of entrepreneurial activities in the mountainous area of the FVG Region. In order to realise this financial activity, Agemont has two main means of intervention: guarantees of medium-term loans: these guarantees are

issued principally in the case of loans destined for the realisation of investment programmes; temporary participation in company capital as a minority

shareholder in joint-stock companies and as subsidising partner in co-operative companies.

Sources of funding European Union through the FESR fund Treasury and Friuli-Venezia Giulia Region within the framework of the DOCUP Objective 2 2000-2006, Action 2.3.3, Project S.PR.IN.T.

CBM S.c.r.l.

- Cluster in Biomedicine-

Address Strada Statale 14 - km 163,5 AREA Science Park 34149 Basovizza, Trieste ITALY


Legal Status Private


Fields of activity Acting as a bridge between Research and Industry in the biomedical sector

Competencies / skills The Institutional & International Affairs: the office is in charge of supporting CBM's management to represent and to promote the Consortium at international, national and regional levels; Business development: CBM prepare studies, market analysis, reports on the commercial expoitation of new products and services; Economic observatory: CBM monitors the evolution of biomedical sector and supports technology transfer activities; Grants office: The office facilitates access to national/international financing for research and innovative enterprises.


Researchers, students, employers, employees and inventors



The Business Development Department is responsible for identifying and defining the business attributes and funding needs of new ventures as they mature from concepts to growth companies. The team facilitates access to innovative financial instruments to support the organizational and qualitative development of businesses. The IP service (in cooperation with Area Science Park) is dedicated to protecting intellectual property and accompanying a research idea through the various stages of business development. CBM encourages state and local government bodies, foundations, companies, philanthropists, individual investors and other sources of capital to expand their involvement as providers of seed and early stage risk capital through both grant-making commitments and investment asset allocation

Sources of funding Ministry of Education, University and Research (MiUR) Friuli Venezia Giulia Region AREA Science Park Fondazione CRTrieste

Assicurazioni Generali S.p.A. Rotary Trieste Nord

Polo Tecnologico di Pordenone

Address viale de La Comina, 25 - 33170 Pordenone, Italy


Legal Status Consortium

Years of activity

Fields of activity Promotion of scientific research and innovation technology, linking of the Companies to the Regional system of scientific research.

Competencies / skills Improve business competitiveness identifying the appropriate innovation path;

Provide information about patent documentation and innovative tools for business;

Facilitate initiatives of skills aggregation

Assist enterprises in finding new materials

Enhance the research and development for competitiveness;

Assist the funding search activity and the participation in European research projects

Offer to the established enterprises, training grants and preferential paths for the development of innovation.


Researchers, professors and students of regional universities, employers, employees and inventors


Supporting in the protection of industrial property, patents and deposit conditions: • rules, laws and regulations, at international and national level; • type of protection of industrial property and patents; • assistance in preparing the application. Monitoring action of different productive sectors with high possibility of development, in particular in the new technologies’ area; Legal and business consultants; Assistance, information and training focused on the types of funding for regional research activities and technological innovation;


Feasibility Study Compilation of Business Plan Consulting on the most appropriate legal form for the enterprise Tax advice Assistance in the start-up phase, especially providing an office in “Open space” in the Pole.

Sources of funding Ministry of Education, University and Research, Autonomous Region Friuli Venezia Giulia, other EU projects


Friulia -investment company of FVG Region-

Address Via locchi, 19 - 34123 Trieste, Italy


Legal Status A public company, (79,2% of FVG Region)


Fields of activity FRIULIA invests in companies with a shares capital, in order to encourage the development of economic initiatives in the Region FVG.

Competencies / skills engine for development and innovation strength the financial resources of the enterprises and finance the growth plans consulente dell’azienda per elevarne il prestigio ed il merito creditizio e sostenerla nelle scelte strategiche e di investimento analista per valutare i piani industriali ed il suo modello di sviluppo


SME’s, start up /spin off, at least with an operating unit, in the Region FVG.


Information and documentation necessary to apply for assistance Buy into a minority participation and at the end of the intervention period sells its equity Provides technical advice and assistance Develop synergies between the enterprises and other institutional and private investors and large industrial groups


Provides a continuous checkup on business plans Provides technical advice and assistance Develop synergies between the enterprises and other institutional and private investors and large industrial groups

Sources of funding FVG Region, insurances, investments companies and banks


Associazione Piccole e Medie Industrie di Udine

Address Viale Ungheria, 28 - 33100 Udine Italy


Legal Status Association

Years of activity

Fields of activity Protect the interests of SME’s in the Region Friuli-Venezia Giulia

Work actively to ensure that SME’s acquire a prime position in the socio-economic development.

Offer to members a concrete support to business.

Create opportunities for exchange of ideas between entrepreneurs.

Competencies / skills


Associated SME’s


- Rapresentation of the members - Support in management issues


- Support in the identification of the most appropriate structure - Support in the identification of exploitable economic instruments - Identification of the most appropriate legal form (SMEs or craftwork enterprise)

Sources of funding

Industrial Association of Trieste, Udine, Pordenone, Gorizia

Address Piazza Casali, 1 - 34134 Trieste Largo Carlo Melzi, 2 - 33100 Udine Piazzetta del Portello, 2 - 33170 Pordenone Via degli Arcadi, 7 - 34170 Gorizia

E-mail Trieste: [email protected] Udine: [email protected] Pordenone: [email protected] Gorizia: [email protected]

Legal Status

Years of activity

Fields of activity Various business services Environment and Safety at Work Quality and technical standards Ports and Transport Conjunctural analysis Development association Relations with the unions in advising on employment relations and training and professional updating.

Competencies / skills Follow the development of economic and financial issues Provides consulting, support and information services to their associates, Organizes seminars and training courses Provides advice on employment relations and training and professional updating.


Enterpises, Citizens, Unions


Incentives for Enterprises: Monitoring of the facilitation instruments at regional, national and EU level Taxes and Customs: Support in resolving operational problems of enterprises


Sources of funding



Confartigianato - Regional Federation of Craftsmen of Friuli-Venezia Giulia-

Address via Coroneo, 6 - 34133 Trieste


Legal Status

Years of activity

Fields of activity Reunite the regional craft enterprises in order to improve their competitivness

Competencies / skills assist the creation of new enterprises; assist and support involved enterprises in the formalities

relating to business management; provide opportunities for growth and development of

involved enterprises collect, process and disseminate information about regulatory,

industrial, technical and economic activities; implement meetings and conferences on topics of the craft

sector and SMEs; interact with Universities and Research Centres; promote innovation.


Enterprises, SME’s, specially craft enterprises


provide fiscal, legal, administrative assistance organize focused meetings, offering the opportunity to

develop relationships, facilitate collaboration, exchange news and knowledge, establishing cooperation projects elaborate and disseminate information relevant to the access

to specific markets (eg government procurement) and to specific facilities (EU, national, regional, etc.). organizza convegni, iniziative di formazione manageriale e

seminari tecnici di approfondimento organize conferences, management training and technical

seminars


Promote all economic and social initiatives aimed at stimulating the increasing of the businesses manage by women; Promote all economic and social initiatives aimed at stimulating the increasing of the businesses manage by young enterpreneurs;

Sources of funding


4. CONCLUSION

Based on a large number of small and very small enterprises, the FVG’s entrepreneurial system has

been regarded as a positive model of widespread entrepreneurship, typical for the so called Italian “North

East”. This widespread entrepreneurship model brought to the development of strong territorial

specializations that led to the development of a number of productive districts with hi tech productive

bases and high quality standards: coffee, chair production, piasentina stone, digital technologies, food,

thermo-mechanics, cutlery, mechanics, furniture, shipbuilding, electronics, molecular biotechnologies.

Moreover, some sectors display a growing cooperation within its subsectors (ex. mechanics) that have

brought optimization of competencies and quality both along single subsectors of the productive chains

(vertical optimization) and within specific production phases of different subsectors (horizontal

optimization). Mechanics and wood-furniture as the two leading sectors in the regional economy reached

quality and innovation standards that give them competitive advantages at national and international level.

The regional economy is strongly export oriented as exports nearly double imports.

Notwithstanding the listed positive features, the regional economy is undergoing a difficult

transition that can be just partially related to the recent international financial and economic crisis. In fact,

difficulties stems from structural problems that can be mostly related to the main characteristic of the

enterpreneurial system: the average small dimension of enterprises. What for a long time has been

regarded as a strength, global economic dynamics in the last decade turned to a weakness.

In particular, small dimensions of most enterprises hamper their internationalization processes,

render difficult to finance their investments and to analyze their competitive position on the markets. The

low internationalization levels coupled with an insufficient knowledge of foreign markets render small

companies poor exporters. The largely positive trade balance registered by the regional economy is thus

mainly the result of the strong export flows of large and medium companies. The high operational

flexibility granted by the small dimensions that traditionally was a cornerstone of their competitiveness is

not supported by a strategic flexibility: the capability to modify products, to enter new markets, to change

internal organizational models, ownership or management. Small companies are highly dependent on big

players in terms of turnover (single buyers) and in terms of technological platform as usually small

companies work as outsource for big players and technology is simply supplied them by the latter.

Although working on a hi-tech base, Small enterprises seldom develop an autonomous growth path in

technology and market terms (JOB ON ORDER TRAP). These dynamics result in a low demand for innovation

and research (noted especially in the mechanics sector) by SMEs.

Although important national and international research centers based on the regional territory

form a relevant regional research potential, low level of private spending in R&S, scarce patents

applications and a constant deficit in the regional technology balance of payments clearly indicate that the

technology transfer process is still too weak and still need to be fostered. As reported by different national

and international surveys (RIS - Regional Innovation Scoreboard) the innovation potential and capacity of

the regional productive system is good if compared to other Italian regions but insufficient if compared to

some other EU regions. The spin-off and spillover effects of existing tech-parks are still spatially too

concentrated/limited. The weak tech-transfer is to be related to deficiencies of both sides: a) the activities

of research centers sometimes appear too distant from real SMEs needs; b) enterprise’s demand for

innovation and research is low, mainly due to the fact that the regional productive base is still dominated

by traditional sectors that managed to foster their competitiveness mainly through an increasing territorial

specialization. The innovation process was thus to some extent developed just through the extreme

product specialization and was to a lesser extent research based.

Nowadays this model is not suitable to cope with global competition and renders the SMEs

particularly vulnerable. Furthermore, the dimensional factor play again a significant role as most of the

small and very small enterprises do not have the internal competencies and resources to take advantage of

existing know-how and technologies based in tech parks. The support measures displayed are mostly suited

for medium and large enterprises that have the internal human and capital resources to access programs

and projects.

Althouhg the BSO network is well developed, and the policies set up by the regional administration

to address the different problems/weaknesses of the economic system are well designed and related to key

aspects (internationalization, competitiveness, innovation, R&D, human resources), the results reached so

far has been just partially satisfactory. In fact, the BSO’s system presents weak coordination and integration

among the different actors that usually embody different interests while measures to tackle weaknesses

are generally considered well designed although sometimes inadequate for very small companies

especially in terms of capital and financial adequacy criteria.

The regional research potential is undoubtedly high but spin off and spillover effects of tech parks

are still spatially too limited. Local offices set up by tech parks on the regional territory as “driving belts”

between demand for innovation (enterprises) and supply (science and tech. system) need to strengthen

their activities and effectiveness. In general the knowledge transfer is too weak as BSOs weren’t able to

encourage knowledge and technology transfer from the research and knowledge centers to the

entrepreneurial environment. As reported by interviewed companies, timeframes of

development/innovation projects financed by public funds intended to support enterprises usually do not

meet the time to market standards and again are more suited for medium and large enterprises. Lack of

resources (financial and human resources) limits the scope for the SMEs to take full advantage of existing

supporting and technology institutions.

The capacity by the regional administration to develop a foreign policy/economic strategy should

be upgraded. Support to SMEs Internationalization, particularly in terms of new market search and

promotion, is weak compared to other competitors. Export finance and insurance are considered

inneffective if compared with some EU competitors (ex. Germany) and in some particular sectors SMEs find

it difficult to participate to large international contract procurements. Last but not list, the credit system is

too conservative and poorly development bound and creates chronic difficulties in credit access by small

enterprises, penalizing growth potential.

The development of new relationship/aggregations between enterprises seem a top priority to

bridge the dimensional problem. At present the regional productive base is characterized by a low degree

of aggregation. Policies to promote aggregation between SMEs proved to be largely ineffective so far as

turning cooperation ideas in reality is very difficult in the SMEs highly competitive environment.

Aggregation and cooperation among small enterprises thus require first of all a new “cultural approach” by

entrepreneurs that traditionally perceive themselves as self-sufficient. This seems particularly relevant

nowadays, as the ongoing crisis is hitting hard and is producing structural effects on the demand side. Small

enterprises cannot afford to neglect the development of markets (national or foreign) and just produce for

single buyers. Furthermore, new cooperation and aggregation models seem crucial also to preserve the

competitive advantage developed so far and foster the innovation capacity of SMEs. In this respect,

aggregation would enable enterprises to develop a better interaction capacity with the regional

“knowledge system” and better access to support schemes set up by the regional administration, BSOs,

etc..

On the institutional side, the measures, policies, schemes set up to tackle various needs of the

enterprise system are considered appropriate in principle, thought sometimes not really suited for small

enterprise, but the implementation model seem non adequate as is based on a passive approach. The “set

the measures and wait” model proved ineffective to reach troubled enterprises, particularly small

enterprises, that in tough periods find it difficult to mobilize internal resources to interact with institutional

actors.

The foreseen pilot action to be developed in the nautic sector in Latisana seem to meet some of the

needs and factors just pointed out: it’s a joint initiative of several entrepreneurs that have envisaged that

individually they would not be able to cope with the evolution of their market, that they need a common

technical –market support facility to support their activity, and that this new facility would serve also as an

interface tool to interact with research entities and their support programs.

ITALY: Umbria Region



Table 1

2004 2005 2006 2007 2008

STRUCTURE

GDP (m €) 19.274,6 19.641,8 20.519,6 21.484,0 -

GDP ( y/y) - 2000 2,3% -0,1% 2,5% 2,3% -

GDP per capita PPP (€) 22.583,00 22.749,30 23.574,90 24.449,70 -

Structure GDP (%):

Agriculture 3,2 2,2 2,2 2,3 -

Industry 27,4 27,9 28,0 28,2 -

Services 69,5 69,8 69,8 69,5 -


No. active companies 81.073 82.211 82.381 82.764 83.315

Total turnover (m €) 0,7 0,6 - - -

% of SME turn./Total Turn


Agriculture

Industry

Services

EMPLOYMENT

Total employment (m) 340 346 355 367 376


Employment per sector:

Sector A (%) 3,8 4,3 3,7 3,0 3,7

Sector B (%) 31,2 32,1 32,1 32,2 32,2

Sector C (%) 65,0 63,6 64,2 65,1 64,1

V.A. per employed (€) 45.119,47 44.363,91 44.267,00 43.872,38 -

Average gross wage (€) 5.495,0 5.769,4 6.158,6 - -

Unit labour cost (€) 30.775 32.236 33.005 - - -

Labour productivity (y/y) 0,1 0,4 0,5 -0,2 -

Unemployment (%) 5,7 6,1 5,1 4,6 4,8

Unemployment per education level:

Primary (%) 6,3 2,8 4,1 3,1 5,5

Junior High school (%) 6,5 7,2 6,5 5,6 5,3

Secondary - 2-3 years (%) 3,9 5,2 2,4 3,2 5,6

Secondary - 4-5 years (%) 5,2 5,7 5,1 4,6 4,3

Tertiary (%) 6,3 7,1 4,6 3,8 5,0

FOREIGN TRADE

Import of goods (m €) 2.134,15 2.336,20 2.797,19 2.882,39 2.543,41

1. good category (SITC 2digit)

2. good category

3. good category

Export of goods (m €) 2.646,38 2.826,56 3.245,99 3.627,76 3.398,59

1. good category(SITC 2digit)

2. good category

3. good category

Trade balance (m €)


1. partner (county + m €)

2. partner

3. partner

FDI inflow (m €)

Main FDI sectors


Sector B

Sector C

Umbria is a region with a population of 850.000 units, with a constant, although modest, growth

since 1981. This is caused by two different factors: one is a negative birth/mortality ratio, compensated by

a positive immigration rate. Therefore Umbria can be considered as a highly attractive area, able to offer

favourable social and economic conditions to people coming from other territories. However, a high

concentration of population is registered in the over 65 bracket (around 24% of the total population), well

above the national average of 20%, generating a higher demand for welfare structures and services.

The territory of the region is entirely covered by hills (71%) and mountains (29%), without any plains. Over

31% of the regional territory is occupied by forestry, while over 7% of the territory is occupied by protected

natural areas and parks.

The region is characterised by the presence of small municipalities: 50% of these has less than 3.000

inhabitants. 37% of the population of Umbria lives in the 3 biggest municipalities (all with more than 50.000

inhabitants), while a little over 15% of population live in the 62 smaller municipalities.

Infrastructures in Umbria are below the national average, especially as far as motorways are concerned

(the lower rate in Italy). The transport network and infrastructures of Umbria are one of the weaknesses of

the regional and a priority in the programming activities of the present regional Government.

The economy of Umbria can be divided, as with all other regions in Italy, in the 3 traditional sectors:

agriculture, industry and crafts, tourism and services.

The number of workers is 233,955, with an average of 3.5 employees per company. Companies with only

one employee account for 55.7 percent of the total, and employ 16.2% of all workers. 39.0% of companies

have from 2 to 9 employees, and employ 37.3% of all workers. Companies with 50 or more employees

represent 0.5% of the total (22.9% of workers). Unemployment rate is below the national rate at 5,2%.

There are 83.315 active companies in the region. An analysis of the dynamics in companies numbers show

that the number of registered companies has grown in 2008 by 0,4%, well above the national average that

registered a decrease of – 0,4%. New companies have increased by + 7,2%, while there has been a mortality

rate of 6,8%.

The majority of companies are concentrated in the services sector (69,5%), operating mostly in commerce

(29.1%) and in other business services (20.3%). Tourism represent a very solid sector with further

possibilities of development that are actively pursued by the Region Umbria. 2 million tourists come to

Umbria each year, of these about 500.000 come from abroad. The tourist offer of the Region includes

attractive in culture and arts, religion and spiritual, environment and nature (including hiking, biking, horse-

riding), wellbeing, food and wine. Compared to a general decrease of arrivals in many Italian destinations

(up to -20% in some cases) Umbria has shown only a decrease of 2,2%. However, the balance of payment is

in tourism sector +41 million Euro, which shows the permanence in the region of high-quality and high-

spending visitors.

Industry, which represent 28,2% of the total (over half of which in the building sector), have a

greater weight in the province of Perugia, with 28.8% compared to 24.8% in the province of Terni. Here,

since the 19th century, there has been the development of steel, metalworking and chemical industries.

Historically and socially the city of Terni is closely linked to heavy industry: the ‘Acciai Speciali Terni’ has

been for decades the propelling motor of the province of Terni and even of the region as a whole; since the

80% the steel-working sector has started to lose its importance, until the company was acquired by Thyssen

Krupp, Central Umbria is home of the majority of mechanical, aerospace, motor component and engine

producing industries; while the northern part of the region houses the sector of machineries for agriculture,

furniture production and graphic industries. The area around Perugia, capital of Umbria, has a long standing

tradition in textiles, fashion and food production. The latter is one of the strongest feature in the regional

economic structure as a whole, and Umbria is home to several international companies and multinational

operating in this sector, such as Nestlè (formerly Perugina-Buitoni). Moreover, Umbria produces 10% of the

mineral water that are sold in Italy.

Crafts have a deep rooted tradition in Umbria, and is part of its cultural, artistic and economic

heritage. Crafts-working companies represent the main share of the industrial sector of the region.

Production of crafts is of the highest quality and includes ceramics, woodcrafts and furniture-making,

embroidery and some textile working.

Agriculture employs only 2,7% of active population but has a relevant position in the regional

economy and society. Main cultivation are vines, olives, wheat and tobacco, but, among main sources of

turnover, there is black truffle, whose quality is renowned in Italy and internationally.

The macroeconomic performances of Umbria are currently closely connected with the global crisis

and are suffering from the effects of the financial turmoil that has shaken the economies of the Western

world. However, the good results that have been realised in GDP in 2007 have protected the region from

the negative effects of the crisis in 2008 and the first quarter of 2009. In the period 2000-2007 the Umbrian

economy has grown annually by 1,2%, a little above the national average of 1,1%: this makes Umbria one of

the most dynamic region in Italy, along with Lombardia, Veneto and Tuscany. Good performances have

been registered in 2007 in particular in family expenses and earned incomes, along with export, labour

market and tourism.

Umbria exports 17% of its GDP, and the performance has been positive every year in the 2000-2007 period.

In 2007, export has grown by 11,8%, while national average has registered a + 9,9%, putting Umbria as 10th

in the rank of all Italian regions. Based on the latest available data, in 2008 Umbria has registered a

decrease of 6,3%, in line with the rest of central Italy. This negative data is heavily influenced by the metal

and metal-product sector. Without this one, the export performance is actually a +1,9%, thanks to food,

wines and tobacco (-16,8%), textile and clothing (+4,9%) and machinery (+4,7%). These are traditionally the

best performing sectors in export for the region.

As for labour market, despite some negative signs over the different three-months periods, 2008 has closed

with a positive sign for employment.

Total employment has risen by 9.000 units to 376.000, an increase of + 2,4%, one of the highest rise

registered in Italy. Employment rate is therefore 65,4%. Both male and female employment has risen: the

first by 1,2% (+3.000 units), the second more markedly by 6.000 units, a +1,3% over 2007.

Employment has risen in the building sector (+3.000), agriculture (+3.000) and especially services, excluding

commerce (+5.000), while employment in industry is stable.

However, given the increase of the resident population in Umbria, unemployment rate has risen slightly in

2008 to 4,8%, involving almost entirely male employment (from 6.000 to 7.000 unemployed), while female

unemployment remains unchanged at 12.000.

1.2 Main sectors

Table 2 Average aggregate values in Umbria

UMBRIA 2005 2006 2007

Resident population (in thousands, yearly average) 863,4 870,4 878,7

Employed (thousands) 371,4 378,2 388,4

Salaried workers (thousands) 250,2 260,1 273,8

Per capita value

Market price GDP per inhabitant (euro ) 22.749,3 23.574,9 24.449,7

Market price GDP per worker (euro correnti) 52.885,7 54.256,0 55.314,0

Domestic final consumption per inhabitant (euro) 19.239,4 19.748,2 ....

Salaried workers income per unit (euro) 31.459,2 32.235,7 32.963,0

Table 3 Added value at base prices and GDP – Current price value (in million Euros)

ACTIVITIES 2005 2006 2007

AGRICULTURE, FISHERY, FORESTRY 387,3 407,7 433,9

Agriculture, fishery, forestry 383,9 403,0 ....

Fishery and connected services 3,4 4,7 ....

INDUSTRY 4.902,3 5.081,0 5.383,2

Strictu sensu industry 3.582,2 3.762,6 ....

Mining 52,0 48,1 ....

Manufacturing industry 3.073,5 3.230,9 ....

Food, beverage and tobacco 444,1 423,5 ....

Textile and clothing 338,4 333,0 ....

Leather and leather working 23,9 20,9 ....

Paper, graphic, printing 168,8 169,3 ....

Cokerie, refineries, chemistry, pharmaceutical 95,6 99,9 ....

Non-metal mineral working 402,8 411,7 ....

Mechanics 1.228,1 1.388,4

Wood, plastic, rubber 371,8 384,1 ....

Production and distribution of electricity, gas, steam and water 456,7 483,6 ....

Building 1.320,1 1.318,4 ....

SERVICES 12.254,1 12.683,5 13.265,5

Trade, hotels and restaurant, transport, communication 3.956,4 4.021,1 ....

Banking and financial intermediation, real estate 4.361,5 4.566,8 ....

Other services 3.936,1 4.095,6 ....

Base prices added value 17.543,7 18.172,1 19.082,7

VAT, net indirect taxes on products and taxes on import 2.098,1 2.347,5 2.401,3

MARKET PRICES GDP 19.641,8 20.519,6 21.484,0

Table 4 Total jobs (annual average in thousands)

ECONOMIC ACTIVITES 2005 2006 2007




INDUSTRY 107,2 108,7 113,1

Strictu sensu industry 75,4 76,8 ....

Mining 0,7 0,7 ....

Manufacturing industry 72,7 74,0 ....







Mechanics 28,4 30,0



Building 31,8 31,9 ....

SERVICES 243,9 250,2 257,9

Trade, hotels and restaurant, transport, communication 99,7 102,8 ....

Banking and financial intermediation, real estate 44,9 47,1 ....

Other services 99.3 100.3 ....

Total 371,4 378,2 388,4

Table 5 Total employed (annual average in thousands)

ECONOMIC ACTIVITES 2005 2006 2007




INDUSTRY 109,9 111,6 115,8

Strictu sensu industry 78,0 79,6 ....

Mining 0,7 0,8 ....

Manufacturing industry 75,3 76,7 ....







Mechanics 29,0 30,6



Building 31,9 32,0 ....

SERVICES 248,1 255,9 264,9

Trade, hotels and restaurant, transport, communication 89,1 93,0 ....

Banking and financial intermediation, real estate 45,1 47,3 ....

Other services 113,9 115,6 ....

Total 372,8 381,5 393,0

a) Mechanics

Mechanics in its various forms by now represents almost one third of the overall regional

manufacturing industry, with the province of Terni surpassing that of Perugia thanks to both metallurgy and

electric and precision machinery whereas it has a smaller share in machine tools and transport equipment.

The differences already noted regarding the profile the weight of mechanics in Italy remain, both in terms

of the number of active local units and the number of employees.

Actually, the large iron and steel plants in Terni lessen, at the least in terms of employees, the distance

from the average national values.

Again for 2007, there are ISTAT data available on territorial economic accounting, which bring to light, for

Umbria, some aspects that seem especially significant.

Among these, as regards the amount of added value generated:

the low incidence (17.6%) of the whole of the manufacturing and processing industries;

this incidence is basically in line with the national average for the metals industry.

As regards the industrial employment levels, the gaps are smaller and the aspects to be highlighted are

those regarding internal differences.

The presence of some segments and some enterprises in the process of restructuring, the theory that some

companies suffer while passing from one generation to the next and the ample presence, in this area as

well, of subcontracting enterprises are all concomitant causes of an outcome that gives an early warning.

The main concentration of mechanical industries is in Terni and the Terni Province, where steel work,

metalworking and chemical industries are located; however, poles of mechanics are also in Central Umbria,

around Foligno (aerospace, engines, components) and North Umbria, around Città di Castello (machinery

for agriculture).

Recent trends in mechanics can be summarised as follows:

Growth in employment

Strengthening of export and increase in average value

Strengthening of the medium-sized enterprises core

Best practices of internationalization processes

Cooperative network of SMEs for research and innovation

Collaboration with research and training centres.

Within the mechanical sector, automation represents an important sub-sector in regional policies.

In fact, Umbria has seen the investment and realisation of poles of excellence such as the

Mechatronic Pole in Città di Castello (North Umbria), the Automotive research Centre at Pischiello, in

Passignao and the Aerospace and aero-industry pole of Foligno, as mentioned in other parts of this

document. These poles represent the will to enhance and strengthen the capacities and know-how of the

mechanical sector in an innovative application, exploiting the full potential of this segment of industrial

production. However, although some automation enterprise of high level are present in Umbria, in general

electronic and electric industries are not at the same standard as the mechanical sector. Therefore, Umbria

can count on a deep-rooted traditional know-how in the design and production of high-level mechanical

system, while lacking the expertise to realise the electrical devices necessary to control the mechanical

movements. Potentiality to create a finished product entirely in the Region is therefore still to be improved.

Another weakness is represented by the difficulties in finding skilled workforce able to design

electrical systems to be used in robotics, automotive systems, aerospace and bio-engineering. The need to

invest in the innovation of the mechanical sector has also brought to light the need of specific know-how

and skills. This is a gap the Region is striving to fill with specific policies, both in industrial programming and

in training. As far as training is concerned, resources and attention are devoted especially to the creation of

a workforce skilled in automation and mechatronics, both for high-school specialisation and post-graduate

targets.

b) Agrifood and agroindustry.

The Region of Umbria is highly characterized by the presence of numerous structures operating in

the agrifood and agroindustry sectors. In particular, as of today’s date, there are approximately 300

companies in the sector, mainly small and medium-sized enterprises. Standing out among these are

nationally and internationally known brands, such as Colussi, Monini, Rocchetta, Mignini, Coricelli,

Farchioni, Spigadoro and many others, with productions ranging from biscuits/cookies to olive oil, pasta,

salami and other cured meats, wine, and tobacco.

The overall sales in this sector exceed 1,300 million Euros, employing a total of over 5,400 persons, while

the value of Umbrian agricultural production comes to about 753 million Euros, accounting for 1.8% of the

national total.

Along with the “classic” agrifood production chains, there are others now in the study and development

stage, such as that of biofuel and biomasses; many national and regional companies are involved in the

various stages of the latter (cultivation of rapid growth crops, harvesting, processing and utilization for

producing energy/heat).

Thanks to a number of well-chosen marketing policies and the success on the market of Sagrantino, a grape

variety with remarkable potential, Umbrian wines have gained a considerable share of the market. There

are four DOC wine zones: in Montefalco the king is Sagrantino, and then there are Orvieto, Torgiano, and

the Trasimeno area. Each has its own wine and its own expert winemakers.

The Region of Umbria is unrivalled for its olive oil. The olive, a slow-growing, extremely long-lived tree,

could very well represent this region’s ability to maintain centuries-old traditions, and the extra virgin olive

oil of Umbria represents one of the most appreciated products on the markets. In Umbria, the position of

the olive groves (90% in hill areas and the remaining 10% in mountain zones), combined with the soil

conditions and the climate, result in approximately 90% of the entire production, an average of 8,000,000

litres per year, going to extra virgin olive oil. There are four protected designation of origin (PDO) zones.

Agri-food industry is particularly important in Umbria, both in quantity and for its role form the

social, environmental and cultural point of view. Sectors involving the production of olive oil, wine, meat,

pasta and tobacco have a significant role for the income produced and the enhancement of the territory

and its traditions. However, agri-food companies in Umbria have traditionally a medium-small dimension,

and this proves to be a weakness as it reduces the possibilities to invest in R&D, and makes the relationship

with distribution more difficult. In general, agri-food sector has a 6,5% share on production value, and a

3,4% share on added value to total production Agri-food sector has more importance in Umbria compared

to the rest of Italy and represents the third most important regional economic sector.

c) Textiles/clothing/fashion

In 2007, the textile/clothing/fashion industry has registered a total turnover of more than 54 billion

euro. Export has been of 28 billion euro, and its share on turnover has increased from 48,4% in 2002 to

51,8% in 2007.

The textile/clothing sector is still the second most important one in Umbria, counting 1.823 companies in

the first trimester of 2009, - 276 compared to the same period in 2004 (2.099 companies).

As with most other sectors in Umbria, individual companies are 54% of the total, while limited companies

are only 18,7%.

As for the territorial position, the sector is mainly concentrated in the Province of Perugia, where 147

companies are located. Based on the data provided by the trade associations, about 90% of enterprises are

sub-contractors and work for 1 partner: these are mainly the most prestigious representatives of Italian

luxury brands. The sector can therefore be described as fragmented into small and micro enterprises, that

have high-level skills aimed at niche and high-quality productions. These enterprises use bank credits

mainly for medium terms management of current expenses. A particular relevance in the sector is

cashmere production, with world-famous best practices.


Mechanics in Umbria is a sector that, although not generally considered high-tech, is able to

express innovation capacities. In fact, in Umbria, the most innovative sub-sectors of mechanics, such as

mechatronics, advanced mechanics, along with metal special materials and micro and nano tech, are the

priority sectors included in the Technological District –DTU project.

Innovative aspects of mechanics in Umbria are the surfacing of new initiatives and the efforts to integrate

sub-sectors and specialised know-how, especially through the setting and or the strengthening of

relationships and networks among enterprises. This can often become veritable technological poles, where

SMEs with different but coherent know-how, experiences and competences mange together research

projects and development of new technologies. Some examples that are worth mentioning are: the

European Centre for advanced research and projects for the automotive sector, that is located in the Villa

Pischiello in Passignao, Perugia, where regional SMEs and Universities, supported by Region Umbria,

cooperate in the development of innovative products and technologies, also collaborating with

internationally renowned companies; the Mechatronic Pole in Città di Castello, Perugia, that brings

together Umbrian SMEs in the mechatronic and mechanic automation processes sector, multinationals as

technological partners, universities into developing projects for research and training; the High Technology

Centre in Foligno, Perugia, where 11 SMEs with different but coherent specialist know-how have developed

an integrated project aimed at enhancing their technological level and strengthen their productive

capacities and market positioning.

The aerospace pole of Umbria

The Aerospace Pole of Umbria has been promoted and set up by the Umbrian branch of

Confidustria in 2008 through the involvement, initially, of 6 companies of this sectors (Era Electronics,

Fucine Umbre, Garofoli, Ncm, Oma, Umbra Cuscinetti). Ordinary members of the Pole are companies that

work in research, design, project and production of components and systems in the aerospace industry;

supporting members are institutions and public bodies that cooperate in this sector. At the moment there

are 28 companies as members of the Aerospace Pole, with a total turnover of 450 million euro and a total

of 2.500 workers

Archimede Solar Energy is the company belonging to the Gruppo Angelantoni that works in the renewable

energies sector and that, along with Techint, Ronda High Tech and Duplomatic Oleodinamica has set up a

consortium, Consorzio Solare XXI, aimed at developing new technologies in concentrated solar power. The

Consortium is the first of its kind in Italy, and the most important Italian player on the international market.



Umbria is one of the 21 Italian Regions that, as laid down by Art. 117 of the Italian Constitution,

have the authority to pass laws within the provisions of National Framework Acts and in specific sectors.

Following the subsidiarity principle of National Act n. 59/1997, also known as the Bassanini Act, that has

reformed the Italian administrative system, it is the structure nearer to citizens, the Municipality, that is in

charge of the management of the public life, while other institutions, such as the Province, Region and

State, are competent over matters that cannot be carried out at local level.

Subjects over which the Regions have legislative authority are: environment, protection of soils, public

works, housing policies, testing of alternative energies, disaster management, coordination of integrated

programming aimed at job security, agriculture, hunting and fishing, coordination of integrated actions and

programmes for food quality and safety, mobility and infrastructures, urban policies, new technologies,

productive activities and trade, energy planning, health.

Regions have duties of regulations, programming and monitoring, while all other local public bodies have

functions of administrative management.

Region Umbria covers a territory of two Provinces, Perugia and Terni, and 92 Municipalities; Perugia is the

capital of the Region.

Organs of the Region are the President of the Regional Government: is in charge of the political programme

of the Government and coordination, has direct authority on matters of programming and instruments

supporting local development. The President coordinates all institutional communication activities and

represents the Region in the relations with the National Government and EU institutions; the Regional

Government, the executive organ that is responsible for the political-administrative programme of the

Region and all matters not expressly reserved to other organs; the Regional Council, that coordinates and

monitors the political programme of the Region, is the legislative and regulating organ of the Region and

controls the administrative activity.

The regional programming activity

The Regional Government, in order to define specific local development projects, implements a

negotiating process with local institutions, economic and social bodies, trade unions. Through this process,

and based on a throughout context analysis, the following are agreed upon:

- territories and areas involved

- objectives

- strategic options as basis of objectives for each project

- the maximum financial amount for each project.

This process aims at creating strong partnership able to project, manage, implement and monitor all

decisions concerning local development through an integrated approach, whose main reference is the Pact

for Local Development of Umbria, a veritable contract among all main Regional and local public and private

bodies to carry out the economic programmed activities within the Umbrian territory.

The Pact for Local Development of Umbria was signed in 2002 and all participating actors committed to the

realisation of two types of integrate projects, the territorial type, focused on a specific portion of the

regional territory, and the thematic type, devoted to a single sector of activities. Priorities and timings are

defined through the DAP, Annual Programming Document, the act that defines together the annual

objectives referred to economic development and the relevant financial and budget programmes (as per

art. 14 of Regional Law 13/2000). The present DAP for the period 2009-2011 is the document that contains

all the relevant information and know-how regarding the social and economic perspectives of the Region

Umbria, along with the medium-term objectives, the initiatives and the activities under way.

Integrated project designing is therefore the instrument and the method adopted by the Region for the

implementation of regional policies on economic development.


Umbria regional policies, as they are focused on the growth of regional competitiveness and

innovation of the productive system, support strategic sectors through actions that are aimed at enhancing

investment programs by enterprises, particularly those in start up.

Instruments that are made available are regional and national laws and specific measures that give

financing, grants and incentive to selected projects form enterprises.

The main National law devoted to the support of enterprise creation in n. 185/2000, Chapter I and Chapter

II.

Self-employment (Chapter II)

This is aimed at supporting the realisation and start of small enterprise activities (also in associated

form) form unemployed and people looking for employment for the first time through the following:

Self employment (as an individual company) for investments not over € 25.823

Micro-enterprise (as a private partnership ) for investments not over € 129.114

Franchising both as a company and as private partnership.

Financial help is provided for:

investments (grants and loans)

management (grants)

technical and management assistance services.

Self enterprises (Chapter I)

This promotes the creation of new enterprises and the expansion of existing ones, providing that

the majority shareholders are young people, aged 18-35 and resident in the areas where incentives are

provided.

Support can be for:

investments (grants and loans)

management expenses (grants)

training (grants)

Law 215/1992, "Positive actions to support women entrepreneurship", provides support for new and

existing enterprises set up by women. Financing is provided for investments.

Regional Law n. 12/95, “Support for new enterprises set up by young people”, provides financing

for enterprises set up by people aged 18-32, both as individual or as companies (majority shareholders

must be aged 18-32), that are located and registered in Umbria.

All sectors can be financed, through the following:

1) support towards building costs, up to a maximum amount of € 1.291,14;

2) total reimbursement of expenses for consulting and technical assistance for the first 3 years of

activity, up to a maximum of € 3.098,74 each year;

3) grants for up to 50% of costs incurred in the first year of activity, up to a maximum of € 5.164,57;

4) advance financing up to a maximum of 80% and up to € 123.949,66 for investments.

The law provides additional support in the form of promotion of entrepreneurship, the monitoring

of the entrepreneurial ideas expressed by the territory, assistance to enterprise set ups, the offer of specific

training courses, and support to fill in the necessary forms to access financing.

Regional law n. 18/2006, “Qualification and enlargement of tourism enterprises”, is devoted to the

improvement of the tourist offer of the region through financing of tourism enterprises.

Financing is provided for restructuring and enlarging existing enterprises and starting new ones.

In addition, support to SMEs is also available through the intervention of the regional financing agency

Gepafin, that provides guarantees, loans and minority shareholdings.


The guiding principle of all activities in regional policies of cohesion by Region Umbria is the financial,

programming, sector and territorial integration.

This economic development strategy is carried out through the fullest integration among the activities

included in the different financial instruments (such as ERDF and ESF ROPs, RDP and the FAS- Fund for

disadvantaged areas-programme), among different Axis within the same Programme, and, finally, among

different measures within the same Axis (inter-Axis integration).

Among the most significant interventions devised during the present programming period are the ‘

Integrated, multi-measures calls for proposals’, aimed at fostering the innovations and development of the

regional productive context, with particular reference to agricolture, manufacturing industry, private

tertiary and the development of the integrated Tourism-Environment-Culture sector. This sector-focused

approach fosters the promotion of integration among enterprises with the aim of supporting the growth

and competitiveness of the regional economic system.

The DAP 2009-2011 has individuated 4 ‘packages’ of thematic priorities. One of the them is

‘competitiveness’ and it includes a series of actions aimed at strengthening links between enterprises in

order to carry out strongly innovative projects in three macro-sectors: Rural Development, Industry and

Tourism-Environment-Culture.

Specific aims are:

1. growth of competitiveness level of single enterprises thug the creation of new products, new

organisation forms and a better access to financial resources;

2. growth of added value to production through integration between different actors within the same

sector;

3. foster the method of working within a network and the creation of stable relations among

enterprises and between enterprises and research centres.

These objectives have been further confirmed and focused towards a better competitiveness of Umbria

as a whole in occasion f the present programming period for the ERDS and ESF ROPs 2007-2013..

As far as intervention aimed at supporting SMEs through EU financial instruments, the ERDS ROP 2007-

2013 has devoted an Axis specifically to the strengthening and enhancement of the Umbrian economic and

productive system. Means to reach this objective are actions aimed at promoting an innovative

entrepreneurial approach. In addition, within the programming objectives, there are provisions for the

realisation and financing of interventions that, based on EU regulations, can be defined as state aid. These

are aimed at raising the quality level of the Umbrian know how and system in the field of enterprise

innovation.

The general objective is to boost private expenditure in Technological Research and Development and

the demand for innovation by enterprises in Umbria, with particular reference to SMEs.

Measures are aimed at encouraging:

Technology transfer processes

Support to public-private partnerships and to network of enterprises

Support for investments

Development of information society

Help towards the creation of innovative enterprises

Supply of financial services aimed at supporting highly innovative projects and technology transfer

efforts by enterprises..

The main financial means of intervention are devoted to support innovation throughout all leading

regional sectors (agri-food, manufacturing, mechanics, biotech, energy efficiency).

Attention is also devoted to know-how and training.

The ESF ROPs 2007 -2013, that represents the main programming document for the 2 Provinces

(Perugia and Terni) for employment, labour, training and education policies, includes several measures and

opportunities that enhance human resources within single or network of innovative enterprises, supplies

several types of incentives for employment inclusion and provides personal training vouchers to support

lifelong training. The Programme also foresees financing to research and innovation projects by single

enterprises, alone or in cooperation with Universities and research Centres.

Additional provisions for regional SMESs are foreseen within the Rural Development Programme 2007-

2013, where 760 million euro are provided for investments in favour of agricultural, environmental and

forestry interventions, along with support to the diversification of rural economy.


The Umbria Region considers the redevelopment of brownfield sites as a significant measure to

stimulate and promote local development. Over the past 15 years, through several pilot projects, the

Umbria Region has provided local communities with technical and financial assistance to facilitate the

development of new business re-using abandoned industrial sites.

The Region plays the role of coordinator of all public stakeholder to manage the development process:

many SWOT analysis have been realised in order to develop the identified sites within the territory, along

with the definition of the range and intensity of economic uses associated with the development. On the

basis of these studies, financed by local and European resources, a complete map of restructured Umbrian

industrial areas that are ready for new investments has been defined. The services offered by the local

authorities are t technical assistance for the localization and for the creation of new enterprises, availability

of financing to support the business idea, streamlining of bureaucratic procedures. The public stakeholders

involved in this field developed , also, common strategies to preserve and exploit their environmental and

real estate heritage.

Specific tools have been defined in order to assess and enhance the economic aspects of architectural

heritage, taking into account each peculiarity (specific problems, users, regulations, etc). Best practices of

the experience in Umbria as example of “brownfield restructuring are the Rocca Albornoziana, an anciene

fortress in Spoleto, converted into cultural site, the Bosco plant in Terni, reconverted for industrial use, the

creation and management of public consortia for the development of specific industrial areas where

privileged conditions are offered to selected enterprises responding to quality criteria.


3.1 Mapping of the existing institutions/associations/various structures

Umbria offers enterprises a range of services by public and private institutions that provide all the

necessary support in all phases of the process of constitution, localisation and start of investments.

In general, services can be summarised as follows:

Information services

Training services

Research services

Tecnical assistance

Internationalisation services

Financial services

As far as public services are concerned, these can be accessed by all enterprises, regardless of their

dimension and sector of activity.

Services offered by Public Administrations are committed pay attention to new activities and products,

keeping up with market demands and innovation, and to provide qualified services, as these are crucial to

assure competitiveness of enterprises and to the economic context..

In particular, innovations introduced in Public Administrations include bureaucratic simplification, efforts

towards integration between different services and a better cooperation between public and private

bodies, electronic data processing and e-government. Weakness that have to be improve are the lack of

monitoring of changes of demands emerging from the market, especially as far as two important sectors of

activities: R&D and advanced services for enterprises.

Despite some improvement, moreover, many services concerning training, information, innovation,

organisation, promotion are still the responsibility of a great number of different bodies, so that excess of

information, overlapping and competition among different institutions contribute to the dispersion of

allocated resources.

Particularly relevant BSOs are: Sviluppumbria, Gepafin, Consortia for Industrial Areas (Terni and Orvieto)

and BIC-Invitalia.

List of regional BSO.

Chamber of Commerce, Industry, Agriculture and Crafts of the Provinces of Perugia and Terni.

Chambers of Commerce are public bodies that act in the general interest for local enterprises; are

autonomous bodies, as they have their own Statute and are independent, both from the financial and

management point of view.

The present multiannual programme foresees several priority objectives, including internationalisation of

SMEs, diffusion of innovation and of technology transfer, promotion and certification of typical local

products; the improvement of local infrastructures. Chambers of Commerce oversees a series of activities

concerning administration of the enterprise system (register of all enterprises, lists, etc.); moreover, they

have a role in promotion of local SMEs and economic development and in financing of projects and/or

programmes that are presented through public calls for proposals.

The 2 Umbrian Chambers act in close collaboration with other public institutions, and in particular

with the 2 Provinces, Perugia and Terni, for the best possible integration os strategies and activities for the

promotion and the enhancement of the identity of Umbria, both in Italy and abroad. The Chambers belong

to a national and international network that allows to access data, information and services worldwide.

Moreover, the Chambers of Commerce organise specific and tailor-made training activities to meet the

needs of the local business community and promote meetings, seminars and events.

Camera di Commercio di Perugia/ Chamber of Commerce - Perugia

Address Via cacciatori delle Alpi, 42 06100 Perugia Italy


Legal Status Public body

Years of activity 170

Fields of activity SME services

N. of employees 50





Training, information on public incentives and Technical assistance to present business projects under public calls.


Information and technical assistance

Sources of funding Associated enterprises that are listed in the Public Register of Enterprises overseen by the Chamber.

Camera di Commercio di Terni / Chamber of Commerce - Terni

Address Largo Don Minzoni 6 05100 Terni


Legal Status Public body



N. of employees 40





Training, information on public incentives and Technical assistance to present business project under public call.


Information and technical assistance

Sources of funding Associated enterprises that are listed in the Public Register of Enterprises overseen by the Chamber

Sviluppumbria, Regional agency for economic development of Umbria

SVILUPPUMBRIA

Address Via Don Bosco, 11 06121 Perugia


Legal Status plc


Fields of activity Economic development

N. of employees 42

Competencies / skills Local development, territorial marketing, enterprise creation , international cooperation.


Public bodies and enterprises


Research,


Technical assistance

Sources of funding Public shareholders

Sviluppumbria, which was instituted by regional law in 1973, is Region Umbria’s economic

development and promotion agency. The Region Umbria is the majority shareholder, along with other

public bodies. .

Sviluppumbria has steadfastly played a key role as a consultant for the Region, local institutions,

organizations and bodies in a wide range of areas. It offers services for the creation of new entrepreneurial

initiatives and for the support of existing businesses and company groupings to attract investments,

economic activities and partnerships. Its core business is regional marketing and FDI attraction, through

several instruments and tailor-made packages of opportunities identified on the territory. Sviluppumbria

also acts as promoter and coordinator of development projects, both at regional, national, EU and

international level.

Confederazione Italiana Agricoltori ( CIA) Umbria – Italian Confederation of Agriculture

CIA Umbria

Address M. Angeloni 1 , 06125 Perugia


Legal Status Confederation


Fields of activity Services to agriculture enterprises

N. of employees 2657 at national level



Farmers and enterprises in agriculture.


Information, training and technical assistance



Sources of funding Annual fees paid by associated enterprises.

The Italian Confederation of Agriculture (CIA) is a non-confessional organisation operating in Italy,

Europe and at International level for the progress of agriculture.

CIA is articulated into different associations, institutions and companies that act for food safety,

environmental protection, pension schemes, social, health and fiscal assistance, technical consulting,

training and organic farming

CIA has a National office and regional, provincial and local branches, and is present throughout Italy.

In Umbria, CIA has 18 local offices e 5 branches, carrying out activities referring to technical and

management assistance legal and fiscal assistance, project management and development, support

services for SMEs competitiveness.

National Confederation of Crafts and SMEs ( CNA).

CNA

Address Via Morettini, 7 06128 Perugia


Legal Status association



N. of employees 40



SMEs


Training, information, technical assistance


Technical assistance in developping of business enterprise project


The aim of CNA is the promotion a veritable ‘culture of enterprise’, the qualification and updating

of know-how of entrepreneurs and workers and the support to the realisation o fan environment that is

favourable to innovation in small craftworking enterprises. CNA organises seminars, meetings and

researches on economic and social matters and supports initiatives that put actions in favour of enterprises

on the map of public policies. Additionally, CNA, thanks to its professional know-how and expertise, can

provide SMEs with consulting services, assistance and information in fiscal, administrative, legal and

insurance matters and on problems concerning environmental protection and workplace safety. CNA

strives towards meeting the demands of enterprises with innovative and coherent responses and services,

in order to enahnce compettiveness and quality of production in all sectors..

Confapi Umbria

CONFAPI

Address Piazza della Repubblica 7 06123, Perugia





N. of employees 20


Direct Beneficiaries of BSO’s SMEs

activities


Training, information, technical assistance


Technical assistance in developping of business enterprise project


Confapi Umbria is an association whose aim is the protection, development, promotion and

representation of moral and economic interests of enterprises and their need concerning production.

Confapi promotes and supports industrial and business culture and progress. To this aim, Confapi provides

information to all members and organises meetings, seminars, stiduies and researches, press actions and

public debates. Confapi represents memeber enterprises in the relationship with Institutions, Public

Administrations and all other trade associations, economic and political bodies, at local, National and

International level.

Confcommercio – Umbria: Italian General Confederation of Enterprises, Professional Occupations and Self-employment

Confcommercio Umbria

Address Via Settevalli, 320 06129 Perugia




Fields of activity Sme

N. of employees 10



Trade, tourism and service sectors


Advising, training and technical assistance in the definition of business project to be presented under public call


Front office and information on public call


The Italian General Confederation of Enterprises, Professional Occupations and Self-employment is

the largest enterprise-representative in Italy, with more than 820,000 members from the trade, tourist,

service and transportation sectors.

Confcommercio, an independent political subject, promotes the development of the business sector where

firms of the tertiary sector operate, in a broad context and with the aim of expanding the entire economic

system. As declared in its Statute, the Confederation has the following objectives:

a) the guardianship and representation of the economic sectors which identify themselves in

the Confederation, in the regards of public and private institutions, as well as political, social, economic

organizations and trade-unions, including the international ones;

b) the increase in value of the economic and social interests of entrepreneurs and the

acknowledgment of their social function.

Transportation and innovative sectors, such as computing, telecommunications, radio and television

services, communication and advertising, are present, along with other, more traditional areas, such as

education, real estate agencies, private health services, etc.

Confindustria Umbria

Confindustria Umbria

Address Via palermo 80, A 06129 Perugia


Legal Status Confederation


Fields of activity Services to SMEs and representation of memebers interests and projects.

N. of employees 10



Enterprises.


Relationship with public institutions and other trade associations, training, project development, organisation of meetings, events, studies and researches.


Information


Founded in 1910, Confindustria is the main organisation representing Italian manufacturing and

services companies.

A total of 135.320 companies of all sizes - employing a total of 4.954.000 workers - are voluntary

members of the organisation.

The fundamental value underlying Confindustria’s activities is the belief that free enterprise and

free economic activity, within the framework of a market economy, are key factors for the growth and

development of society as a whole.

In its by-laws, Confindustria pledges to contribute to Italy’s economic and social growth by

cooperating with both Italian and international political institutions and economic, social and cultural

organisations.

To this end, Confindustria represents the interests of Italian companies to leading political and

administrative institutions, including parliament, the government, trade unions and other social partners.

Confindustria is the leading organisation representing the interests of Italian companies that

produce goods and services in the political sphere and in relations with trade unions.

Companies can become members of the Confederation through local associations or trade

associations and sector federations that are Confindustria members.

Direct Confindustria members are 103 local associations: consisting of companies established in

the same provincial area, from different production sectors; 97 trade associations: consisting of

companies from all over Italy that operate in similar and related production activities; 21 sector

federations: consisting of trade associations, directly or indirectly affiliated with Confindustria, and 3

special aim federations: formed by trade associations to achieve a common goal or roll out a project in

special areas.

As concerning the Umbria federation the main services addressed to the local SME are training and

information and communication and technical assistance on enterprise start up.

Gepafin spa

Gepafin spa

Address Via Campo di Marte 9, 06100 Perugia


Legal Status plc


Fields of activity Guarantees, shareholdings, and financing

N. of employees 20



Enterprises.


Guarantees, shareholdings, and financing


Guarantees, shareholdings, and financing

Sources of funding Public

Gepafin Spa is the regional financing company promoted by the European Union, the Region of

Umbria and by 11 credit institutions at both the regional and national level to sustain and develop the

activities of small and medium enterprises in Umbria. Sviluppumbria is the pivot shareholder of the

company.

Gepafin manages European Community funds to facilitate the access of small and medium

enterprises in the industrial, agricultural, artisan and service sectors to financial and risk capital markets,

which provide funds for refinancing and company restructuring.

Guarantee assistance

Gepafin offers:

1) guarantees to cover business insolvency risks even for agricultural and new companies;

2) guarantees to cover exchange and interest rate variations;

3) interest subsidy for PAIP area investments; interest subsidy for loans given to small and medium

enterprises in the Province of Terni and the Municipality of Spoleto.

4) guarantee fund for areas hit by the earthquake of 1997.

Share capital interventions:

1) guarantees to shareholder for underwriting of share capital; advances to shareholders for

increases in share capital;

2) guarantees to institutional investors for investment risk; advances to institutional investors for

investment risk;

3) direct investments; risk capital companies.

Consorzio aree industriali Terni , Narni, Spoleto

Consorzio aree industriali

Address Via Armellini 1 05100 Terni


Legal Status Consortium


Fields of activity Sme services

N. of employees 3



SMEs


Information, Communication, promotion, advanced services ( TIC/ Infrastructures, etc)

Main activities addressed to start Technical assistance for the localization in Consortium areas

ups


The Consorzio per lo sviluppo delle aree industriali di Terni Narni e Spoleto (Consortium for the

Development of the Industrial Areas of Terni, Narni and Spoleto) is constituted by five bodies: the

Municipality of Terni, the Province of Terni, the Municipality of Narni, the Municipality of Spoleto and

Sviluppumbria Spa.

Regional bodies, public-sector financial institutes, entrepreneurial associations, and banks that

promote the economic and industrial development of their regions can all take part in the consortium.

Within the district, The Consorzio per lo sviluppo delle aree industriali di Terni, Narni e Spoleto

promotes the necessary conditions for the creation and development of industrial areas. To this end, it

constructs and manages infrastructures and buildings for entrepreneurial activities and promotes support

services and every other type of service connected with manufacturing activities.

INVITALIA – BIC UMBRIA

INVITALIA – BIC UMBRIA

Address Strada delle Campore n. 13 – 05100 Terni




Fields of activity Sme services

N. of employees 8



SMEs


Information, Communication, promotion and technical assitance




Invitalia's Inward Investment arm promotes inviting business opportunities and strives for the

success of each investment project. It embodies a single and reliable national reference point for foreign

investors eager to expand or to set up a new business in Italy by providing a full spectrum of services in all

stages of the investment process.

Mission Statement: Entrusted by the Italian government, Invitalia is a partner of choice for

integrated and flexible investment solutions based on value added services. Strongly committed to

promote globally Italy's competitive advantage, to boost innovation & local industrial development and to

upgrade local competitiveness.

Invitalia is composed by 17 regional companies, for Umbria the company is BIC- Umbria. Its service

kit spans from updated information on the business environment, to investment opportunities in specific

sectors and business advisory services throughout the implementation process. It offers also phisical places

as location to the enterprises.

4. CONCLUSION

In general, the main features of the regional context can be summarised as follows.

Strenghts of Region Umbria are

the high capacity to attract people and qualified workforce,

low unemployment rate compared to the national average,

a high public spending for R&D,

highly qualified human resources,

a higher than average use of alternative energies,

a wide presence of protected natural portions of territory,

a high concentration of natural, cultural and urban resources

the high level of schooling of the workforce.

On the other hand, weaknesses are

the high incidence of population over 65 years of age,

a low level of added value for worker unit,

low infrastructure network,

low patent capacity,

low turnover share coming from new products,

low propensity towards science-based innovation,

concentration of Umbrian enterprises in mature sectors,

low transport accessibility,

increase in long term unemployment.

Such a context presents therefore a general situation of structural fragility and weakness and

difficulty to transform innovative potential into productive aims. At the same time, the high level and skills

of the workforce and the extremely high participation of all social and economic stakeholders to the

regional policies processes, are the main features of an attractive territory, where favourable conditions

have increased the flows of people, capital, resources and investments.

In the course of the last years the region has faced a difficult economic situation, partly caused by the

difficulties at global level, but also due to the federal reform in Italy and the progressive limitation of the

traditional financial sources. This, rather than being merely a weakness, has also increased the regional

government programming and administrative capacity.

In order to face this challenge and preserve a growth based on a network system of cities and

territories, on social cohesion, on environmental wellbeing and on the qualification and enhancement of all

territorial resources and potential, Region Umbria has chosen an integrated approach. The main

instrument, as noted before, is the Pact for Economic and Social Development, that brings together all

regional stakeholders into sharing all choices concerning regional programmes. In general, the region has

adopted a participative method of programming all activities and all its actions are carried out through and

integrated approach, by putting together public and private concerns and projects.

The macro-objectives that have been set by the Region Umbria in its action to support local

development are:

1. providing support to strategic themes of research, innovation, strengthening of network of

enterprises in order to enhance competitiveness;

2. support to innovation processes, promotion of innovative investments, strengthening of

small-dimension enterprises through development projects and introduction and enhancement of the use

of information and communication technologies;

3. promotion and support to the diffusion and transfer of innovation in the companies

processes including organisation, management and internationalisation;

4. strengthening of financial structure of enterprises;

5. meeting transversal objectives of energy saving and environmental protection

6. improvement of the infrastructures.

In order to meet these objectives the main financial sources that have been allocated come from

EU sources, from the Regional Fund for productive activities, from specific national funds. The total amount

coming from these resources of 143.340.000 Euro. The more general outlook of the commitment of Region

Umbria to the improvement, strengthening and support to the territory and its growth includes resources

coming from EFS ROP, RDP and Ob. 3 ROP. The latter is particularly relevant for the Region as it is coherent

with its policies regarding partnerships with other European and international regions. In particular, close

relationships have been established with the North-East Region of Romania, with the Province of Prahova

(both Romania) and with the Province of Vojvodina (Serbia), in order to develop common projects in

themes of local development, environmental protection and enhancement of cultural heritage.

Lastly, it is worth mentioning that a recent study by the Italian newspaper Il Sole 24 Ore has applied

the 2009 findings of the Stieglitz Commission (set up by President Sarkozy in order to produce a report on

the Measurement of Economic and Social Progress) to the Italian Provinces. By measuring the indicators

concerning quality of life, health, schooling, personal cultural activities, participation to political life,

security, environment and social relationships, the two Umbrian Provinces come at the top of the rank in

Italy: Perugia 12th (56th by ‘traditional’ GDP measurement) and Terni 21st (62th GDP).

These parameters contribute to generate the attractiveness of Umbria and testify of the social and political

efforts put into place to make the region an better place to live, invest and create wealth, both material

and immaterial.

SLOVENIA: Mura - Murska Sobota



2004 2005 2006 2007 2008

STRUCTURE

GDP (m €) 1.132 1.176 1.249

GDP ( y/y)

GDP per capita PPP (€) 9.072 9.399 10.223

Structure GDP (%):

Agriculture 8,1 8,3 6,9

Industry 35,9 34,5 36,2

Services 55,4 57,3 56,9


No. active companies 1.125 1.149 1.176 1.268 1.376

Total turnover 293.523 (m SIT)

319.480 (m SIT)

380.136 (m SIT)

1.812.260.000 (€)

2.050.086 (€)

% of SME turn./Total Turn 75,1% 74,5% 84,55 84,8% 86,9%


Agriculture 14,0% 12,8% 13,4% 13,0 %

Industry 44,8% 41,0% 40,4% 40,1%

Services 41,2% 45,7% 46,2% 45,9%

EMPLOYMENT

Total employment 35.341 35.178 35.140 35.637 35.393


Employment per sectors:

Sector A (%)

Sector B (%)

Sector C (%)

V.A. per employed (€) 18.906 20.369 23.876

Average gross wage (€) 930 1.000 1.009 1.063

Unit labour cost (€)

Labour productivity (y/y)

Unemployment (%) 16,8 17,1 15,7 13,4

Unemployment per education level:

Primary 39,2 39,1 37,5 36,6

Secondary (vocational or else) 49,1 49,3 49,4 49,4

Tertiary (university) 11,7 11,6 13,1 14,0

FOREIGN TRADE

Import of goods (m €) 491.861.597 649.688.464

1. good category (SITC 2digit) 2710

2. good category 8471


Export of goods (m €) 447.523.814 550.992.575

1. good category(SITC 2digit) 12.407



Trade balance (m €)


1. partner (county + m €)

2. partner

3. partner

FDI inflow (m €)

Main FDI sectors


Sector B

Sector C

As Slovenia has no official independent regions, with their own governmental authorities, Pomurje

is only one of the 12 statistical regions of the country. However, there is a lack of statistical information

about the region and especially of data concerning the economic activities of regional companies.

Pomurje is the least developed region in Slovenia with reference to all economic indicators. The

traditional activities, like textiles and agriculture, have been hit by the modern economic environment, thus

resulting in the worse economic situation ever. In 2009, two major losses affected the regional economy:

the closing of the biggest meat processing company and the closing of the once biggest clothing company in

Europe. The meat processing company has very little chances to be renewed, whereas the clothes

producing company of Mura is in the process of restructuring and basically restarting on new grounds. This

means, that the importance of the economic sectors in the region is changing and has shifted to other

sectors.

Pomurje has more than 8.000 unemployed (end of September 2009), 75% of which with less than

middle school education level. This makes the possibility to attract or develop high tech industries difficult.

At the end of 2008 in Pomurje there were 1.376 companies and 3.127 entrepreneurs. These numbers have

had a positive trend year by year, but the problem is in the structure of companies. As for the

entrepreneurial activities, the entrepreneurial spirit is developing, although more because of the “necessity

entrepreneurship” and not because there is really need of high tech or very profitable activities. The

average number of employees in the companies in Pomurje was 14,2 persons. 409 registered companies

have not had any employees.

On the other side the amount of industrial production in 2008 has fallen for the first time in 5 years

by 1,5%. Exports of regional economic entities in the region amounted to 19.777.040 Euro, whereas

imports amounted to 22.944.376 Euro. Exports rose by 2 %, imports by 7 %.

As all companies together had a positive balance, 12,5 m Euro, entrepreneurs in Pomurje generated all

together a profit of 21,93 m Euro. The comparison with previous years shows that the economic power of

the region has worsened in 2008. 62% of companies in the region had a decrease in profit in 2008

compared to 2007. In fact, 438 companies that had profit in 2007 have turned into red digits. The highest

losses have been registered in restaurants, catering activities and agriculture. The highest profits were

registered in processing industry and construction. Indicators for Pomurje are lower than in Slovenia:

Income/employee: 34 % less

Added value/employee: 30,2 % less

Gross salary/employee: 20,2 % less.

Because of the above description of the economic situation in the region, the Slovene government

adopted a special law for the Pomurje region aiming at stimulating the regional economy and attracting

investments to catch up with the rest of the country. The Law contains the following measures:

- Improvement of Pomurje’s competitiveness:

o Priorities: geothermal water and renewable sources of energy, agrofood and tourism

o Target: 1.000 new employees

o Co-financing of investments to create new employment

- Incentives for investments (70 % of the value of investments into technology can be

deducted from the corporate tax base)

- Incentives for employment creation (70 % of the wages of new employees can be deducted

from the corporate tax base for 1 year, while in case of employment of the “target groups” the company

gets reimbursed for the social contributions for 2 years)

- Priority handling of projects from Pomurje:

o Establishment of an intercompany training centre: further training of employees

o Establishment of a regional economic centre: infrastructure for economic development

o Improvement of competitiveness in the agrofood sector and diversification of agriculture

o Improvement of the water supply system in Pomurje

- Establishment of a governmental office in Pomurje to coordinate activities among the

ministries and vertically between the region and the government. The office will be also responsible for the

promotion of the region and the preparation of quality projects for sourcing funds.

Pomurje is unfortunately far from the Slovene average with reference to all indicators. Although it

had very positive trends in the development of entrepreneurship and also some significant foreign direct

investments, the region still has not overcome the structural problems of the past. Pomurje has 4 industrial

zones, among which the most important one is Murska Sobota, with 12 ha of land available out of 50 ha in

total. The Lendava business park is almost full, the Ljutomer business zone is developing and will have a

total of 39 ha of available land for investors. Gornja Radgona interestingly has sold the land to a private

investor in order to develop infrastructures and sell industrial land to other investors. A great potential is

also represented by the fact that almost every municipality has a few ha of land available for investors.

Therefore, it could be said that Pomurje has a sufficient amount of land available for investments.

In case of brownfields it is a different situation. There are just a few brownfield sites available,

while the biggest opportunity at the moment is in the production facilities of Mura, the bankrupted

clothing factory. However, it is difficult to find appropriate investors for this site, because the premises are

huge and it is difficult to break them up into smaller units.

As for military brownfields, there is actually only one: the military campus of Murska Sobota. The

municipality of Murska Sobota has developed renewal plans for this site, but the Ministry of defence is not

yet ready with the new site for the military camp and in this moment it cannot be said when and how the

Municipality can get the old campus into its ownership and develop its plans.

1.2 Main sectors

Considering the lack of available information, it is very difficult to draw a detailed analysis of the main

sectors of the region.

1. Companies

The most important sectors by number of companies are:

- Sales (wholesale and resale): 402 companies

- Processing industry: 222 companies

- Expert services (accounting, legal and business advisory, etc.): 194 companies.

The most important sectors for number of employees are the following:

- Processing industry: 10.795 employees (including about 3.000 from Mura, which is max

1.000 in 2009)

- Construction: 2.114 employees

- Restaurants and catering: 1.173 employees.

The highest income from sales is generated in the following sectors:

- Processing industry: 818 m Euro

- Sales: 625,2 m Euro

- Construction: 264,7 m Euro.

In terms of assets, the most important sectors are: processing industry, sales and construction.

The most important economic activity in the region is the processing industry, which generate 39,9

% of the total income from sales, whose assets represent 40,7 % of all companies and employ 55,4 % of

employees in the region.

2. Entrepreneurs

Among entrepreneurs, the most important sectors by number of entrepreneurs are:

- Sales (wholesale and resale): 534

- Construction: 491

- Restaurants and catering: 438

The most important sectors for number of employees are:

- Construction: 1.199 employees

- Processing industry: 857 employees

- Restaurants and catering: 690 employees

The highest income from sales is generated in the following sectors:

- Construction: 73,1 m Euro

- Sales: 64,8 m Euro

- Processing industry: 56,1 m Euro

In terms of assets the most important sectors are processing industry, logistics and sales and construction.

From the sectorial data we can see that the processing industry and construction could generate

innovativeness and also benefit from cooperation with centres of knowledge. Innovation is spurred by the

two main BSO’s in the region: the Regional Development Agency Mura and the Pomurje technology park.

RDA Mura has a special focus on the use of new materials (polymers) and employs 3 young researchers.

The aim is to connect these centres of knowledge with the regional economy. In reality this is a difficult task

because companies in the region are not so R&D oriented. They are more followers on the market or even

subcontractors of other companies. The Pomurje technology park focuses on newly established companies

and enables them the access to laboratories and know-how of the Universities in Slovenia, mainly in

Maribor.

FDI are concentrated almost 100 % in the processing industry sector. Pomurje has the advantage of

being in the EU and thus gives investors security and flexibility. The average wage of under 1.000 EUR is still

offers to investors a cheap labour force. The biggest problem of the region is the education level of the

8.000 unemployed persons. The low educational level namely doesn’t allow to attract high tech production

or production with very high added value. In this moment the aim is to attract FDI which require simple

production techniques but have the potential for further development into higher added value activities in

the future.

The hope is that the new law for Pomurje is going to change the situation also in the field of

innovation and R&D, as well as to attract investors with high potential.


This paragraph concentrates on the sectors/activities that the law for Pomurje defines as the

sectors with high potential:

1. Geothermal water and renewable sources of energy: Natural resources are very important

but it is not the case to be very enthusiastic. Geothermal water namely is not very clearly regulated in the

moment and to have serious potentials on this field, regulatory changes are needed. The potential of

geothermal water is in heating of greenhouses, buildings and for production of electric energy. Other

renewable sources of energy have great potential as well, but the number of newly created jobs in this field

is low.

2. Agrofood and rural development: This sector is a potential sector in terms of further

development of the traditional advantages of the Pomurje region. Food industry should be accompanied

with regional trade marks whereas rural development should be connected to new types of agricultural

production (herbs, fruits and vegetables which would be packaged on farms, etc.) in order to achieve higher

added value.

3. Tourism: Tourism is already a propulsive sector in the region. 10 % of all overnight stays in

Slovenia is generated in Pomurje. The main reason for this is the geothermal water and big tourism resorts

based on this. The law instead of these resorts is concentrated on complementary activities up to the spa

resorts.

As for the processing industry sectors, the most interesting production is on the fields of

electronics, lighting and other activities, which can deliver higher added value for the region. These

activities can in the short term employ the available workforce in the region and develop more important

activities in the future.



In Slovenia all the measures and actions of SMEs and investment policies are centralised. On the

regional level the only available tool is the Guarantee scheme for Pomurje. All other subsidies and

incentives are given by the Ministry of the Economy of the Republic of Slovenia, the Entrepreneurship fund

and the Public agency for entrepreneurship and foreign investments. This means that the BSO’s from the

region have to cooperate closely with the named institutions in order to get support for companies in the

region. Moreover, some companies go directly to these institutions, not using the support of BSO’s in the

region.


The Ministry of the Economy of the Republic of Slovenia has prepared the “Programme of measures

for promoting entrepreneurship and competitiveness 2007-2013” which is the basic document for the

support to SME’s. It defines following measures:

Regional guarantee schemes are active in the environment as individual projects within

entrepreneurial centres, which to a smaller extent cover smaller investments of SMEs in individual regions.

Certain regional guarantee schemes are also linked with the Slovene Enterprise Fund. At the local level,

municipalities provided favourable finance for companies primarily in the form of microloans and

subsidised interest. At the national level, the implementer of measures of financial support was the Slovene

Enterprise Fund (hereinafter: the Fund). Financial instruments offered by the Fund were direct loans,

indirect loans through banks, guarantees and subsidised interest. Between 1996 and 2005, the Fund

supported approximately 1510 investment projects of small and medium-sized enterprises and approved

roughly 126 m Euro of various favourable finance (indirect loans, direct loans, grants and bank loans

guarantees). Measures of the Fund in the area of investment projects in tangible and intangible assets of

SMEs, approved by the Fund only by using purpose-allocated assets and the bulk being in the form of risk-

free instruments, enabled the creation of a large number of new jobs and improved their competitive

ability, because of quality investments in technological and other upgrades in all industries and, in the last

two years, in those not prohibited by the State Aid Control Act. The Fund used the existing capital in the

1996-2005 period to support on average of around 151 projects amounting to 12 m Euro thereby enabling

the creation or preservation of an average of 640 jobs annually in the SMEs segment.

An increase in favourable financial sources for supporting development investments of SMEs has

been noted in recent years. The reason lies in increased funds from the national budget for promoting

SMEs in Slovenia, notably the programmes utilising funds from the European structural funds intended for

direct incentives to investments of SMEs. The development investments are also supported by consulting

services as SMEs can use favourable entrepreneurial consulting supported by the voucher consulting

programme to prepare investment studies.

In Slovenia the Slovene Association of Venture Capital Funds is in function, which currently includes

five companies linking their activities also with the function of venture capital funds.

On the regional level, the RDA Mura is managing the Guarantee scheme for Pomurje. From 1997

the RDA Mura has granted almost 5,5 m Euro of guarantees for bank loans for investments and 1,2 m Euro

guarantees for micro credits (which can be used when a company employs an unemployed person).

FDI ATTRACTION

The RDA Mura is working operatively on FDI attraction from 2004 onwards. The role of RDA Mura is

firstly to persuade the investor (also investors from other parts of Slovenia) that Pomurje is the right choice

and when achieving this, RDA Mura is supporting the investor in the preparation of projects for obtaining

incentives from the national level. The aftercare services are implemented also after the investor has

started the investment.

FDI attraction for Slovenia as a country is done by the Public agency of the Republic of Slovenia for

entrepreneurship and foreign investments (JAPTI), which also manages the public tender for incentives for

foreign investors. The public tender offers incentives for 3 categories of investments:

- Manufacturing

- Internationally tradable services

- R&D activities

Investors have to prepare a tender which is evaluated with the max numbers of 100 points. There

are categories of points (for example 75-79 points) which define the amount of money that is given for

every newly created employment. The offer of JAPTI (incentive) can however not exceed the max value of

state aid, which is 30% for large, 40% for medium and 50% for small companies. The incentive is given as

directly transferred money at the beginning of the project implementation and is secured with a bank

guarantee. After the investor proved that the investment was implemented and employment created as

stated in the project presented, the bank guarantee is released and the obligations of the investor fulfilled.

The investor has to keep the number of employees (as defined in the project) for at least 5 years after the

proposed number of jobs is achieved.

OTHER SUPPORT PROGRAMMES FOR SMEs

Incentives for SMEs are given by the Ministry of the Economy over the Entrepreneurial fund, which

is also part of the Ministry. The list of tenders for 2009 is in the appendix to this document.


The priorities of the National development programme of the Republic of Slovenia are:

1. Competitive economy and faster growth will contribute to the fulfilment of the economic

goals set by the Lisbon Strategy. The priority is to promote entrepreneurship and investment in human

resources in companies, with the aim of increasing the competitive capacities and innovativeness of

companies. At the same time, it aims towards promoting investment both from foreign companies in

Slovenia and investment by Slovenian companies abroad. The priority is also aimed at establishing efficient

transport, information and communication infrastructure.

The aim of the first capital development priority is to promote entrepreneurship, increase

innovation, the scope of domestic and foreign investment in the economy and the transport, information

and communication infrastructure, including the development of human resources in companies and the

promotion of internationalisation of Slovenian companies to increase competitiveness.

2. Effective creation, two-way flow and application of knowledge for economic

development and quality jobs, will contribute to greater link the economy with higher education and

research institutions and to promote the development of tertiary knowledge for greater economic

competitiveness, especially through an increased degree of innovation and thereby and increased

proportion of innovative products and services, through the creation of new, demanding jobs with higher

value added and increased employee productivity. Infrastructure for knowledge is also ranked in this

priority.

The aim of the second capital development priority is to increase support for tertiary education and

research and development activities for the needs of the economy and the labour market for the global

competitiveness of companies, products, services and persons.

3. An efficient and less costly state, including an more efficient and successful public

administration, will improve the quality of state services, as the establishment of public-private

partnerships, reform of labour market institutions, the promotion of the development of non-

governmental organisations and civil dialogue, the development of local development initiatives within the

framework of regional development institutions. This priority also ensures the better functioning of the

judicial system.

The aim of the third capital development priority is to raise the quality and efficiency of state

services and to reduce public spending by excluding from budgets those services that can be provided in the

market.

4. Modern social state and higher employment, including the development of the education

system, the improvement of the employability of individuals, the prevention of social exclusion and

strengthening active labour market policies, will increase the employment prospects of vulnerable social

groups (the elderly, women, young persons, disabled persons and others). This priority also relates to

overcoming the structural gaps in employment through vocational and geographic mobility, the

development of social entrepreneurship, the improvement of the population’s state of health, reducing

housing problems and reducing the exclusion of vulnerable groups in society.

The aim of the fourth capital development priority is to achieve a society of full employment and to

prevent poverty and the consequent social exclusion through education, improvement of labour market

flexibility and by ensuring job security.

5. Integrating measures to achieve sustainable development, aim at promoting harmonised

regional development, the development of the countryside and fisheries, the strengthening of food security

and the improvement of the quality of life in urban and rural areas. Programmes to promote renewable

energy sources and efficient energy use are also prioritised. The priority includes the improvement of

spatial and real estate management and ensures the conditions for improved operation of the real estate

market. It includes better environmental management and establishing an efficient environmental

infrastructure. Promoting the development of the national identity, culture and cultural heritage as well as

sports programmes and sports infrastructure is also prioritised. Priority areas also include programmes to

protect health that are integrated into sectorial policies, reducing regional differences in health and

promoting healthy behaviour patterns.

The aims of the fifth capital development priority are to ensure a high quality of life, based on the

development of culture and national identity, more harmonious development of the regions, security,

spatial management and sustainable mobility, as well as an improved quality of the environment and

adequate municipal service infrastructure.

In principle, EU funds can be obtained to finance all five capital development priorities of the NDP,

which all satisfy the eligibility criteria to access at least one of the EU funds. It is common practice in the EU

to determine joint substantive priorities (European value added). This is the basis for coordination between

a Member State and the European Commission. Programme documents are prepared so as to guarantee

synergy among the envisaged activities and a limited number of priority fields. Administrative costs arising

from fund management are also considered in choosing activities to cofinance with EU funds. This often

requires a critical mass (project size) and a concentration of activities down to a limited number of contents

and instruments, since this increases the absorption capacity. The availability of other financial sources,

such as the European Investment Bank, is also considered in the determination of priority activities.

As part of the implementation of the EU Cohesion Policy, in drawing up the National Strategic

Reference Framework 2007-2013 Slovenia and the European Commission agreed that the common

development goals would be reached by implementing the following operational programmes:

1. operational programme to strengthen regional development potentials,

2. operational programme for human resources development,

3. operational programme for environmental and transport infrastructures,

4. programmes of goal 3 - territorial co-operation:

cross-border programmes (cross-border cooperation with Austria, Italy, Hungary, cross-

border cooperation of the IPA with Croatia and the IPA in the Adriatic initiative),

transnational operational programmes (Alps region, South Eastern Europe, Central Europe

and the Mediterranean),

interregional operational programmes (interregional cooperation programme INTERREG

IVC, interregional programme Interact, interregional programme ESPON and the interregional programme

URBACT).

Regarding the implementation of the EU Common Agricultural Policy, Slovenia and the European

Commission first coordinated the National strategic plan for rural and fisheries development. On this basis,

a programme for rural development and a programme for fisheries development were adopted.

The distribution of EU funding among operational programmes is presented in Table 2. By scope of

funds, the most important programmes are the Operational programme to strengthen regional

development potentials (a third of all funds), the Operational programme to develop environmental and

transport infrastructures (31.9%) and the Rural Development Programme (17.6%). Individual development

priorities and priority orientations will be implemented within the operational programmes, and these will

be financed by five EU funds (European Regional Development Fund, European Social Fund, Cohesion Fund,

European Agricultural Fund for Rural Development and the European Fisheries Fund).

A third of all Cohesion Policy funds (1,412 m Euro) is allocated to Cohesion Fund programmes, and

the rest for programmes under the European Regional Development Fund (ERDF) and the European Social

Fund (ESF). Finances from the Cohesion Fund (CF) will be evenly distributed between the environment

(including energy) and transport. A total of 756 m Euro will be allocated for the ESF, whereby Slovenia is

ranked among comparable countries which invest relatively the largest share of available assets in human

resources development. A total of 60 m Euro from the ERDF will be invested in European territorial

cooperation. The available funds will finance a considerable number of programmes, since Slovenia is

taking part in five cross-border, four transnational and four interregional programmes.

Table 2

EU operational programmes by NDP priorities (EU funds only)

OPERATIONAL PROGRAMME

Total value of the OP

within 2007-2013 PRIORITIES OF THE NDP

million euros

in %

1. A competitive

economy and faster economic

growth

2. Effective generation,

two-way flow and application of knowledge for

economic development and quality jobs

3. An efficient

and less costly

state

4. A modern

social state and higher

employment

5. Integration

of measures to achieve sustainable

development

Operational programme to

strengthen regional

development potentials

1,710 33.6 755 327 28 15 585

Operational programme for human resource

development

756 14.9 38 382 91 244 0

Operational programme to

develop environmental and transport infrastructure

1,636 32.2 1,075 0 30 0 531

3rd

Objective operational

programmes, Territorial

cooperation

60 1.2 0 0 0 0 60

Rural development programme

900 17.7 0 0 0 0 900

Fisheries development programme

22 0.4 0 0 0 0 22

Totals of all operational

programmes 5,083 100.0 1,867 709 149 260 2,098

structures in %

100.0 36.7 13.9 2.9 5.1 41.3

The major portion of EU funds (41.3%) will be directed to fulfil the fifth priority of the NDP

(measures to achieve sustainable development). This is followed by the first NDP priority (competitiveness

of the economy) with 36.7% and the second NDP priority (knowledge for economic development and

quality jobs) with 13.9% (Table 11).

SMEs can find opportunities in almost every priority of the NDP. Funds are allocated thru public

tenders of different ministries.


In Slovenia brownfield investments are not separately categorised. The cost of procurement of

buildings is normally an eligible cost in tenders.



In Pomurje the following BSO’s are presently operative:

- Regional development agency Mura

- Technology park Pomurje

- Chamber of commerce of Pomurje

- 4 areal chambers of crafts

- Regional employment office (regional unit of the Slovene Employment office)

- 4 local development agencies, each covering a certain area of the region

Regional Development Agency Mura (www.rra-mura.si) is the leading development institution in

the region of Pomurje (on both sides of the river Mura). RDA Mura plays a key role in the economic

restructuring of the region, in the promotion of a better co-operation between private and public sectors in

the multicultural area through the promotion, guidance and linking of a sustainable business and

technological development, and in contributing to the achievement of a higher standard of living, through

the integration of Pomurje region (Euregio). All this is possible only with the good co-operation with

municipalities, local development agencies, institutions, organisations and companies as the driving force

of economical development.

Its main activities are: promotion of regional development in the Pomurje region through

preparation and implementation of the Regional development program, offering financial incentives for

SMEs, activities in the field of technological development (innovation centre), also through its research unit

and variety of activities in the field of human resource development, especially through the Pomurje

Training centre Rakičan, the Pomurje Labour Fund and the Foundation Knowledge for development for

talented students.

The offer of the Pomurje Technology Park (http://www.p-tech.si/eng/default.aspx) is presented in

the following chart:

The Chamber of commerce and chambers of crafts are classic chambers, which offer information

support and represent the interests of their members. They does not offer any incentives, does not prepare

any projects and therefore cannot be counted as actual BSO’s, although at least with the information giving

they can provide actual benefits.

The regional employment office is the long arm of the national employment office and takes care

of the implementation of the so called “Active employment policy”. This policy gives (not just to SME) the

possibility to receive funding by employing unemployed persons or funded training for companies.

The 4 local development agencies are more oriented towards municipalities and usually play the

role of informing SME about where they can get support.

Table 3

Regional development agency Mura Ltd.

Address Lendavska 5a, 9000 Murska Sobota


Legal Status Ltd. Non-profit


Fields of activity Business consulting

N. of employees 17


Competencies / skills Preparation and implementation of projects, coordination of the regional development programme, guarantee scheme for Pomurje, one stop shop, attraction of investments

Direct Beneficiaries of BSO’s activities Municipalities, companies, population in general

Main activities addressed to SMEs Guarantee scheme, consulting, support in the preparation of projects for public tenders

Main activities addressed to start ups Establishment of companies and to that related consulting (free of charge)

Sources of funding National, local and mainly own income from projects

Pomurje technology park Ltd.

Address Plese 9a, 9000 Murska Sobota


Legal Status Ltd. Non-profit

Years of activity 6


N. of employees 5

Competencies / skills Preparation and implementation of projects, renting of premises and equipment, business consulting

Direct Beneficiaries of BSO’s activities Start-ups and spin-offs

Main activities addressed to SMEs Preparation of projects for public tenders

Main activities addressed to start ups Consulting and renting of premises under favourable conditions

Sources of funding Mainly own income from rent and projects


4. CONCLUSION

The first and biggest problem by preparing the Context analysis is the fact that Pomurje is a

statistical region, but most of the very specific questions in the analysis cannot be answered or supported

with accurate statistic data. On the other hand, Slovenia has no regions with decision powers and budget to

promote priorities for its development. The region is preparing a Regional development programme, but

mostly it comes down to support of regionally interesting (in line with RDP priorities) projects in the

application for national tenders. Another important fact is that namely Pomurje generates in average less

projects than other regions and consequently receives in average less money from national tenders than

other regions.

Pomurje has a very weak economy. The reason for this is in the traditional structure of its economy

where the two most important sectors (agriculture and textiles) are facing huge difficulties. Two of the

most important once parade horse companies Pomurka and Mura have bankrupted this year, leaving

around 2500 people unemployed. Regional development agency Mura and the Pomurje technology park

have been very active on the promotion of entrepreneurship in the past 6 years. There has been some

success but not enough to compensate negative economic developments in this period.

Development of entrepreneurship is always connected to some specific know-how of the

entrepreneur. The regional education level (out of 9.851 unemployed 75% have up to the IV. Educational

level) is very concerning and does not allow a booming entrepreneurial development. From another point

of view, it does not allow the development of high-tech activities on a larger scale.

The development of new types of business support services is crucial for the Pomurje region.

Economic development can be achieved by supporting 3 different areas of development:

- Development of the existing companies: enabling them to develop applicative R&D

activities and access the know-how from centres of know-how. This can be achieved by developing

competence centres for most important economic sectors;

- Development of entrepreneurship: offering risk capital funds, promoting entrepreneurship

and offering very active support in the development phase;

- Attraction of investments in form of Greenfield and Brownfield investments, which will use

the pool of workforce available in the moment (not highly educated) but have the potential to upgrade

activities to ones with higher added value and technology.

The government of the Republic of Slovenia has adopted a law for Pomurje, which should

contribute to solving the present critical situation of the region. The law identifies the following competitive

advantages of the region:

- Geothermal energy and renewable energies;

- Agrofood and rural development;

- Tourism.

All together the Law secures 272 m Euro for the following 5 years, from which 90 m is for the

development of water supply, the rest is in form of subsidies, tax incentives, development of projects and

training programmes of employees.

As a general summary, it could be said that Pomurje in this moment faces huge difficulties which

are the results of the past economic structure. However, due to the Law for Pomurje, the next 5 years

surely represent a great challenge to restructure the economy and set the basics for a successful

development in the future.

GREECE: Drama – Kavala



Table 1:

2004 2005 2006 2007 2008

STRUCTURE

GDP (mln Eur) 2.8 3.1 3.2 3.3 3.2

GDP ( y/y) +1.10 +1 +1 -1

GDP per capita PPP (Eur) 12000 12400 12800 13200 12800

Structure GDP (%):

Agriculture 10.5 10.5 10.7 10.7 10.5

Industry 36.5 36.4 36.7 38.2 39.1

Services 53 53.1 52.6 51.1 50.4


N° active companies 16145 16320 16120 15950 15968

Total turnover (mln Eur) 943285 1235964 1356892 1368951 1269311

% of SME turn./Total Turn 1.71 1.32 1.18 1.16 1.25


Agriculture 8.9 8.9 8.9 8.3 8.3

Industry 45.2 46.3 43.2 41.8 41.9

Services 54.1 44.8 47.9 49.9 49.8

EMPLOYMENT

Total employment (.000) 98763 101325 110421 103654 106987

% SME emp. on tot. emp. 63.2 68.4 69.4 65.2 69.1


Sector A (%) 6617 6974 6320 5980 5873

Sector B (%) 30122 29563 31345 32578 35462

Sector C (%) 62023 64788 75456 65096 65652

Value added per employed (Eur)

Average gross wage (Eur) 950 1050 1150 1180 1250


Labour productivity (y/y) 94 93 98 101

Unemployment (%) 16 14.3 15.8 13.2 14.8


Primary 4.5 4.3 4.8 4.9 4.2

Secondary (vocat. or else) 12.3 13.5 10.9 11.2 12.1

Tertiary (university) 18.9 17.6 18.4 18.6 17.8

FOREIGN TRADE

Import of goods (mln Eur) 1689 1720 1780 1810 1890 1. good category (SITC 2digit) 2. good category 3. good category

Export of goods (mln Eur) 1580 1678 1720 1790 1810 1. good category(SITC 2digit) 2. good category 3. good category

Trade balance (mln Eur) -109 -42 -60 -30 -80

Main trade partners: 1. partner (county+mln Eur) Germany +10 +23 +31 +28 +15 2. partner UK

+3 +2 +12 +8 +6

3. partner Bulgaria

+2 +1 +1 +1 +1

FDI inflow (mln Eur) 6 8 3 12 8

Main FDI sectors

Sector A (Cumulate data) 2 1 0 1 1

Sector B 1 6 3 2 2

Sector C 3 1 0 9 5

The FATE partners in the Region of East Macedonia and Thrace are the 2 out of the 5 prefectures of

the Region, those of Drama, where the Drama Chamber of Commerce and Industry is the partner, and that

of Kavala Prefecture where the Kavala Municipality is the partner. The 2 prefectures are situated at the

north-most part of Greece; They border Bulgaria on the North with the region of Gotze Celchev which is

also a FATE partner. On the south they border with the Aegean Sea. On the west in 1.1/2 hours drive is the

major urban conglomerate of Thessaloniki, while on the East the Turkish border is only 2 hours away. The

total population of 250 000 (2001 census) has a tendency to increase. The 2 major urban economic centers

are those of the city of Drama with a population of 55.000 and that of the city of Kavala with 75000 (2001

census).

The average per capita GDP of the combined area in 2008 was 12.800 with small variations of the

ears. With such a combined GDP per capita the region ranks 27th among the 52 prefectures in the country.

The unemployment rate is rather high and above the national average. In 2008 reached 14,8 %. The Drama

region has much higher unemployment than the Kavala region. Growth rates are positive but on average

lower than the rest of the country.

The primary sector is considerably developed, compared to the national average and is linked to

the secondary sector. The primary sector is represented by agriculture and forestry: cultivation of intensive

crops, such as vegetables, vineyards, tobacco, potatoes, cotton, fruits, as well as cereals. The application of

the Common Agricultural Policy (CAP) shall lead to new, more competitive and cost effective cultivations. In

general terms, efforts are made to change the traditional cultivation of cereals and turn to other crops,

organic ones included. The area has developed crops of olives, cereal, grapes, fruit and vegetables. Most of

these products are used as rrw material in the secondary sector where the food processing industry is a

major employment and income baring sector in the overall industrial production. Animal farming is

important in terms of employment and income in the mountainous area of Drama while on the other hand,

fisheries and fish farming is equally important in the costal are of Kavala.

Considerable efforts have been made for strengthening the secondary sector which has faced a

decline the last decade with the consequence of the opening of the border with neighboring Bulgaria

where many industries moved production for lower labor costs. Main industrial sub-sectors, clothing and

textile industry faces heavy drop, experienced during the industrial development of the region in the ‘90s,

resulted in the considerable decline of the sector and the implementation of unfavorable structural

changes. Another economic issue of great importance is the moving of enterprises. In the past few years,

many enterprises of the textile sector moved from Drama to Bulgaria in order to decrease the production

cost by taking advantage of the low wages of the Bulgarian workforce. The restructuring process supported

the creation of new industries which had very low GDP in the region but in the last 10 years are developing

as major industries with remarkable rates of growth and excellent exports of their products. There are the

industries that have developed in the food processing industry either with the use of agricultural farming

products, or fisheries and dairy products as well. One other industry that is flourishing with very good

results is that of the wine and beverage (ouzo) production with good exports and good brand names of

products.

In the secondary sector one must add the extracting and marble processing industry. The combined

area has bout 70% of marble production in Greece and constitutes about 30% of total Greek marble

exports. The industry is well developed, uses new technologies with innovative techniques of marble

quarrying and processing that are exported in other countries as well. The product is of significant quality

and is selling well in the international markets. The production of energy from alternative sources is a new

activity that is developing in the region.

The basis of the secondary sector depends on small or very small industries with most of the times

lag in the adoption of new technologies and the rationalization of their production capacity. Major

infrastructure to support SMEs does not exist in the combined region and calls for the creation of Business

Centers, Incubator Centers and technology parks did not materialize at all.

The service sector is very active. The enterprises operating in the tertiary sector are mainly located

in the cities of Drama and Kavala. The majority of these active enterprises are in the financial sector /

banking services, telecommunications, trade and logistics. The last few years other forms of service

activities are developing in the region that have to do with new technology and energy.

The service sector presents a dynamic potential for development. The cross border area has a

significant competitive advantage, namely, its outstanding combination of natural resources. The mountain

relief, the rivers and forests, the natural reserves suggest an attractive pole for tourism during all seasons.

The area has the potential to welcome visitors with diversified interests and offer them alternative

solutions for leisure and tourism. The tourism industry is constantly developing and perspectives for

additional progress are high. The combined are offers a variety of tourist attractions that range from

mountainous alternative tourist activities in Drama to summer resort sea activities in Kavala. It should be

noted, however, that the initiatives taken so far lacked strategic coordination. Indeed, some tourist

infrastructure exists, but without particular interconnection between services and professionals of the

tourism sector.

On the other hand, during the past ten years, thanks to the ROP and to Community Initiative

LEADER, a burst of agrotouristic infrastructure, like small cottages, traditional restaurants and business

with local products and gastronomy has been recorded. This trend is quite dynamic in both sides of the

eligible area and seems to be capable of transforming entire regions into poles of agrotouristic interest.

Additionally, the multiple unique resources can easily attract visitors and offer them a multitude of choices.

The trade sector is well developed in the region. The balance of trade is negative for the region

because although we good exports on wine, marble, farming products and food processed products we

have to import raw material for the other sectors of the industry and also to import technology, energy,

etc. The main export destination is Germany where farming products are welcomed in the local markets.

The UK is an important market where ready to wear, processed food, wine and fishing products are

exported. Neighboring Bulgaria is a good product destination market while the last few years trade with

Turkey is developing fast. The region imports come from Italy, Bulgaria, Turkey, Germany, etc.

The main problems that SMEs report to face in Drama and Kavala regions are an unsupportive

environment – distance from power centers, poor urban & regional planning: unclear where activities can

be located at; several conflicts, high transportation costs and waste management problems (treatment &

disposal).

One of the major problems is the lack of space planning allocation, creating a number of important

problems:

1. the disorderly urbanization and un-clear definition and classification of sites where you can develop

various business activities.

2. the negative position towards the secondary sector and manufacturing, as traders cannot know

precisely who can install the enterprise without creating problems.

3. the landscape’s loss of natural beauty and identity.

The absence of proper urban of sub-urban space to develop business activities has led some of the

economic sectors to look into available space in the abundance of abandoned military camps that exist in

the area and are unused.

Other problems associated with the development of entrepreneurship in the region are:

o Temporary licenses issued to businesses operating in predetermined areas lead to the

expansion of the problem not to its solutions

o Companies are suspended after the expiry of the licence or public’s complaints

o The absence of scientifically-documented pollution limits and the corresponding staffing

control mechanisms.

o The lack of specialized staff to implement and monitor relevant studies.

o The absence of an active advisory role the Ministry and the Region.

o Agricultural activities result to threats to the natural environment, although at present there

are not very serious:

o Inadequate management of forest resources, forest fires, overgrazing or undergrazing lead to

degradation of the natural environment.

o The illegal logging that is found in areas outside forest management in some cases leads to

illegal construction

o Quarries are a cause of disturbance of the landscape and are a major environmental problem.

The region has major shortcomings in waste collection and treatment infrastructure.

In the region exist the infrastructure to connect the energy sources of natural gas to the industrial

areas yet this is something that has note developed yet. .

Degraded is also the infrastructure of the rail network in Drama yet the harbour facilities in the

Kavala harbour are very efficient and are used well by the industries for the export-import of products.

Same effective is the air facilities in the local airport while the major international airport of Thessaloniki is

not that far away.

Following discussions with the local FATE partners’ the most important legal and institutional problems

reported in the interview and the meetings are the following:

o When a company changes its legal form, it is required to report the change to all collaborating

banks and institutions.

o The procedure for obtaining a loan for a business is a bit slow because all the assets of the company

must be checked.

o When a company is listed in the list of unfavourable elements “TEIRESIAS,” automatically are added

to this list the names of the partners of the company and the procedure to withdraw from the list is

very long and difficult.

o Besides the above problems, we could even export some of which appear across the legal,

regulatory framework and infrastructure. These are:

o overregulation

o bureaucracy

o capacity

o low productivity

o unpredictable changes rules

o high operating costs

o delays

o repeated postponements

o corruption

Finally, it would be wise to present a number of other serious problems that constitute an obstacle

to the development of the enterprises. These problems are of more general nature concerning

entrepreneurial development in Greece. Some of these problems are:

o Bureaucracy and inefficiency.

o Important economy and enormous contribution evasion

o High tax rates

o Corruption and transparency and the unreliability

o Unclear and uncertain regulatory framework

o Difficulty starting, operation and closure

o Lack of competition

o Delay in broadband infrastructure for the Information Society and Knowledge

o Education system in isolation the needs of business and labor market

o Lack of innovation in products and services

o Lack of entrepreneurial opportunities and high difficulty finding funds for new businesses

1.2 Main sectors

Agriculture and food producing industry

The sector of agricultural production is one of the most important in the area in terms of

production and employment rates. Over forty agricultural production companies are operating,

representing the 16,4 % of the total of this sector’s activity in Greece, employing over 2600 employees.

The majority of them have started as and part of them is still operating in the form of small family business.

Nevertheless, this does not prevent them from introducing new technologies and the current integrated

systems of quality assurance (ISO, HACCP etc). Together with their effort to augment productivity rates

determine their clear orientation to penetrating new markets.

o Meat and meat products (Cooked meats, standardized, packaged meat cuts etc.)

o Fish products

o Fruit and vegetables (tomatoes, potatoes, spinach, leeks, zucchini, nuts and dried fruit etc.)

o Dairy products (milk, butter, cream, yogurt, ice cream, cheese produce)

o Flour mill products, starch and starch products

o Prepared animal feeds (bran etc.)

o Sugar-based products and processing - package standardization of nuts and dried fruit

o Vegetable oils and fats

o Other kinds of food (halvas, confectionery etc.)

The region has more than 140 food-processing businesses, representing 37.4% of all processing

activity in the region and employing some 600 individuals. Most of them are small, traditional concerns,

which have become involved over the last few years in a series of initiatives to improve quality through the

introduction of international quality assurance systems (ISO 9000, HACCP etc.) and the introduction of

new technology, while at the same time taking care to improve productivity and seek out new markets

both here and abroad.

Food processing sector

2006 2007 2008

N° active enterprises 138 138 140

SME quota (%on total) 98 98 98

Total turnover (mln Eur) 253 654 783

Output volume (y/y)

Employment (n°) 654 682 600

Av. gross wage (Eur) 1653 1865 1878


Productivity (y/y)


5421 6584 5862



1. Italy; 6 France; 9 Italy; 8

2. France; 3 Italy; 6 France; 8

3. Turkey; 1 Egypt; 2 Cyprus; 2



1. Cyprus; 82 Germany; 73 Italy; 198

2. Germany; 47 France; 6 France; 12

3. Bulgaria; 3 Cyprus; 3 Turkey; 2

Trade balance (mln Eur) +123 +140 +120


Marble mining and processing

The Prefecture of Drama, together with the adjacent Prefecture of Kavala, is one of the most

important marble mining, cutting and processing centre in Greece and in Europe.

There is a variety of types of marble produced, cut and processed in Drama exploited by the biggest

companies of the marble industry.

The total annual marble production amounts to over thirty-five thousand cm3. Over the last few years,

productive investing in marble has considerably developed. It is estimated that in the years to come there

will be a large number of private investments in the prefecture.

Marble production can be classified into three sectors of activity:

Primary production referring to mining,

Secondary production referring to cutting and processing units and

Handicraft, artisan and industrial processing units for final products and trading companies of

intermediate and final products (slabs, tiles, stair treads, flooring, cladding and other forms).

Businesses related to marble

Sector of activity No of Companies

Marble mines 135

Industry – handicraft units 240

Wholesale trade 87

Marble sculpture 18

TOTAL 480

Marble sector

2006 2007 2008



Total turnover (mln Eur) 1.3 1.32 1.56

Output volume (y/y)

Employment (n°) 965 1013 1266



Productivity (y/y)


12865 11236 13564



1. Turkey; 5 Turkey; 6 Turkey; 6

2. Bulgaria; 3 Bulgaria; 1 Bulgaria; 2

3. FYROM; 2 Serbia; 1 Serbia; 1



1. Golf countries ; 358

Golf countries; 534

Golf countries; 327

2. Italy; 34 Italy; 32 Italy; 17

3. USA; 16 USA; 5 Germany; 8

Trade balance (mln Eur) +642 +771 689


0.9 1.2 3.1

Textiles and clothing

There are 35 major clothing companies occupying approximately four hundred workers. In their

majority those companies are small, private companies or partnerships characterized by specialization in

the clothing business and personal commitment. Over the past few years, the local clothing industry shows

a strong preference for brand clothing of high quality. The companies develop their strategy prioritizing, as

far as manufacturing is concerned, on quality, specialized human resources and new technologies.

Regarding the distribution sector, expansion through penetration in new markets is one of the top

priorities.

Textile and Cothing sectors

2006 2007 2008



Total turnover (mln Eur) 1.2 1.3 0.8

Output volume (y/y)

Employment (n°) 1350 1210 946



Productivity (y/y)


6543 6892 7561




2. Bulgaria; 17 Bulgaria; 23 Bulgaria; 15

3. France; 2 France; 5 France; 3




2. Germany; 12 Germany; 8 Germany; 12

3. Bulgaria; 3 Bulgaria; 1 Serbia; 1



Wines and spirits

Since the ancient times, wine has enjoyed enormous esteem throughout the Greek world, and this is

why the vine was cultivated almost everywhere the climate would permit, often alongside other crops, and

in some areas was the main source of income.

The long wine tradition, combined with the geography and climate of the region provides the ideal

conditions for the cultivation of the vine and the production of high-quality wines. The combination of

the altitude, the mild climate, the many days of sunshine each year and the high quality of the soil give a

distinctive character and personality.

Wines and Spirits sectors

2006 2007 2008




Output volume (y/y)




Productivity (y/y)


5896 5632 5428



1. UK; 12 UK; 16 UK; 25





1. Germany; 12 (mln Eur)

Germany; 13 Germany; 15

2. UK; value 2 UK; 2 UK; 1

3. USA; 1 France; 1 Russia; 1

Trade balance (mln Eur) +7 +2 +40


.8 1.2 1.3

Wood manufacturing and trading

Wood manufacturing in the region holds a share of 20% of the national production of the sector.

The wood industries are in their grand majority small but flexible companies exploiting mainly pine and

beech wood and producing wooden pine posts and wooden railway sleepers, sawn timber particularly for

use in construction and furniture. Strategically orientated to exporting to countries of the EU, lately the

wood industries of Drama are penetrating the vast market of the South-East Balkan countries, thus

reinforcing their competitiveness in the sector.

Wood manufacturing and trading sectors

2006 2007 2008




Output volume (y/y)




Productivity (y/y) 100 100


3560 3650 3890



1. Bulgaria; 5 Bulgaria; 5 Ukraine; 5

2. BiH; 4 Ukraine; 3 Bulgaria; 4

3. Ukrain; 3 Serbia; 2 Ukraine; 4



1. Turkey 15(mln Eur)

Russia; 26 Russia; 19

2. Russia; 13 value Turkey; 16 Turkey; 18

3. Spain; 9 Libya; 13 Libya; 15

Trade balance (mln Eur) +85 +98 107


.5 .6 .4


The emerging potentials for the region is to take advantage of mild and sustainable activities of

development.

The region’s entrepreneurs wish to develop activities in the new opportunities in the fields of energy,

energy production through alternative sources,

One other sector that has a dynamic future in the area is the development of logistics services since the

region is at the crossroads of many different markets and regions. Equally important is the biological

farming of quality products in farm and animal production

Finally, many think that tourism should continue to develop with strategic priorities and well developed

plans.

The participants in the meetings and in the seminars that were organized due to the events of the FATE

project catalogues the following emerging potentials for the development of the region:

Logistics Development Geo-economic position in relation to the Balkan and Black Sea countries

The geographical position of the region it in a cross-road of increasing importance. The accession of

Bulgaria in the EU, combined with the opening of a border crossing to Bulgaria, places Drama in a privileged

position as a gate of Greece to visitors and traders from Bulgaria. Likewise, the Black Sea co-operation does

not leave Drama unaffected as it is placed in the broader Black Sea basin area.

Strong agricultural profile in the biological production

The region has a strong agricultural profile, which is a factor of economic stability with many potential to

develop in strong pace with bio-products of quality

Important investments in energy and communications

The region, thanks to a couple of major investments, has become a node in Greece’s energy system;

especially given the fact that the power plant is one of renewable energies, unaffected by fluctuations in

international fuel prices. This area of activity has further potentials of development.

Diversification of the economy in rural regions / development of ecologic production

The people of the region, based on the long tradition of respect and love for natural beauty, have oriented

part of their economy towards the valorisation of nature. This has been expressed with steps towards the

cultivation of organic products.

Development of networks of cooperation

The local actors of Drama have been very active in networking for co-operation at various levels and have

gained in terms of knowledge, ideas and business ties with other regions and countries.

The strong potentials of tourist development

The area is an area rich in natural resources: marble, farmland, woods Offers a rich and diverse landscape,

appropriate fro the development of year-long tourism. The ecosystems of the region offer a rich

biodiversity, which makes them places attractive for ecological tourism. Finally, The ski centre in Falakron is

a major tourist attraction, capable of attracting significant number of tourists. Additionally, the summer

vacation is a strong potential of development in the region of Kavala.



Today in an era characterized by globalization and growing competition, the Greek Very Small,

Small and Medium Enterprise (SME and VSE) is called to give his own struggle to modernize to survive and

be divided into an internationally competitive environment.

But the fact that Small and Medium Enterprises in all countries of the world is an integral part of the

structure of national economies and societies, are critical to economic development, production,

employment and also on decentralization and social cohesion.

It also act as incubators of new enterprises and innovative types of applications, flexible business

formation, local service needs, spatial distribution of jobs and income. For instance, the Small and Very

Small Enterprises (0-49) employing 79% of the workforce of our country.

Overview of measures to support SMEs

The biggest problems for SME development in our country is:

o bureaucratic procedures.

o lack of information by the competent institutions to SMEs

o inadequate institutional framework both European and National.

o lack of fixed-and-simple tax system.

o absence of creditors to ensure the media (resulting in financial difficulty for facilities)

o lack of business education.

o inactivation of companies and individuals in bankruptcy cases

The modernization of the Greek SMEs is a prerequisite for survival. The Greek national policy on small

business takes into account individual circumstances and develops a framework for concerted actions

specified in the following lines of support:

• Creation of a conducive administrative environment for SMEs

• Facilitation to finance for SMEs by creating Guarantee Agency

• SME support for technological and organizational modernization

• Promotion of networking of SMEs (clustering)

• Promotion of entrepreneurship

• Support for SMEs to enter the New Economy


General support measures for SMEs

The financial opportunities that are provided directly to SMEs via the following actions and

programmes have been announced and publicized. Some of these are ongoing and others are expected to

be launched in the near future:

ROP/NSRF

Financing of SMEs

Modern Business

Certification of enterprises to meet the requirements of European quality standards.

Support

Meet immediate, small but strategic needs.

Be Original

Fostering innovation as a key parameter for improving the competitiveness and diversification and

regeneration of traditional industries.

Relocate

Relocation from Athens and Thessaloniki in the region and generally opening up new business in

the Greek region, residents of large cities

Get Accredited

Strengthening institutions & laboratories for testing for initial accreditation or extension of

accreditation

Youth and Women Entrepreneurship

Establishment of new businesses

Green Business

Integration of environment in the operation of (mainly) manufacturing enterprises

Green Infrastructure

Strengthening firms active in environmental protection

Relocate 2009

Relocation to industrial/business parks & technopoles

Evolve

Modernization of medium-sized manufacturing enterprises to enhance integrated business plans

DIGI - LODGE

Digital assistance of Hotel and Tourist Accommodation for creating web sites and promotional

electronic booking

Rural Development

Strengthening marketing and processing agricultural products through development and adoption

of innovations and technological equipment, to improve the quality, hygiene, product safety

Strengthening of Digital Tourist Enterprises

Improving the visibility of tourism businesses on the Internet and to improve services, using digital

and computer technologies and communications.

Support by the General Secretariat for Research and Technology

Of particular importance are the following actions administered by the General Secretariat for

Research and Technology:

SPIN-OFF & SPIN OUT

Strengthening the creation and evolution of business technology innovation, innovative investment

projects, the use of knowledge by researchers in Greece and abroad, to produce new products,

processes and procedures for high value-added and knowledge intensive

Research and Technological Development

The support needs of SMEs and new businesses and stimulating the implementation of research

and technological development by the companies themselves, or by other qualified organizations

for and support of business

Cooperation

Improving competitiveness and extroversion of businesses, increase employment and quality of life

through the implementation of research and technological development in specific areas and

activities.

Due to their importance, in the following subsections we make a more detailed presentation of these

support actions.

Support of SMEs groups for research and technological development activities

The main objective of the Programme is to support the needs of SMEs and of new companies, as

well as to stimulate the implementation of research and technological development projects by the

companies themselves, or by other qualified organizations that act on behalf of the companies to their

benefit.

Small and Medium Enterprises (SMEs) with common problems, needs and goals have the right to submit a

proposal. The proposal is submitted by three or more SMEs with the participation of at least one R&TD

body, with the optional participation of associations or SMEs unions.

Projects eligible for funding may cover the following research themes:

Information and Communication Technologies

Agriculture, Fisheries, Production of Livestock, Food and Biotechnology

High value added products and technologies focusing on traditional sectors (textiles, clothing,

construction, furniture, chemicals, leather)

Advanced materials, Nanotechnology – Nanosciences - and Microelectronics

Energy

Transport

Environment

Health

Space and Security Technologies

Cultural Heritage

Social and economic dimensions of development

The average budget of a project is estimated at 300.000 €. The maximum budget per project is 500.000 €

and the maximum contribution at 75% of total costs. The total public cost of the programme is 23.730.000

€.

Closing date for the first evaluation is 26/10/09. There will be a second evaluation with a deadline on

31/5/10.

Creation / Support of new innovative companies, mainly knowledge-intensive (Spin-off, spin-out)

The Action "Creation / Support of new innovative companies, mainly knowledge-intensive (Spin-off,

spin-out)" is launched.

The programme addresses to innovative small companies created maximum six years before the beginning

of the grant. These companies may have the following forms:

Small companies, existing and start-ups - offs (Spin-off / Spin-out)

Small innovative companies, existing and start-ups

In order to participate, companies should meet the following criteria:

Company Form: SA or LTD

The majority of its owners must be private investors (including researchers) or Private Legal

Entities. (e.g. venture capitals)

Distribution of at least 15% of their operating expenses in R & D for at least one of the last three

years before the investment grant.

Submission of integrated investment plans that lead to the production and utilization of innovative

products, processes or procedures.

Existing companies exploiting research results must meet the characteristics of the beneficiary, as

stated in the Guide.

Non-receipt of payment from other public (EU or national) sources for the same purpose.

Compliance with Advertising Regulations.

Establishment and activity in the region where they belong, and residence for at least 5 years after

the project completion.

The expected average budget of a project is estimated to be around 1.100.000 €. The maximum

benefit for each company will not exceed 1.000.000 €. The maximum rate of aid on the budget will not

exceed 70%. Own contribution can not be less than 25% of the total eligible costs, while the remainder can

be covered by borrowing from banks or other recognized European financial institutions. For start-up

companies own contribution means paid-up capital in cash and, while for the existing companies, the

amount of the increase in share capital resulting from new cash contributions from shareholders. The

maximum project duration is 36 months.

Expenses that belong to the following categories are eligible:

Costs of creation or expansion of existing infrastructure

General Operating Expenses

Research and Development (compulsory) costs

Other Costs

The deadline for the first round of proposals is on 30/9/09. The call for proposals will be permanently open

until its closure date on 30/6/2010. Every 3 months from the date of the action, groups will be formed so as

to evaluate proposals. The recipients of funding will be nominated with the completion of the procedure.

The total programme budget is 25.000.000 €.

Funding of collaborative research activities - Action "COLLABORATION"

The main objective of the Programme is to improve the competitiveness and extroversion of

companies, the increase of employment and quality of life through the implementation of R & D projects in

specific sectors and activities.

The particular call of the action covers the following acts:

Act I: Collaborative Projects of small and medium scale (total project budget from 300,000 to

1.000.000 €, duration 24-36 months, minimum number of participants 3, including at least 1

company.

Act II: Collaborative Projects large-scale (total project budget from 1,000,000 to 3.000.000 €,

duration 36-60 months, minimum number of participants 5, including at least 2 companies)

The action addresses at the collaboration of companies of all sizes, research centers, institutes and

universities, technological and other entities. Note however, that the main beneficiaries are

companies and research institutions (Universities, Colleges, Research Centres and Institutes).

Projects to be funded may belong to the following priority areas:

Health

Biotechnology

Energy - Environment - Climate

Nanotechnology

Transport

Social & Human Sciences - Culture

Information and Communication Technologies

Textiles - Processing

The funding rates depend on the research category and the size of the beneficiary. The maximum payment

is estimated up to 80% of the project budget. The total public cost of the action is 76.1 million €.

The deadline for proposals is on 16/10/09.


LEARNING

Αction programme in the field of Lifelong Learning – Decision no. 1720/2006/EC

The general objective of the Lifelong Learning Programme is to contribute through lifelong learning to the

development of the Community as an advanced knowledge-based society, with sustainable economic

development, more and better jobs and greater social cohesion, while ensuring good protection of the

environment for future generations

Αction programme in the field of Lifelong Learning – Jean Monnet programme - Decision no.

1720/2006/EC

The Jean Monnet programme shall support institutions and activities in the field of European integration. It

shall comprise the following three key activities:

* the Jean Monnet Action;

* operating grants to support specified institutions dealing with issues relating to European integration;

* operating grants to support other European institutions and associations in the fields of education and

training.

e-Services

The programme provides financial support to private companies for improving the provision of services to

their customers by the use of ICT and the internet.

INNOVATION & GROWTH

Investment Incentives Law 3299/2004

Investment plans for the production of electricity from mild energy forms and investment plans for the co-

generation of electricity and heat.

Provision of investment incentives in the form of cash grant, leasing subsidy, tax exemption, and cash grant

for the expenses of wages relating to the employment created by the investment

Cohesion Fund (2007-2013)

The Cohesion fund is one of the financial instruments for the Cohesion Policy of the European Union for the

period 2007-2013, which is structured into three objectives:

* Convergence,

* Regional competitiveness and employment and

* European territorial cooperation

EIF – EC resources: Capacity Building Scheme (2007-2013)

The Capacity Building Scheme will support the capacity of financial intermediaries to focus on additional

investment and technology aspects and action will also be undertaken to facilitate SME financing in

countries where banking intermediation is significantly lower than the EU average.

Joint European Resources for Micro to Medium Enterprises (JEREMIE, 2007-2013)

The Joint European Resources for Micro to Medium Enterprises (JEREMIE) it’s a joint initiative between the

Commission (ERDF) and the EIB Group (EIB and EIF) that will enable European Member States and Regions

to use part of their structural funds to obtain a set of financial instruments that are specifically designed to

support micro and small and medium enterprises in European regions for the next programming period

(2007-2013).

Eurostars

The Eurostars Programme is a European innovation programme. Its purpose is to provide funding for

market-oriented research and development with the active participation of specifically R&D-performing

small and medium enterprises (SMEs)

Seventh Framework Programme for Research and Technological Development - (FP7)

Improving the health of European citizens and increasing the competitiveness and boosting the innovative

capacity of European industries and businesses, while addressing global issues. Emphasis will be put on

translational research (translation of basic discoveries in applications including scientific validation of

experimental results), the development and validation of new methods

EIF – EC resources for guarantees: SME Guarantee Facility

The SME Guarantee Facility will continue to provide counter or co-guarantees to guarantee schemes

operating in eligible countries and direct guarantees to financial intermediaries. The SMEG Facility shall be

operated by the EIF on behalf of the Commission

Innovation

EIF - EC resources for venture capital (2007-2013): High Growth and Innovative SME Facility

The High Growth and Innovative SME Facility it is a financial instrument created to implement actions

under the Entrepreneurship and Innovation programme, which it’s included in turn in the Competitiveness

and Innovation Programme, covering the period from 1 January 2007 until 31 December 2013

Services in support of business and innovation (CIP)- DECISION No 1639/2006/EC

The Competitiveness and Innovation Framework Programme (CIP) is established to contribute to the

competitiveness and innovative capacity of the Community with particular attention to the needs of Small

and Medium-sized Enterprises (SMEs). It brings together several existing EU activities that support business

and innovation.

Risk Sharing Finance Facility (RSFF)- European Commission and European Investment Bank (EIB)

RSFF is an innovative scheme to improve access to debt financing for private companies or public

institutions promoting activities in the field of:

* Research, Technological Development Demonstration, and

* Innovation investments.

Competitiveness and Innovation Programme (2007-2013): Entrepreneurship and innovation sub-

programme

Entrepreneurship and Innovation programme aims to help enterprises innovate by providing access to

finance: sharing risks and reward with private equity investors and providing counter or co-guarantees to

national guarantee schemes.

Competitiveness and Innovation Programme (2007-2013): ICT Policy Support sub-programme

The ICT Policy Support Programme shall provide for the following actions:

* development of the Single European information space and strengthening of the internal market for

information products and services;

* stimulation of innovation through a wider adoption of and investment in ICTs;

* development of an inclusive information society and more efficient and effective services in areas of

public interest, and improvement of the quality of life

Competitiveness and Innovation Programme (2007-2013): The Intelligent Energy-Europe sub-

programme

The Intelligent Energy-Europe Programme will encourage the wider uptake of new and renewable energies

and improve energy efficiency, and shall foster compliance with our energy regulatory framework.


In the last years a large number of military brown-fields have been dismantled because of changes

in the security/defence policies. Part of these sites is in easily accessible city-centre locations and usually

has good infrastructures in its surrounding area.

Rehabilitation of these former military areas in the proximity of densely populated areas is an

important issue in the agenda of local authorities of regions involved and private investors: by recovering

military brown-fields, green-fields are preserved, sustainable urban, economic and social development is

supported and public owners can profit from the reuse. In addition, regions and Municipalities involved

present as priority the improvement of entrepreneurial environment competitiveness by means of

supporting structures as Business Incubators (BI) or Business Support Centres (BSCs) and the development

of adequate measures to encourage economic and SMEs growth.

Restructuring military brown-fields shows difficult processes of property transfer, high number of

claims, interests and uncertainties, physical ties resulting in a complex planning/implementation process.

Regions involved (and of SEE area) have several military brownfields whose stages of recovery are various:

some sites belong to the state governments while others to municipalities. Local authorities need to

rehabilitate the sites and convert them into BSCs/BIs to develop innovative productive activities. Thus,

different problems have to be faced: from negotiating the property transfer from central to local level to

the implementation of entrepreneurial supporting measures and the most adequate BSC/BI. Regional

programming to manage rehabilitations, spatial planning, operational plans for future investments,

measures to support BSCs/BIs is needed by administrations involved.

In accordance to it’s main objective, the project aims at developing, implementing and

disseminating concrete strategies and operational plans to strengthen and diversify urban and regional

economies, by converting military brown-fields into productive estates.

In particular, by starting from the results of previous experiences, the project intends:

a) to promote sustainable urban restructuring and renewal by providing regional and local administrations

with

1. tools to manage the entire rehabilitation process from the negotiation with the central

government to the involvement of private investors and

2. specific programming on recovery and development plans for forthcoming investments;

b) to foster entrepreneurial environment and support territorial economy and competitiveness by running

the conversion process of former military assets into the most suitable type of BSC/BI and by ameliorating

regional strategies/measures to sustain SME’s base and start ups

c) to apply tools come out of the project to 8 specific cases of rehabilitation of military brown-fields in the

regions involved, as preliminary/first step for more important investments.

All project actions envisage consensus building/awareness raising activities by means of the active

involvement of target groups/stakeholders through interviews, surveys, their participation in working/focus

groups, working tables and project events. Project dissemination and management are cross activities and

are carried out along the entire duration of the project, to assure the proper effectiveness/efficiency.

Main project results can be summarised as follows:

Adoption of recommendations on military brownfields restructuring by regional administrations as

programming tool for the spatial planning; tool will remain valid after the project end;

Adoption of a common strategy to promote entrepreneurship and attract FDI as guideline for

development policies in the medium-long term and resulting in improved regional policies on

entrepreneurship;

Urban/territorial planning for and starting up of the creation of BI/BSCs with high technological and

management standards, as first step of further larger investments;

Recommendations to manage military brownfields property transfer process from central to local

level

Durable partnerships, translational network of BI/BSCs and translational cooperation among

productive clusters

Search, commitment and involvement of possible investors and stakeholders, search of

programmes/opportunities funding infrastructural investments during the project will assure the financial

sustainability for the recon structuring processes. Each administration involved as partner or observer is

committed in giving sustainability to the results by leading the rehabilitation and making effective the

measures/strategies came out from project. Engagement by all institutional partners in transferring results

at political level and involvement of policy makers in the project will assure the political sustainability of the

project results. SC's and Working groups members will stay in touch after the project end to monitor the

further development of the action and to continue with the cooperation.

Results like recommendations, strategies, measures and the integrated and methodological

approach can be easily transferred to and adopted by the other several SEE regions and administrations

having the same problem, allowing a major territorial development and competitiveness.



DRAMA PREFECTURE : Department of Local Development

Address Diikitirio, 1st Iouliou - P.C. 66100 Drama


Legal Status GPV

Years of activity 5

Fields of activity The Prefecture is in charge of issuing all the permits for construction, change of use of land, etc. Valuable contribution to the project

N. of employees 5

Competencies / skills Economic support Support to entrepreneurship Tourist development


SMEs Entrepreneurs investors

Main activities addressed to SMEs Issue permits


Allocate land Issue permits

Sources of funding Gov (Drama Prefecture)

Regional Development Agency of Drama

Address 2 Konstantinoupoleos Street 661 00 Drama


Legal Status Gov non-profit development agency


Fields of activity Regional development Rural development Tourist development

N. of employees 23

Competencies / skills The Regional Development Agencies are organization of support to regional development efforts. The Drama Development Company, SA was founded in 1996, in the framework of the Community Initiative LEADER II, and evolved into an innovative, pioneering and reliable instrument approach to local development, with an ever widening range of activities


New investors in rural development Investors in agrobusiness Investors in agro-tourism

Main activities addressed to SMEs Support SMEs and investors to take advantage of LEADER type of projects or other programmes funded through national and EU budgets to support rural development


Provide direct support for the creation of business plans Support for designs and construction Support for marketing activities

Sources of funding Funded from prefecture, municipalities and the chamber of Drama

Regional Development Agency of Kavala

Address 10 Ydras Street, 65110 Kavala


Legal Status Gov non-profit development agency


Fields of activity Regional development Rural development Tourist development

N. of employees 23

Competencies / skills Similarly, the Kavala Development Company, created in 1992, manages the LEADER programme and other programmes of support mainly to agro-tourims and tourism industries


Rural development seeking investors

Main activities addressed to SMEs Support to locate, manage and implement programmes addressed to rural development, agro-tourism an agro-business


Initiate new investment projects in the rural development area

Sources of funding Funded from prefecture, municipalities and the chamber of Drama

DRAMA CHAMBER OF COMMERCE AND INDUSTRY

Address 40 Lambrianids Street, 661 00 Drama


Legal Status Public status


Fields of activity General support to SMEs Support for economic growth and development in the area

N. of employees 15

Competencies / skills Economics Growth policies Support to entrepreneurship Manage and implementation of EU funded programmes


SMEs Individual entrepreneurs Organizations of economic development


The protection and development of trade, industry, crafts and professions in the region, within the framework of the interests of national economy

The provision of advisory recommendations on matters relating to the financial attractiveness of the area of Drama, and the growth of the Prefecture and its businesses

The information to Members on economic issues and the development of entrepreneurship


Support new investment by providing advice on legal issues

Sources of funding Member Enterprise dues


KAVALA CHAMBER OF COMMERCE AND INDUSTRY

Address 50 Omonias Street 65302 Kavala


Legal Status Public status organization


Fields of activity Support to SMEs Regional growth programmes

N. of employees 15

Competencies / skills Economics Investment Entrepreneurial support


SMEs

Main activities addressed to SMEs General support for all legalistic issues Promotion Faire participation Business trips


Guide the investor with legal advice Direct the investor in the funding sources

Sources of funding Member enterprises

KETA of Eastern Macedonia and Thrace Centres for Business and Technology Development (KETA)

Address 40 Lambrianidis Street, 661 00 Drama


Legal Status Ministry of Development in the implementation of Action 1.4.1 of the Operational Programme "Competitiveness


Fields of activity Support to SMEs Support competitiveness Introductions of new technologies

N. of employees 3

Competencies / skills Thrace acts at regional level with central coordination and the use of existing structures and mechanisms (e.g. Chambers, collective business bodies, representing entrepreneurship special groups, development agencies, research centres, universities and technical institutions, etc.), in order to provide reliable information services and advisory guidance to businesses (e.g. information on potential financial support to provide basic information and orientation to specialized topics: legal, financial, promotional, finding qualified consultants or suppliers, etc.).


SMEs Entrepreneurs New investors

Main activities addressed to SMEs The activities of KETA cover the following areas:

Update - Information - Cultivation of entrepreneurship. Information for young people, unemployed, etc. for entrepreneurship

initiatives; KETA has the necessary connections with the market and the capacity to provide necessary information to stakeholders.

Monitoring the competitiveness of SMEs. This is done following the model of well-organized businesses; records business performance and compares against certain standards.

Personalized support / core business consultants The businessman after careful diagnosis of the needs is directed to the best investment / business decision.

Organization providing business services Organization, grouping of business consultants for expert help to entrepreneurs.

Mediation and use of financial instruments Information for modern financial instruments.

Actions to support the globalization & export-orientation Broadening the scope of business support abroad through the participation in international competitions, joint ventures expansion of productive activities.


Direct investors to funding sources Assist with logistics in the area of investment

Sources of funding Organized under the operational programme "Competitiveness" its operation is financed by European Union funds and the Greek State budget.

SME Support Agency “DESM-OS E.M.-Th.

Address 40 Lambrianids Street, 661 00 Drama


Legal Status a civil non-profit company and was named Interim Management Agency for Community Programmes


Fields of activity Two of the most important pillars of activity DESM-OS E.M.-Th. are enhancing business competitiveness and reducing regional inequality while lifting the isolation of the islands.

N. of employees 14

Competencies / skills The purpose of establishing the company is undertaking the management as intermediary, of community programmes and initiatives for the development and modernization of SMEs in the Region of Eastern Macedonia and Thrace


SMEs


The purpose of establishing the company is undertaking the management as intermediary, of community programmes and initiatives for the development and modernization of SMEs in the Region of Eastern Macedonia and Thrace.


Provide legal guidance Secure funding sources Direct investors to the proper investment activities

Sources of funding Funded by the partners: the Extended Prefectural Authority of Rodopi - Evros, the National Development Agency of Northern Greece SA (Member of ETEBA Group), Commercial and Industrial Chamber of Rodopi, Professional and Small-Industry Chamber of Rodopi, Chamber of Evros, Chamber of Xanthi, Chamber of Drama, Chamber of Kavala, Prefectural Authority of Drama, Prefectural Authority of Evros, Prefectural Authority of Kavala, Prefectural Authority of Xanthi, Prefectural Authority of Rodopi of the Property Management Company of the Democritus

University of Thrace.

Investors’ Reception Centre

Address Prefecture of Drama 1

st of July Street No1, 66100 DRama


Legal Status Public The development and operation of K.Y.E. based on the existing institutional framework (Law 2516/1997) and (Law 3325/2005) exploiting the opportunities offered.


Fields of activity Support to SMEs to initiate new investment Attract and support FDI n the region

N. of employees 12

Competencies / skills Economics, Development Growth initiatives New investment Attract FDIs


Simplification, promotion and consolidation of the existing legal framework.

Information for investors on the financing programmes offered in each case.

Information and support to use the necessary and required documents and issues of land use.

Cooperation with competent agencies and services involved in the licensing process to reduce the delays and simplify the procedures, to standardize and reduce the necessary documents.


Information on licensing to the establishment or modernization of an enterprise and supporting documents.

Possible inclusion in an investment programme.

Clarification of points of legislation or programme guides - valid investor guidance.

Direction to investors involved with the subject agencies or departments - an advisory and guiding role.

Information about open invitations to interested parties and sending information material to investors and operators.

Continuous contact with the public services (Development Department, Urban Planning, Health, Environment etc.).

Working with Chambers and other bodiees

Statistical data processing and licensing updates. Monthly and semi-annual progress reports of the project.


Support to investors with solving beaurocratic problems Permits Land availability

Sources of funding Ministry of Economy Prefecture of Drama Prefecture of Kavala

Business Park of Kavala

Address 50 Omonias, Street, 65403


Legal Status Public non-profit

Years of activity 5

Fields of activity Operate the business park of Kavala

N. of employees 5

Competencies / skills Provide land to new investors Manage the park


SMEs New enterprises


Initially an area allocated by Central Government at the fridge of the city of Kavala to host pottential re-allocation of the Kavala’s companies. This area was designed in order to provide space to the local companies and become an industrial park


Provide land Investment support Direct investors to proper legislation Direct investor to funding sources

Sources of funding - Prefecture of Kavala - Municipality of Kavala - Chamber of Kavala

4. CONCLUSION

The FATE project provided a good opportunity in the regions of Kavala and Drama to open and put

forward the discussion concerning the stage of economic development, the nature and needs of

entrepreneurship, the use of new investment and the exploitation of the available land in the brown fields

that can be used for entrepreneurial purposes. This dialogue was carried out for the first time ever the

FATE project was the catalyst for such an achievement. We put together in the table a variety of involved

agencies, politicians, organizations, SMEs, entrepreneurs, investors and the general public.

After the long discussion it was conclude that the final decisions on the use of the old brown fields will have

to be evaluated based on their:

Importance for the local society and economy, and

The feasibility or applicability of the solution proposed.

In times of economic upheaval and demand for increased fiscal restraint, it is natural to ask for shorter

periods for the “Return on Investment.” Engaging into long-term investment without any partial short-term

gains may not be attractive to local or national politicians or even the public opinion. If implemented, early

difficulties may discredit the effort and may lead to the eventual abandonment of the project.

Main project results can be summarised as follows:

Adoption of recommendations on military brownfields restructuring by regional administrations as

programming tool for the spatial planning; tool will remain valid after the project end;

Adoption of a common strategy to promote entrepreneurship and attract FDI as guideline for

development policies in the medium-long term and resulting in improved regional policies on

entrepreneurship;

Urban/territorial planning for and starting up of the creation of BI/BSCs with high technological and

management standards, as first step of further larger investments;

Recommendations to manage military brownfields property transfer process from central to local

level

Durable partnerships, transnational network of BI/BSCs and transnational cooperation among

productive clusters

Strategic directions for reaching a final decision

ChoiceChoiceChoice• Near Drama to achieve

attractiveness for businesses and

faster spill-over impact

• Near a less developed or

underprivileged neighborhood of

Drama to boost local economy and

upgrade the area

• Near Drama to achieve

attractiveness for businesses and

faster spill-over impact

• Near a less developed or

underprivileged neighborhood of

Drama to boost local economy and

upgrade the area

Decision variablesDecision variables

• Direct business opportunities:

recreation, tourism, entertainment for

fast ROI

• Grouped commercial activities of prime

business sectors of Drama so as to

achieve economies of scale

• Support to innovation and

entrepreneurship for promising

business sectors

• Direct business opportunities:

recreation, tourism, entertainment for

fast ROI

• Grouped commercial activities of prime

business sectors of Drama so as to

achieve economies of scale

• Support to innovation and

entrepreneurship for promising

business sectors

Locatio

nLocatio

nLocatio

nA

ctivitie

sA

ctivitie

sA

ctivitie

s

From the context analysis we can therefore articulate a compact set of criteria for the exploitation

of former military camps with respect to two main decision variables: location and activities housed

As per the choice of location:

They should be located near the city of Kavala and near the city of Drama so as to achieve a faster

economic impact and affect positively a large part of the population. This is done in order to satisfy

the feasibility criteria. Although in the long-term, the exploitation of space far from the urban

centres would have a positive effect for rural development, such a venture at the current

circumstances cannot be attractive to either private or public funds.

It should be preferably located near an underprivileged, neglected or degraded neighbourhood of

the urban web, so as to have a social impact through the upgrading of the local economy.

As per the choice of activities housed it is recommended to house a blend of activities as follows:

In order to achieve fast return on investment we recommend some direct business opportunities in

the fields of recreation, tourism, entertainment etc. Such activities may include restaurants, clubs

or even reception halls that will take advantage of both local demand as well as increased visits

from Bulgaria.

Next, it should host grouped commercial activities of prime business sectors of Drama so as to

achieve economies of scale; such activities can include permanent exhibitions of local products, of

local artisans that promote and sell artefacts from wood or marble, other construction material

companies etc.

Finally facilities in support to innovation and entrepreneurship for promising business sectors,

primarily new technologies related to

Information and Communication Technologies (ICTs),

organic agriculture,

environmental protection,

renewable energy sources, and

energy efficiency

The facilities will provide several services to housed companies that will range from meeting rooms

and small conference halls to consultancy and special telecommunication services.

HUNGARY: West - Transdanubian Region



The region made up of Győr-Moson-Sopron, Vas and Zala counties (NUTS III) constitutes 12.2 % of

Hungary’s area (its territory occupies 11 329 sq. km). Around 10 % of the country’s population live in the

West Pannon Region (nearly 1 million people).

A unique position in Europe: 1 region in the meeting point of 5 countries.

The settlement network of the region has special features which are to be taken into consideration

when fulfilling public duties adequately on an acceptable level, and with regard to the regional policy as a

whole. Namely, the settlement network of the region is characterised by an exceptionally high proportion

of small and tiny villages in addition to the poly-centric urban network conditions. The settlement network

is formed by 626 municipalities and 29 towns.

The exceptional high proportion of the small and tiny villages within the municipalities is a

particular feature of the area. More than half of the municipalities in the West Pannon Region are small

villages with a population of less than 500 people, and within this rate, 122 settlements are considered

“tiny villages” with a population of less than 200 people, where the proportion of the elderly people is

exceptionally high (on average 30% ).

Pannon urban network: the poly-centric network of 29 towns is an organic part of the European

urban network. The settlements around the five towns with county rights are in different states of the

agglomeration. The population concentration of the three county seats is typical. Eight towns with a

population between 10-30 000 have regional central functions determinant in the poly-centric urban

network of the region, and 16 towns (with a population les than 10 000 people) have important micro-

regional functions.

The viability of small villages is the key issue of the region. Half of our settlements has a population

of less than 500 people, which require innovative and nature-friendly regional development means, and

renewal from us.

The economy of the region faces a significant challenge. In addition to the activities of multinational

companies mostly based on semi-skilled labour, it is imperative to stimulate the innovation-oriented

activities of the SME-s, and new productive activities requiring qualified manpower should be attracted to

the region. All these should be done while currently the R+D potential is the lowest in the region, and its

distribution is unequal.

The basis and the core of the economy of the region is formed by the processing industry, including

the automobile- and electronics industry dominated by multinational companies. Agriculture is less and less

important, while services are gaining significance, which actually corresponds to both international and

national tendencies. General economic and financial services dominate the service sector. The significance

of tourism-related industries has not increased although they should play a fundamental role in the

development of several disadvantaged small areas in the region.

There are certain challenges and shortcomings which can also be presented on horizontal, national,

or even Central-European level, such as the lack of national medium-size enterprises, the low level of the

integration of the multinational companies, or the problems of transport infrastructure.

Regions innovative paradox is to be resolved – the critical factor of maintaining the dynamism of

economic is that research, development, and innovation in the region amounts to just 50 % of the national

average. The pioneers of the network and regional economy are the Pannon Automotive Cluster and the

Pannon Wood and Furniture Cluster.

General indicators and figures

In economic terms, Western Transdanubia is one of the most developed parts of the country thanks

to its complex economic structure. Industry, the service sector and agriculture are developing at more or

less the same rate. The standard of living is also above the national average and the same applies to the

proportion of inward investments made up by industrial investments and the export orientation of

industry. Furthermore, this region has the highest proportion of businesses founded with foreign capital

behind Central Hungary. Geographical and cultural proximity with Austria has also benefited business

relationships in many areas.

Western Transdanubia

General indicators and figures

Area*, km2 11,209

Population* thousands 998

Of which: 0-14 years % 14.1

15-64 years % 69.7

65 years and over % 16.2

GDP** EUR millions 9,521

Of which: Agriculture % 4.8

Industry and construction % 44.4

Services % 50.8

GDP per capita** EUR thousands 9.5

*2008, **2006

The region has a unique natural environmental resources as far as spa potential is concerned, since

it disposes of considerable assets both in quality and quantity, and is also boasts of the Lake Hévíz, the only

http://www.itdh.com/engine.aspx?page=Western_Transdanubia

lake in Europe suitable for bathing throughout the year. In addition to the spa tourist facilities, there are

further possibilities to be explored in the region concerning the development of cultural and heritage

tourism. The tourist exploitation of the natural and land resources focused explicitly on the variety the eco-

tourism elements, of which provide a sound basis to develop this area.

Health tourism boosts the internal economy! – Half of the spa tourist nights in Hungary are

generated by the thermal network in the West Pannon area, which is the basis of the largest wellness region

in Europe, and the driving force of the revival of the regional services.

The special features of the terrain and settlement structure of the region cause serious problems in

sewage treatment and waste management. There is no complex waste management, and waste is

frequently dumped illegally. At the same time, significant development has taken place in the region, well

above the national average. There is a high ratio of organised waste collection, and there many of waste

dumps provided with technical protection which are in compliance with the EU and the Hungarian

requirements. There has also been a remarkable improvement in the purification of waste water, but the

authorisation and implementation of the nature-friendly sewage treatment, which providing an ideal

solution for regions with small settlements and structured terrain with, is still hindered by problems of

regulation and technical approach.

Hungary still lags behind the EU countries in the field of using renewable energy resources. This is

particularly true of systems of local significance. At the same time, the settlement structure in the West

Pannon Region makes it necessary to make comfortable energy supply available for heating systems in

small villages.

The transport infrastructure in the West Pannon Region is basically determined by its location

among four countries. The significant transit traffic of the borders has a considerable impact on the

conditions of both the roads and the environment. The public road infrastructure of the region is extremely

unfavourable. Although one sixth of the national road network is located in the region, and the road

density is the highest here among the regions (because of the settlement structure of the small villages), its

composition is unfavourable: only 6.5% of the roads are motorways or main roads. Accessibility also poses

a serious problem in the peripheral areas with numerous small villages which mostly lie at the border, and

which are only accessible by one road and from one direction. The increasing congestion in the large towns

of the region, the worsening environmental load caused by vehicle transport, and the inadequate public

transport in the small settlements explain the necessity of improving and supporting the local and inter-

settlement public transport and the standards of the services.

60 % of the commercial freight traffic of Hungary take place across the borders of the West Pannon Region.

Education also faces special challenges in the region. Primary schools in small settlements cannot or

can hardly keep up with larger institutions in a better situation in employing qualified teachers, in

educational facilities, and in the accessibility to up-to-date educational infrastructure. The West Pannon

Region does not play a leading role in the higher education and training system of Hungary, it is devoid of a

real university centre, or a university network based on the facilities of the region including all the relevant

elements of a “universitas”.

In terms of economic performance, the industrial centres that were the most capable of attracting

foreign working capital have acted as the drivers for development: Győr, Szombathely, Sopron, Sárvár,

Mosonmagyaróvár, as well as Szentgotthárd and its vicinity. Dynamic economic restructuring has not taken

place evenly across the region and there has been a further increase in existing regional differences

(between more developed Győr- Moson-Sopron and less developed Zala).

In order to decrease the vulnerability stemming from the high mobility of foreign capital - i.e., if the

region wants to prevent multinational companies from relocating away from West Transdanubia - and in

order to sustain the region’s competitiveness, it is essential that the existing economic development model

be transformed. The current model relies on the attraction of foreign capital involved in low - complexity

production using lowcost labour. The new innovation - driven economic development model should be

based on competitively priced, skilled labour that is involved in the development and production of

complex products, on continuous innovation, and on further attracting as well as internally developing R&D

and innovation-oriented companies.

Table 1:

2004 2005 2006 2007 2008

STRUCTURE

GDP (mln Eur) 9 196

GDP ( y/y) 104,9 103,5 104,0 101,0

GDP per capita PPP (Eur) 9 211

Structure GDP (%):

Agriculture 5,8 5,3 4,7 5,1

Industry 42,2 42,4 44,4 43,5

Services 52,0 52,3 50,9 51,3

Industrial output (y/y) 106,1 98,0 106,9 106,6 99,8

N° active companies 158 452

Total turnover (mln Eur) 8,4 9,2 11,0 11,4 11,2

% of SME turn./Total Turn 51,0 53,6 53,5 43,5


Agriculture 99,9 99,9 99,9 99,9

Industry 99,4 99,4 99,4 99,4

Services 100,0 100,0 100,0 100,0

EMPLOYMENT

Total employment (.000) 425



Sector A (%) Industry 33,8

Sector B (%) Trade 13,2

Sector C (%) Education 7,2

Value added per employed (Eur)

Average gross wage (Eur) 722


Labour productivity (y/y)

Unemployment (%) 4,6 5,9 5,7 5,0 4,9


Primary 7,6 7,4 7,5 6,1 7,4

Secondary (vocat. or else) 11,5 17,3 17,4 14,1 12,9

Tertiary (university) 1,4 2,1 1,2 2,6 1,7

FOREIGN TRADE

Import of goods (mln Eur) 6 768,1 6 875,7 8 016,5 9 386,5 9 220,1 1. good category (SITC 2digit) 2. good category 3. good category

Export of goods (mln Eur) 8 737,0 9 075,8 10 566,1 11 842,8 11 761,6 1. good category(SITC 2digit) 2. good category 3. good category

Trade balance (mln Eur) 1 968,9 2 200,1 2 549,6 2 456,3 2 541,5

Main trade partners: 1. partner (county+mln Eur) Germany Germany Germany Germany Germany 2. partner Austria Austria Austria Austria Austria 3. partner Spain Czech Republic Slovakia Czech

Republic Czech Republic


Main FDI sectors


Sector B

Sector C

1.2 Main sectors

Western Transdanubia is the most industrialised area of the country in terms of the proportion of

the population employed in industry. The region is also a very attractive tourist destination, mainly because

of its spa and medicinal waters, its protected natural treasures, its wine and gastronomy, its listed buildings

and its folk traditions.

Some industries that were considered formerly conventional - as food, light or textile industry -

have been depreciated and continue to loose their role, while machine industry - also with a hundred

years’ tradition - checked after the collapsing eastern markets, then it was gradually renewed - firstly with

the appearance of multinational investors (Audi, Opel, Flextronics, General Electric, etc.).

Within the machine industry, unambiguously dominant branches are: car industry, as well as manufacture

of electrical machines, instruments and communication engineering. Dynamically growing sector is

industrial gas production branch of the chemical industry, which is built on natural resources. (Natural

occurrence of carbon dioxide with the biggest extension in Central Europe can be found at Répcelak.)

Corresponding with the most important sectors of the region, cluster initiatives have been launched

continuously since 2000.

These initiatives are aimed at promoting cooperation and interaction between companies and

providing special services as well as infrastructure for the key sectors that play a dominant role in the

economy of the region

- automotive industry,

- electronics,

- mechatronics,

- wood and furniture industry,

- environmental technologies,

- alternative resources,

- health tourism,

- medical tourism,

- logistics

Industry, construction


Industry, construction

Industrial production, volume index* % 103.0

Industrial sales* % 99.5

Of which:

Domestic sales, volume index % 76.8

Export sales, volume index % 106.3

Construction output, volume index** % 90.3

*2008 Q1-3, **2008 Q1

Several multinational automotive and electronic companies have established operations here, and

this has provided an opportunity for local SMEs to become suppliers to the industry. In some sectors, this

encourages the formation of product clusters, and the resulting synergies also have a beneficial effect on

the development of the region.

Most of the largest companies are active in the key sectors. The automotive industry includes: Audi,

Nemak, Rába, BOS , BPW, General Motors, Sapu, Autoliv, LuK.

Automotive industry

Main features of the region:

- 4-5 million cars produced in CEE

- Appr. 900.000 cars within 120 km of Györ

- 3.5 million engines produced within 300 km of Györ

- App. 2.5 million engines within 160 km of Györ

In the electronics industry, the region has Provertha, Lite-On, Robust Plastic, Kromberg-Schubert,

Delphi (Packard), Epcos, Jabil, and Villszöv.

Besides automotives and electronics, there are other machine industry firms: Cellcomp,

Ipartechnika, Kühne, Mofém, Wahl, and DKG.

Wood and Furniture industry

The wood and furniture industry is also very important with Velux, Lapcom, Ada, Kanizsa Trend,

Swedwood, Interfa, Falco, Savaria Nett-Pack, Műbútor, and Zala Bútorgyár.

Traditionally, the textile industry has been strong in West Transdanubia. However, in the last

decade its importance has declined owing to processes of globalisation, and most of the large companies

have now closed.

The food industry is also a traditional industry of the region with Ceres, Győri Keksz, Pannon

Baromfi, , Sága Foods, Heineken, Pannontej.

In addition to these sectors, the largest companies are in the construction and construction

materials industry, in electricity, gas, water, other public utilities, transportation and logistics. The majority

of these companies have their own R&D units and -activities in the region, especially in the automotive and

wood and furniture industries.


2006 2007 2008

N° active enterprises

SME quota (% on total)


Output volume (y/y)

Employment (n°)

Av. gross wage (Eur)


Productivity (y/y)


Import (mln Eur) 4 980,2 5 501,0 5 289,4


1. Germany Germany Germany

2. Austria Austria Austria

3. Romania Czech Republic Czech Republic

Export (mln Eur) 6 762,3 7 009,2 6 784,7


1. Germany Germany Germany

2. Czech Republic Czech Republic Czech Republic

3. Spain Slovakia China

Trade balance (mln Eur) 1 782,1 1 508,2 1 495,3


Existing industrial/entrepreneurial zones for brownfield/greenfield investment

Innovation and Technology Centre project Zalaegerszeg

This is a new initiation by the city government.

Former barracks in city centers, near economical campus.

Owner: Zalaegerszeg city

Size: 17 ha

Infrastructure: full

Project ideas:

- Campus development – EU & City resources

- Services – EU, City resources and venture capital

- Lands for houses – venture capital

Innovation and Technology Centre project in Nagykanizsa

This is a new initiation by the city government.

Former „Gábor Áron” and „Kossuth Lajos” barracks

Owner: Nagykanizsa city

Size: 55 ha

Infrastructure: full

Utilization:

- part of an industrial park (logistic center)

- continuous reconstruction

- offices, assembly shops, depots

Keszthely – 50 ha

Sármellék- „Fly Balaton Airport” – 200 ha

Lenti – 36 ha



Regions and administrative units in Hungary

Hungary has a population of around 10 million and territory of 93 thousands km2. Since 1999 the

country is divided in 7 statistical regions (NUTS 2 level of the NUTS system of the European Union). Each of

the seven regions has a centre, a Regional Development Council and a Regional Development Agency. Each

region, with the exception of Central Hungary (the region including Budapest, that has only one) is

composed by 3 counties (19 all together at NUTS 3 level). Each county has a County Development Council

and a County Development Agency. Below the County level, micro regions (174 all together at NUTS 4 level,

composed by groups of settlements bordering each other), and local authorities (about 3,175

municipalities) constitute the smaller administrative and governance units in Hungary.

While counties and municipalities form the traditional intermediate and lower administrative and

governmental territorial unit in Hungary, regions and micro regions, although from EU accession are

increasingly gaining competences, are mainly considered as functional units.

Regional planning system

The 1996 Act XXI on Regional Development and Physical Planning was the first act which defined

the framework and institutions for Hungarian regional development. The Act states that regional

development should be based on the national and territorial (regional planning), concepts, programmes

and physical plans. It is significant that it was designed according to the principles of European Regional and

Spatial Planning Charter and the EU regional policy. The Act, which established a new institutional system

of territorial development in Hungary, was followed by a series of decrees on the use and distribution of

the regional development allocation for territorial equalisation among counties.

The drafting of the National Regional Development Concept (NRDC) within the framework of

Parliamentary Resolution 35/1998 (III.20), furthered the process by defining targets and guidelines with a

special view to ensuring compatibility with EU structural funds policy during accession. Notwithstanding,

the wide-ranging nature of the concept and the multiplicity of tasks have left many issues unaddressed,

particularly the role assigned to regional competitiveness policy and how to surmount efficiency/equity

conflicts. NRDC was the first development policy document that defined the long term regional

development objectives, setting out principles necessary to design territorial plans and guidelines for

sectoral and regional planning and for the actors of regional development.

The Concept included long-term objectives concerning major demographic, settlement and

environment changes and the development of major infrastructure networks, as well as medium-term

objectives that specify the regional allocation of the development programmes of individual ministries. The

financing of regional development specified in the Concept was based on the following key principles:

- decentralisation of resource distribution;

- focusing of resources on the most important issues;

- the mobilisation of outside resources;

- the balance of the normativity and discretionality and the promotion of complex

development in larger regions.

The 1996 Act XXI on Regional Development and Physical Planning disposed of revising the Concept

every six years, which became timely in 2004. Prior to revising the NRDC, Hungary faced an extremely

important task. For the first time in its history it had to prepare a development document for the period of

2004-2006 in order to take part in the EU's cohesion policy and to become a beneficiary of the EU's

Structural and Cohesion Funds. Based on the EU's regulation, Hungary prepared its National Development

Plan and its operational programmes. The National Development Plan intended to achieve specific goals

through four development priorities:

1. improving the competitiveness of productive sector,

2. increasing employment and the development of human resources,

3. providing better infrastructure and cleaner environment,

4. strengthening regional and local potential.

Along with sectoral Operational Programmes it was created a single national Regional Operational

Programme that concentrated its financial assistance in the regions (NUTS 2) which faced the most

difficulties (North Great Plain, North Hungary, South Great Plain and South Transdanubia). The aim was to

contribute to the development of the regions most lagging behind by supporting favourably projects from

the so called beneficiary areas. The National Development Concept was adopted by the Parliament in

December 2005 together with the renewed National Regional Development Concept.

The new NRDC defines the overall development objectives for every sectoral policy until 2020, the

development objectives of the National Development Plan 2007-2013 and the guidelines for the National

Agricultural and Rural Development Plan. As the 1996 Act XXI on Regional Development and Physical

Planning disposed of revising the NRDC every six years, in 2004 the “Report on the Territorial Processes and

the Results of the Territorial Development Policy” was prepared and accepted by the Parliament. At the

end, as a result of the revision, the new Concept was adopted together with the above mentioned National

Development Concept by the Hungarian Parliament in December 2005.

The new NRDC builds on the last years experiences and defines the regional development as a

horizontal policy, which gives advice to all the sectoral policies, and aims to co-ordinate them from a

territorial/regional development point of view. The NRDC defines the territorial aspects of all kind of

developments in Hungary. For the sectors and regions this is a guidance document, which also defines the

long-, mid- and short term objectives of the country. The new regional development policy is integrated at

the different levels and actors and is integrated into other policies.

The New Hungary Development Plan (NHDP) contains the country strategy for the period 2007-

2013 and the financial resources – including the EU's Structural and Cohesion Funds needed for the

implementation. The NHDP is in line with the National Development Concept and the NRDC, as well as the

EU's regulations on cohesion policy. It facilitates the efficient use of the EU funds and makes the

implementation of independent regional programmes possible. In the planning process of the NHDP,

planning and programming were coordinated at the regional and national levels.

West-Transdanubian Operational Programme

Priority 2007-2013 Budget (EUR)

2009-2010 Action Plan (EUR)

1. Regional economic development

83,9 M (15,4 %) 53,8 M

2. Tourism development – renewal of Pannon Heritage

128,9 M (23,6 %) 57,7 M

3. Urban development 108,9 M (19,0 %) 69,23 M

4. Environmental protection and transport infrastructure

109,5 M (20 %) 42,3 M

5. Infrastructure development for local and regional public services

99,8 M (18,3 %) 42,3 M

Total: 530 M 265,33 M

Regional Strategies for innovation and development

Regional Innovation Strategy (RIS) - 2001:

- improvement of the innovation environment,

- development of the basis and infrastructure of knowledge

- promotion of diffusion of knowledge (knowledge transfer)

- financial system of innovation

Technology Foresight Program of WT - 2004:

- machinery (automotives, electronics),

- tourism (spa, health, wellness),

- environment industry (renewable energy, wood and furniture)

- knowledge transfer

Autopolis: Program for Regional Growth Pole - 2006:

- innovation-knowledge industry

- economic development-new technologies and services


Almost 99% of the enterprises of the West Transdanubia Region are small or micro-businesses

employing 50 people or fewer. Overall, they employ considerably more than half of the employed

workforce. However, they account for much less than 50% of the GD P, and their portion of exports is even

smaller (60% of all exports of the region originate from the industrial parks). It is obvious, therefore, that

developing this sector may yield considerable economic growth.

Enterprises


Enterprises

Number of registered enterprises* 118,535

Of which:

in manufacturing 7,483

in construction 9,711

in trade 18,174

providing real estate/business services 39,927

others (%) 43,240

Number of enterprises per 1,000 inhabitants* 147

Number of foreign-owned enterprises** 2,511

Number of 100% foreign-owned companies** 1,736

*2007

The economic development of the last 15 years was mainly based on factors such as low wages (but

relatively skilled workforce), well developed infrastructure, tax allowances and incentives, and geographical

location, closeness to the Austrian border and the Western markets. One could characterise it as a form of

extensive development that is based on labour intensive inputs with a low technological base, although

there are some foreign multinational companies with the highest technology and some very competitive

Hungarian SMEs with state-of-the-art technologies and products (ROP 2007). Nevertheless, there is a need

to transform this extensive development process into an intensive one which is based on knowledge,

innovation, and R&D activities.

The most important problems are follows:

- A low level of R&D spending, only about 0.3% of GDP;

- A low level of cooperation between the business sphere and the academic sphere;

- A lack of academic and university research institutions (no traditional university);

- Highly centralised systems, no regional autonomy in innovation or R&D policy.

To cope with these problems, West Transdanubia has elaborated its own Regional Innovation

Strategy (RIS) in 2001 (one among the first in Hungary) so as to accord to the regional development

programme (RIS 2001). The mission of the RIS is the development of West Transdanubia’s innovation

system. The main objectives here are:

- Creating the missing institutions in the regional innovation systems, reaffirming the existing

institutions and organising them into a suitable network;

- Improving the innovation performance of enterprises with the help of specialised programmes

and adequate application systems;

- Providing prominent support for those knowledge-based

- activities which produce high value.

Altogether, the RIS had eleven measures, and these were grouped into four priorities. However, all

the regional actors knew that due to the highly centralised innovation and R&D policy system of Hungary,

the region would not have the financial resources for its implementation. Any new initiative or project

complying with RIS priorities in West Transdanubia had to be connected to the national policy schemes and

programmes to receive financial support.

The technology and knowledge-based development programme thus began. The first steps of this

new development were the establishment of the regional cluster initiatives in five sectors and of some

regional innovation centres in the most advanced industrialised centres such as Győr, Sopron, Szombathely,

or Zalaegerszeg.

In 2004, a technological foresight programme was prepared for West Transdanubia—again the first

in Hungary—with the aims of establishing the continuous renewal of the industrial and economic structure

of the region, creating the basis for greater value added in the economy and increasing the region’s

competitiveness (TEP 2004). Four determining key branches were identified in the region:

- Mechanical engineering (esp. automotive, electronics and mechatronics),

- Tourism (esp. health tourism and rural tourism),

- Environmental industries (environment use, environmentally friendly resources and technologies,

and renewable energies),

- Knowledge industry (from vocational training to higher education and research activities).

For these four key branches, special sectoral background materials were prepared which provide

insight into the most important intervention points and the direction required at both regional and national

level.

In the domain of cluster policy, West Transdanubia has also been a pioneer in Hungary. From 2000

to 2007, eight so-called cluster organisations (in most cases rather networks) were established in the region

to support specific sectors. Two regional university knowledge centres and two cooperation research

centres operating in the two university centres of the region, were established with national funding (Grosz

2006, Grosz 2007, Pannon Business Network 2006).

However, regions have just finalised their Regional Operative Programmes (ROP) for the period of

2007-2013, which is part of the second National Development Plan (its new name: New Hungary Plan).

They are co-financed by EU and national sources. However, these ROPs’ do not contain any measure in the

fields of innovation or R&D policy. These strategic fields will be dealt with in the next period in the

Economic Development Operative Programme, which cover the whole country (ROP 2007, EDOP 2007).

KTIA (Research and Technology Innovation Fund)

The objective of KTI Fund is promoting the establishment of an innovation-driven, knowledge

economy and society. The programmes are inspiring the birth of products, technologies or services from

knowledge and innovative ideas which can be sold on world market.

This is expressed by the „From Idea to Market” action plan with the following major objectives:

- Improving knowledge bases, building knowledge bases complying with international standards;

- Supporting R&D programs linked to National Strategic objectives;

- Increasing the utilization efficiency of R&D results, intensifying the foundation of innovative

enterprises, Introduction of technological and business incubation;

- Development of regional innovation;

- Intensifying international R&D cooperation, fostering Hungarian participation in EU R&D

programs.

On the regional level, there are only two basic sources of funding for RTDI projects:

- contributions from the central government

- budget and 25% of the Research and Technological Innovation

Fund to be spent on promoting RTD I activities at regional level.

The two main support for SME’s in innovation field:

INNOREG

Aim of the subsidy:

- Improve the innovation environment, spread knowledge and technology

- Product and service innovation

- Foster co-operation within the region and interregional co-operation,

- network of innovation centres and research centres

- Improve innovation infrastructure; support purchasing of R&D tools

Total budget:

- 2 mln EUR -4 mln EUR /year/region

Decision-making in the Regions

INNOCHECK

Aim of the subsidy:

- supporting innovational initiatives of micro and small enterprises and encouraging the

innovation service supply and demand.

Subsidy: max. 0,1 / project. Self-contribution isn’t necessary.

Total budget for 3 years and to the 7 Regions: 19 million EUR

Decision-making in the Regions.

Since 2005, 25% of the new Research and Technology Innovation Fund is allocated to the regional

level, and regions may decide on spending priorities. However, the supporting contract is signed by the

National Office for Research and Technology. This is the sole notable financial source for innovation at

regional level (ca. € 4 million per year). The priorities of this Regional Innovation Development Programme

package are established together with the Regional Innovation Agencies according to the RIS priorities and

are formulated and approved jointly with the Regional Innovation Council.


The Government’s mid-term (2007-2013) science, technology and innovation policy (STI) strategy

The formation of a knowledge-based society and economy demands a high level of knowledge,

which appears in new, marketable products and services. Science and innovation are essential factors in

competitiveness and sustainable growth. At the same time, knowledge has become an important factor in

quality of life.

Innovative Hungarian economy

The Hungarian economy and society must step into new fields of development based on knowledge

and innovation in order that Hungary can with knowledge intensive and innovative activities, giving to its

products the greatest added value, become connected with the world economy. Sustainable development

of the Hungarian economy can only be realized in an environment that stimulates innovation.

Strategic goals

The general goal of the strategy is that in the mid-term Hungary shall become a country where

knowledge and innovation are the driving engines of the economy and companies appear on the global

market with competitive products and services.

The mid-term goals:

Expansion of companies’ research and development activities

Establishment of internationally recognized research & development-, innovation centres and

research universities

Enhancing of the regions’ research & development & innovation (R&D&I) capacity

Establishing a knowledge market which works on the principles of performance recognition and

competition through the globalization of knowledge production and dissemination,

Investment in large scientific facilities, primarily in the regional centres and the development poles,

reducing regional differences (regional cohesion).

The dynamic increase in yearly R&D expenditure, above all as a result of growth in corporate

expenditure

Strategic principles

Principles of realizing the strategic goals:

Focusing of intellectual and financial resources, optimization of utilization.

Increased economic and societal implementation of R&D results.

Strengthening of regional innovation.

Strategic priorities

The strategy designates tasks in the following priority areas:

A culture of acceptance and utilization of scientific research results.

Quality-, performance-, and utilization-driven efficient national innovation system.

Well-honoured creative and innovative workforce suitable for the demands of knowledge-based

economy and society.

Economic and legal environment with incentives for creation and utilization of knowledge.

Domestic companies, products and services that are competitive on the global market.

Connection with other strategic documents

The current strategy was prepared in harmony with the objectives of the National Development-

policy Concept (NDC), National Action Program (NAP) and the New Hungary Development Plan (NHDP). The

situation-analysis can be found in the Appendix. The details of implementation (operative goals, tasks and

schedules) are described in the STI action plan.

Hungary's Operational Programmes for the period 2007-2013

Priorities

1. Development of the economy - Economic Development OP

2. The development of transport - Transport OP

3. Renewal of the society - Social Renewal OP - Social Infrastructure OP

4. Environment and Energy - Environment and Energy OP

5. Regional Development - 7 regions

(- European Territorial Cooperation OP (objective 3) – 7 cross border, 2 transnational, 4

interregional programmes )

6. State Reform - Electronic Public Administration OP - State Reform OP

7.Coordination and Communication of The New Hungary’s Programme Development Plan

- Implementation OP

The relevant national programs

GOP (Economic Development Operational Program Priority I)

These programmes encourage industrial research and experimental development programmes

exploitable for the economy and to be implemented in close cooperation between enterprises, universities

and research institutes and also provide assistance to building modern research infrastructure, to

applications for patents and in certain areas of primary importance to the permanent renewal of utilizable

knowledge and to their expedience in market environment. Furthermore these programmes are targeted

at establishing innovation and technology parks, hosting research and innovative enterprises and improving

the existing institutional system.

The focal points of these programmes are as follows:

- intensifying the presently low activity of domestic corporate R&D innovation;

- a more efficient utilization the existing capacities and results;

- and increasing the cooperation between the stakeholder actors.

Regional Development Operational Program (RDOP)

The Priority Axis 1 of the Operational Program of KDR (Regional Development Agency of Central-

Transdanubia) for the programming period 2007-2013 concentrates on the development of regional

economy. In this aspect it encourages setting up an internationally attractive regional economic

environment, the promotion of competitive, innovative economic cooperation systems and networks,

stimulating the building of an innovation-oriented network of regional economy and improving the skills

and abilities of the domestic owners of small and medium-size enterprises.

TIOP (Social Infrastructure Operational Program)

The objectives of the scheme are as follows:

- improving the infrastructure necessary for the qualitative improvement of the R&D+I and training

activities of higher educational institutes,

- creating the necessary infrastructural and technological background for increasing the number of

students educated at faculties of technology and natural science by modernizing and improving the supply

of research equipment and instruments in the fields of mathematics, natural sciences, technology, IT and

life sciences.

TÁMOP (Social Renewal Operational Program)

These schemes assist to the promotion of the technology transfer of higher education institutes,

the supporting of the selected basic research projects of innovative research teams, the publication of the

scientific results of higher education institutes, the planning of a tutorial-researcher lifelong career and the

promotion of talented Hungarian students. They also contribute to the qualitative improvement of

education and research, to increasing the ratio of eminent students and tutor-researchers and urges for

achieving excellent results. A further objective of the schemes is involving foreign researchers or Hungarian

professionals working at foreign research institutes into Hungarian research projects easing in such way the

integration of home-coming Hungarian or foreign researcher-tutors into the domestic world of science.


Military Brownfield Restructuring

The West-Transdanubian Regional Operational Programme provides financial support to further

develop military brownfields to foster entrepreneurial environment. The concept of military brownfields

from the aspects of supporting measures:

Military brownfields are joint building site or sites, 50% of which has not been in use at the time of

application, its territory exceeds 2500 sqm and comes under one of the following categories according to

the settlement plan. Furthermore, function change can be expected due to development, i.e. the disused or

under developed building / complex of buildings / area is in bad physical condition, mostly environmentally

polluted, causing problems in township structures; and the development contributes to find the answers to

these issues.

The area has operated as an economic area for at least 10 years prior to the submission of the

application according to the settlement plan (commercial, service or industrial area in accordance with

OTEK) and industrial activities had been carried out or are being carried out in the area, or it functioned as

an agricultural area or

A particular area, within this context solely:

Areas of Education Centres

Provided the local building regulation has applied the categories defined by OTEK for 10 years

Areas of Health Care, or

Exploitation of raw material (mining), areas for pre-processing of raw materials, or

Areas of national defence, military and national security buildings, or

Areas of refuse operators, refuse tips (solid and fluid, other dangerous and radioactive

refuse etc.) or

Agricultural areas

Transport and public utility areas, within this context solely:

Transport buildings

Administration buildings

West-Transdanubian Operation Programme – 1.3.1. Development of Business Infrastructure and

Investment Environment

„B” section objective:

Development of industrial areas and military brownfields

Objectives of the project:

Expanding services provided by the industrial areas in the region, quality development, and

supporting infrastructural investment allowing these developments.

Applicants:

Local municipalities, autonomous associations, as well as associations established by these

institutions, economic associations, co-ops, foundations.

Subsidy: 10 – 200 million HUF

Subsidy extent:

Micro enterprise 50%, SME 40%, other 30%

Independently attainable activities:

- Establishment and development of infrastructure within the borders of the building site

- Dissociation, building, conversion, expansion of the buildings



The most important governmental organisations at regional level in Hungary are the regional

development councils, which are not elected but delegated bodies. Their executive bodies are regional

development agencies. However, budgetary and administrative decisions are still prepared on a county

level; only on certain necessary developmental and administrative issues does the regional level have

decisional power.

Regional Development Council

The law about regional development and town and country planning adopted in 1996 created the

basis of the institutions of regional development in Hungary, thus also the establishment of the

independent regions. In 1997, the West Pannon Regional Development Council was established with the

participation of the counties Győr-Moson-Sopron, Vas and Zala. The Council was re-formed in 1999 then in

2004 because of the obligation of the rule of law.

In the Council, the presidents of the councils of territorial development of the counties, the mayors

of the five towns of county rank of the region, the representatives of the small regions, the chairperson of

the Regional Tourist Council, as well as the 11 representatives of the government delegated by the

ministers have right of voting, thus the number of members is 23.

Regional Development Agency

The West Pannon Regional Development Agency (RDA ) was founded as a 100% subsidiary of the

West Pannon Regional Development Council (RDC).

The RDA’ s main tasks are to support the work of the RDC and to implement the specific objectives

set in the West Pannon Regional Development Programme. The Agency participates in establishing a future

vision for West Pannonia, and is responsible for implementing the regional development programme:

It carries out tasks associated with the working body of the Regional Development Council, helps

and promotes the flow of regional development information in the region, supports local and small regional

initiatives, and organises as well as coordinates conferences, meetings, and training programmes.

The Agency does not operate as an agency in the literal sense of the word. The Agency takes part in

the comprehensive, all-inclusive management of the respective projects. This includes all aspects from the

establishment of the planning programme, to the monitoring of activities. Based upon the knowledge of

the given situation and its own resources, the Agency decides whether to pursue direct involvement, to

take up a coordinating role, or to apply a mixed approach. In the course of its activity, the Agency has

established a wide level of cooperation with regional, national, and international organisations.

West Transdanubia took the lead in utilising the innovative methods of developing the economy.

Three regional organisations (the West Pannon Regional Development Council, the Regional Tourism

Committee, and the West Pannon Regional Development Co.) created the Pannon Business Initiative in

October 2001.

It aims to support the economic development of the region by encouraging investments,

developing the small, and medium-size enterprises, organising events and regional forums, introducing

innovative methods and other active operations. It operates within the framework of the Regional

Development Agency. The Initiative was meant to serve as an example for a well-organised, harmonised,

regionally integrated economic development model, and thus facilitate the general increase in the

competitiveness of the entire region in the long run. The cooperative network of the Initiative can in fact be

considered a loose voluntary cluster of the numerous organisations engaged in economic development

(Pannon Business Initiative 2006).

Regional Innovation Agency

The National Office for Technology and Research (NOTR ) supports the innovation-based

improvement of the economy, the competitiveness of the Hungarian regions, the formation and

strengthening of regional innovation networks, and the decentralisation of the regional innovation

incentive schemes. It has thus supported the establishment of regional innovation agencies. The Pannon

Novum West Pannon Regional Innovation Agency was established by the region’s innovation actors with

the support of NOTR in 2005. The main task of the Agency is to implement the regional innovation strategy

that was prepared in 2001 for West Transdanubia, namely to harmonize innovation processes, to

encourage the spreading of knowledge, to provide and integrate innovation services, and to establish and

strengthen the requisite technological innovation networks. By enhancing innovation activity, it contributes

to the competitiveness of micro-, small and medium enterprises. The Agency helps to develop a more

innovative environment, encourages networks, and develops new innovation services by implementing

strategic objectives and activities.

The Agency now operates as a consortium of different regional and national organisations

representing the regional target groups.

The three years funding period of the project ended in 2007, but both the national and regional

policy makers are interested in continuing the operation in the future. 2008 starts another three years

funding period of NOTR.

In 2005, a new body focussing on innovation policy was established: the West Pannon Regional

Innovation Council. The members of the Council represent different organisations, thus a great number of

regional actors are connected to the work of the Council. Task is to facilitate innovation processes, to

provide professional proposals, to provide decision support for the Regional Development Council, and to

control and coordinate the work of the Regional Innovation Agency.

County Foundations for Enterprise Promotion (3)

GYŐR-MOSON-SOPRON COUNTY

Kisalföld Local Enterprise Agency

H-9022 Győr, Czuczor Gergely u. 30.

Phone: +36 96 316 188

Fax: +36 96 511 121

Web: http://www.kva.hu/

E-mail: [email protected]

The foundation is serving the small and medium-sized enterprises since almost ten years. It is

building the infrastructure accurately to help the operation of an enterprise and gives them all the

information they need in economic, law and other fields; promoting them to get in touch with and create

business cooperation with partners in the European Union.

The following basic activity:

http://www.kva.hu/


Consulting: in establishing a business, law, accounting, tax, loan, commerce, agriculture and

marketing

Training: Management/enterprise knowledge, computing, language courses.

Coordination of sources: Micro-credit, Start-up Credit, preparing an application, credit guarantee.

Research and studies, organizing events, supporting of exhibitions and fairs, distribution of

publications.

VAS COUNTY

Vas County Local Enterprise Agency

H- 9700 Szombathely, Petőfi S. u. 1/b.

Phone / Fax: +36 94 326 049, 326 050


ZALA COUNTY

Zala County Local Enterprise Agency

H-8900 Zalaegerszeg, Köztársaság u. 17.

Phone: +36 92 316 033

Fax: +36 92 316 062, 310 800

Web: http://www.zmva.hu


Zala County Foundation for Enterprise Promotion (ZMVA) has been established by the Zala County

Self-government, as the only founder in 1992. ZMVA operates as a member of a national network, but it is a

non-profit organization that is independent organizationally and financially, and an important element of

the Hungarian institution system promoting the improvement of the national and international economic

relations.

Objectives: Promoting the economic development of Zala County, supporting the establishment,

survival and first of all the growth of SMEs by operating a central promotion office and a county-level sub-

office network.


http://www.zmva.hu/

milto:[email protected]

Chamber of Commerce (5)

Győr-Moson-Sopron County Chamber of Commerce and Industry

Vas County Chamber of Commerce and Industry

Zala County Chamber of Commerce and Industry

Sopron City Chamber of Commerce and Industry

Nagykanizsa City Chamber of Commerce and Industry

Innovation and Technology Centres (3)

INNONET Innovation and Technology Centre, Győr

The most important one of them is the INNONET Innovation and Technology Centre, which is

located in the Business Park Győr and is equipped with a modern communication equivalent to that found

in similar European centers targeting start-up companies. INNONET provides a wide range of

administrative, management, and training services at reduced rates for such companies.

The center work is based on the firm belief that long term socio-economic benefits of innovation processes

significantly exceed the earnings of individual companies participating in them. Committed to this

observation, INNONET was established as a non-profit organization to aid innovative small and medium

enterprises and thus foster the development of the West-Transdanubian Region.

The Centre also tries to create important synergies between the international firms settled in the Győr

Business Park and the local innovative small -and medium-size ventures. It has very good relationships with

similar Austrian institutions (e.g., Eisenstadt, Wiener Neustadt, Seibersdorf) and runs several joint projects

with these partners.

Innovation and Technology Centre Sopron

The Innovation and Technology Centre located in the Industrial and Innovation Park of Sopron. The

centre is driving ventures which are producing high technology level products, and helping the

development of the town and the region with their services. Their work do not need large space, but use

high-tech instruments, and employ the high qualified local human power.

So the Park helps ventures which cause minimal environmental damage, use high-tech and

telecommunication instruments, deal with environment and nature protection or medication.

All the public works can be used by the tenants.

Claudius Technology Incubator and Innovation Centre Szombathely

The Technical Incubator House and Innovation Centre located in Claudius Industrial and Innovation

Park, 1500 m2 has been built with the mission of supporting mainly SME businesses.

The Technical Incubator House and Innovation Centre offers various services in outstanding circumstances

characterized by high level of infrastructure.

In Zalaegerszeg and Nagykanizsa two new innovation and technology centre is under preparation

which will focus on wood and furniture industries and mechatronics.

Competence centers (3), University Knowledge Centers (2)

National Office for Research and Technology announced a call for proposals in October 2004 for the

first time to establish and support the operation of Regional Knowledge Centres.

The main goal of the Péter Pázmány Programme is to establish Regional Knowledge Centres (RKC) to exploit

research and development results in close cooperation with the industrial sector.

The aim of the programme is to establish professional and regional centres of excellence in

cooperation with companies and other research organizations to manage innovative projects, focused on

research and development at an international level. These research centres effectively cooperate with the

industrial sector, stimulate the technological and economical development of the regions.

The task of the supported Knowledge Centres is to transfer R&D results to marketable new products and

technologies.

In our region there were two Regional Knowledge Centres established under the support of

National Office for Research and Technology:

- Regional Knowledge Center of Forest and Wood Utilization, Sopron, University of Western-

Hungary

- University-based Regional University Knowledge Center for Vehicle Industry, Győr,

Széchenyi István University

ERFARET Regional Knowledge Centre of Forest and Wood Utilization

The aim of the Forest- and Wood Utilization Regional University Knowledge Centre (RET) is to raise

the level (that was extraordinary so far) of the sylviculture and wood products industrial activity of the

West-Hungarian region, throughout technological and economic support and development of the region

and improving the competitiveness of the region and the country.

The centre task was to create a scientific and technological innovative centre (based on network

principle), carrying out innovation and research-development(R+D) activities that are extra ordinary in the

region. The centre will effectively and intensively cooperate with the economic sphere, as a professional

and regional centre. Among the strategic aims, the knowledge centre, the level of the innovation ability,

the modern technology, supportive cooperation between the intensive wood processing industry and the

forest management, the development of small and medium ventures (KKV) in the region, has to be

mentioned. All these correspond to the aims of the Economic Competitiveness Operative Programme

(GVOP) of the National Development Strategy (NFT).

The wood, the timber is one of the largest and most valuable natural resources of the Pannon

region, which traditionally determines the character of the landscape. The forest rate in the region is

significant, the necessary basic materials can be found in large quantity and good quality, the determinant

companies of the wood products industry (with great traditions) are concentrated in the whole spectrum of

the wood utilization. The analyses, carried out for the development plans, determined the utilization

possibilities of the region in the integration of economical networks, which are based on product clusters.

Regional University Knowledge Centre for the Vehicle Industry in István Széchenyi University

The Regional University Knowledge Centre for the Vehicle Industry (JRET) project operated with the

support of the National Office for Research and Technology in the framework of the Péter Pázmány

Program in the period from 2006 to 2008, and since then it operates as an independent organizational unit

implementing new projects. The main activity of the Knowledge Centre is focused on the vehicle industry,

within this priority is given to research into vehicle manufacturing technologies and assembly

constructions. The Knowledge Centre acts as a centre for scientific and technological innovation, which in

co-operation with the business sector operates an outstanding research-and-development network in the

region.

The grant of HUF 1.1 billion, awarded for an application, raised an additional HUF 713 million from

company resources. Within the field of vehicle manufacturing technologies the three major research-and-

development programs of the project were complex research into the manufacturing technologies and

tools of high-quality vehicle parts, development of modern vehicle main units and research into their

diagnostic procedures, as well as technology and knowledge transfer. The Centre established world-class

research potential on the knowledge base of István Széchenyi University with 8 full-time researchers, the

lecturers and PhD students of the University, as well as modern research tools. This enabled the consortium

partners and the companies associated with the Knowledge Centre to develop and manufacture products

that are competitive on the world market and have a high added value.

The mission of the Knowledge Centre is to act as a centre for scientific and technological innovation

for the vehicle industry in co-operation with the business sector, to operate an outstanding research-and-

development network in the region, improving thereby the competitiveness of the country and supporting

the economic development of the region.

The research infrastructure and human resources offered by the Knowledge Centre are available to

every enterprise for the development, introduction of new technologies, and the creation of competitive

vehicle products.

In the long term the organization intends to operate as a centre of excellence, playing a dominant

role in vehicle development in the Austrian-Slovakian-Hungarian border region.

Industrial and Business Parks (22)

By now the 24 Business Park formed in the region almost completely cover the area of the region

and it can be observed that - beside the foreign enterprises - these Parks play a prominent role in the

growth of the local economic players, especially SMEs.

Occupancy rate of Business Parks in the region

Number of Business Parks

Total area, acres

Net area, acres

Occupied area, acres

Occupancy for the total area, %

Occupancy for the net area, %

Győr-Moson-Sopron 7 521.7 430.3 289,3 55.4% 67.2%

Vas 6 583.7 429.3 298.5 51.1% 69.5%

Zala 9 395.8 371.4 246.3 62.2% 66.3%

West Transdanubia 22 1501.3 1231.1 834.1 55.6% 67.8%

By 2006 total area of Business Parks in West Transdanubia exceeded the 1500 acre value, from

which the net floor space to be built-in exceeds the 1200 acres value. Number of resident enterprises is

increasing from year to year, it now approaches 350 companies. There are Parks that are nearly full and the

occupancy rate in regional level approaches 68% resulting in the need to involve new areas into the

developments.

Main features of Business Parks in the region

Area (acre) No. of enterprises No. of employees, persons

Investment, Million HUF

1349 343 37 889 423 032

Enterprises in Business Parks employ nearly 40 thousand people which means that on average one

Park employs 1800 persons, in other words, 12.5% of the employees in the region find up-to-date working

environments at enterprises working in one of the Business Parks.

Of course there are significant differences among the parks, as in parks operating since nearly 15

years in the major industrial centres number of the resident enterprises still exceeds 30 (in Győr this

number is over 80), while number of companies in a park of a minor township is much lower, is under 12 on

average, and obviously their role in employment is also minor.

Regional clusters

The first similar initiative in Hungary was established in West Pannonia. Its principle is the network-

based organisation.

Strictly speaking of the clustering processes and clusters as ecosystems, we cannot talk about well

working clusters in the West Transdanubia region. There are a number of fields and sectors (car industry,

wood and furniture industry, tourism, etc.), at the same time, where a continuous progress of the

clustering process can be observed and this can be a basis for these potential and politically directed pre-

clusters to become by an active policy developing and well working clusters, even on middle term.

- Pannon Automotive Cluster (2000)

- Pannon Wood and Furniture Cluster (2001)

- Pannon Thermal Cluster (2001)

- Pannon Mechatronics Cluster (2005)

- Pannon Logistics Cluster (2005)

- Pannon Textile Cluster (2005)

- Pannon Local Product Cluster (2005)

- Pannon Renewable Energy Cluster (2006)

- Pannon Cluster for winery (2007)

- West-Pannon Eco Cluster (2007)

- Pannon IT Cluster (2008)

- Sopron Region ICT Cluster (2008)

- Pannon Pellet Cluster (2008)

Though the region does not have an own solid and complex cluster policy, this deficiency is partly

counterbalanced by the effect of the institutional, organizational and higher educational efforts to satisfy

the special needs and demands of the pre-clusters established since 2000 (car industry, wood and furniture

industry, thermal, mechatronics, logistics, textile industry, local products, renewable energy) or those of

priority sectors as well as the effect of the innovation policy of the region.

4. CONCLUSION

The whole surface of the 24 business parks that were to be found in the region of West Pannonia

exceeded 1300 hectares in 2005. The number of enterprises that settled in the region increases dynamically

and more than 350 companies located here at the moment. Certain business parks (for ex. Győr, Sárvár)

are quite completely full therefore other areas have to get involved into the development for example the

military brownfield areas.

Earlier traditional sectors of the region - food industry, light industry, textile industry - have

devaluated and lost their role while engineering industry that has also age-old traditions stopped short

after the collapse of the eastern markets, then it renewed step by step owning to the appearance of

multinational investors (Audi, Opel, Flextronics, General Electric and so on). Within engineering industry,

motor industry as well as the production of machinery, instruments and telecommunication equipments

dominate.

The dynamic growth of the industry is based on the powerful export orientation that is

characteristic not only for the foreign enterprises settled in the region but also for the Hungarian

companies. Unfortunately, it is characteristic for one part of the foreign investments (for ex. electronics)

that they established an assembling activity with lower added value, as well as they were not able to

integrate into the economy of the region by developing Hungarian supplier chains. The major part of the

existing export oriented sectors needs many imports, and at the same time it is a low-tech assembly as well

as job processing with low added value which is based on less qualified labour force. At the beginning of

the years 2000, disinvestments could be experienced in textile industry and in electronics concerning the

activities with low added value which could cause serious employment problems in certain small regions.

On the base of the most important sectors of the region, such cluster initiatives were launched

from 2000, the aim of which is to promote the cooperation and interaction of enterprises, to provide

special services and infrastructure for the most important sectors of the economy and for their connecting

background industry in the region. Many projects were realised that are useful for the close connections of

the economic sphere and municipalities involved the brownfield reconstructing and investment

possibilities.

ROMANIA



Type of economy

Since early 1990, Romania has had a free market economy despite continuing government

presence in the industrial sector. Successive governments have taken steps to liberalise and privatise the

economy.

Romania sits on the crossroads of many historic trade routes that allow access to another 200

million consumers within a 1,000-km radius of Bucharest. The main channels of these routes are the

Danube River and the port of Constanta, one of the largest ports on the Black Sea, which is linked to the

North Sea by a new navigation route through the Rhine-Main-Danube Canal. Romania has a large skilled

workforce experienced in areas such as engineering and manufacturing and cheaper labour costs compared

to many other East European countries.

Many of the country’s big cities boast of a large industrial infrastructure, which along with

Romania’s considerable natural resources offer substantial potential for exploitation and development.

Main macroeconomic trends

Like many countries in Eastern Europe and the former Soviet Union, Romania had been struggling

to turn its command economy into a market economy. Successive governments have found it difficult to

turn the economy around because of a lack of hard currency and the inability to secure external funds due

to the country’s high budget deficits, much of it accrued from financing loss-making state industries. Old

economic and financial structures have been slow to change just like the bureaucratic culture inherent in

many old institutions. In the last years, the overall business climate has improved and the economic

indicators look healthier.

Table 1: Growth and associated factors

UM 2005 2006 2007 2008

GDP growth % 4,2 7,9 6,2 7,1

Final consumption % 8,9 9,4 9,6 8,0

Gross Fixed Capital Formation % 15,3 19,9 29,0 19,3

FOREIGN TRADE AND INVESTMENT

Exports FOB Mil. Euro 22255 25850 29549 33614

Imports FOB Mil. Euro 30061 37609 47371 51813

Trade balance Mil. Euro -7806 -11759 -17822 -18199

Merchandise trade balance as % of GDP % -9.8 -12.0 -14.4 -13.4

Exports % 27.9 26.4 23.9 24.6

Imports % -37.7 -38.4 -38.3 -38.0

Current account deficit Mil. Euro -6888 -10156 -16677 -16877

Direct Investments Mil. Euro 5237 8723 7047 9237

INFLATION

CPI (average) % 9,0 6,56 4,84 7,85

EMPLOYMENT

No. of employees in economy Thou. pers. 4559 4667 4885 4737

Unemployment Thou. pers 523 460 367 403

Unemployment rate % 5,9 5,2 4,3 4,0

EXCHANGE RATE

RON/EURO (average) - 3.6234 3.5245 3.3373 3.6827

RON/USD (average) - 2.9137 2.8090 2.4383 2.5189

Source: INS; BNR; The National Agency for Employment.

Table 1 shows the major macroeconomic development during 2005-2008

Over the period of reference Romania’s economy grew steadily. In year 2005 GDP grew by 4.2% as

against 2004 and in 2008 GDP growth was 7.1% as against the previous year. Imports and exports grew at

different rates leading to the lopsided balance of payment and to the deficit of the current account.

Leading sectors of the Romanian economy

Manufacturing and engineering are Romania’s backbone industries. The country also possesses

substantial energy resources and agricultural land. Most sectors of the economy remain under-exploited

and offer great potential, particularly manufacturing, agriculture and tourism. The technology sector

continues to play an increasingly important role in the economy due to the high level of skill among its

workers and rather low wage costs. The real estate sector also offers significant growth opportunities.

Government-owned industries and privatization

Romania’s government has reaffirmed its commitment to privatize the remaining state-owned companies,

particularly those in energy, heavy industry, pharmaceuticals and utilities. The relevant privatization

strategies are formulated, approved and executed every year by the concerned ministries in collaboration

with the state privatization authority, the Authority for the Disposal of State Assets (AVAS). Most of the

companies up for privatization are listed on the two major capital markets – Bucharest Stock Exchange and

RASDAQ.

Privatization is often carried out on these markets through electronic auction, public equity offer

and/or firm commitment underwriting. Moreover, in the case of big state-run companies undergoing

privatization, direct negotiations are a common practice.

Last year, foreign investors showed a special appetite for the automotives sector, electronics and

household appliances, construction, pharmaceuticals and bio-diesel production. Automotives was

appealing to investors because of its long tradition in Romania. Production of consumer electronics and

household appliances benefits from the wide availability of skilled workforce. The construction sector

flourished due to the continuing boom in the real estate market and bio-diesel production benefited from

large areas put to fuel-yielding crops.

The Information Technology and Communications (IT&C) sector has also attracted foreign

investment due to the availability of highly qualified IT specialists.

Foreign direct investments

Sectors that attracted foreign investments in recent years include oil and natural gas, automotives,

metallurgy, banking and finance, food processing, heavy engineering, telecommunications, construction

and consumer goods manufacturing. Investors have expressed interest in newly-privatized industries as

well as in greenfield projects. The FDI within greenfield projects exceeded 42%.

Table 2. Foreign direct investments attracted by Romania during 2004-2008 Eur million

2004 2005 2006 2007 2008e

TOTAL FDI inflow 9258 21885 34512 47139 36641

Industry 6223 10689 15155 19621 24087

Services 3035 11196 19357 27518 12554

Foreign direct investment balance, as % of GDP ... 6.6 8.9 5.7 6.8

Structure of the total FDI, %

TOTAL FDI inflow 100 100 100 100 100

Industry 67.2 48.8 43.9 41.6 65.7

Services 32.8 51.2 56.1 58.4 34.3

Source: <http://arisinvest.ro/en/why-romania/fdi-statistics/>

FDI per capita in 2008 (Euro) was slightly above 2,000 Euros

Foreign direct investments (FDI) play a key role in the globalization process and is an important

element affecting international relations .

Table 3. The structure of the Foreign direct investments attracted by Romania during 2004-2008 Per cents

2004 2005 2006 2007 2008

TOTAL 100.0 100.0 100.0 100.0 100.0

Industry 67.2 48.8 43.9 41.6 65.7

Services 32.8 51.2 56.1 58.4 34.3

The foreign trade activities

In 2008 the total exports were over 33.6 billions Euro and the imports were over 51.8 billions Euro.

During 2004-2008 the foreign trade activities increased continuously, but the evolution of the imports

exceeded the exports one (see the table no.1). In this context the trade balance was negative; the trade

deficit increased from 7.8 billions Euro to 18.2 billions Euro.

Table 4. The External trade in goods, 2007

Extra EU-27 Intra EU-27

EU-27 2665.80 5218.03

Euro area 2010.99 3908.78

Romania 22.98 57.39 Source: Eurostat (ext_lt_intratrd)

Most of Romania’s trade is orientated to the EU (71.4% of the total volume in 2007, by 5.2% higher

than the average external trade of the EU-27).

The number of employees

The number of employees in the Romanian economy increased by 3.9% (from 4559 thousands

persons in 2004 to 4737 thousands persons in 2008).

The number of unemployed was 403 thousands persons in 2008. The rate of unemployment

decreased from 5.9% in 2004 to 4.4% in 2008.

* * *

In the last IMF Report for Romania the decline of economic activity was deeply influenced by the

world financial economic crisis. The real GDP contracted by 7.6% during the first half of the year 2009,

compared to the estimated 2%, because of the high decrease of the domestic supply, especially of the

consumption.

SOUTH REGION - MUNTENIA (NUTS II)

The municipality of Alexandria is situated in the South Development Region, located as its name

indicates in the South part of Romania, with a surface of 34,453 sqkm (14.45% from the country’ surface),

composed by 7 counties (Arges, Calarasi, Dambovita, Giurgiu, Ialomita, Prahova and Teleorman). In the

South, the region borders with Bulgaria. The landscape is characterized by the predominance of the low

altitude relief: plains and watermeadows-70.7%, hills-19.8% and about 9.5% mountains.

In 2005, the total population of the seven counties was of 3,329,762 inhabitants, which

represented 15.3% of the total Romanian population. The population density is 96.6 inhab/sqkm, a higher

value compared to the national average (90.7 inhab/sqkm). The urbanization level is 41.7%, below the

national average, because, except Prahova County, the majority of the population lives in rural areas.

The South Region had, in 2005, a settlement network composed of 48 cities (out of which 16

municipalities), 517 communes and 2018 villages. Most of the cities (32) have less than 20,000 inhabitants,

most of them with a poor urban infrastructure, similar to the rural areas. There are only 2 cities over

100,000 inhabitants (Ploiesti and Pitesti). The territorial distribution shows a large concentration of the

cities in Prahova county (14) and more reduced in Giurgiu (3).

Regional economy

In 2004, the regional GDP registered 2,447 euro/inhabitants (2,932.8 euro/inhab the national

value). At county level, the highest values are registered in Arges (3,071 euro/inhab) and Prahova (2,696.9

euro/inhab), while the most reduced is registered in Calarasi (1,748.2 euro/inhab). The essential

characteristic of the region is represented by the partition in two subareas with different socio-economic

and geographic individualities.

The high level of industrialization characterizes the northern part of the region (Arges, Dimbovita

and Prahova counties), Prahova ranking first in the country, as it regards the industrial production. The

main problems that characterize this area are linked to the industrial units decline, which generates a high

unemployment rate. The closing down of certain economic units in mono-industrial areas determined the

development of serious social problems, especially in some mono-industrial urban localities: Mizil, Moreni,

Plopeni, Urlaţi, Costeşti and Câmpulung Muscel.

The southern part of the region (Călăraşi, Giurgiu, Ialomiţa and Teleorman) is traditionally

underdeveloped, representing the second poverty area in Romania (the first being in North East Region).

This area is characterized by the predominance of the population occupied in agriculture. Also, the

component counties are characterized, as relief, by the predominance of plain. In the ’70s, the whole area

supported an artificial industrial development. Currently, the area is affected by the severe impact of the

transition process towards the market economy, through the closure down of the majority of the

representative industrial units. This situation characterizes all the county capitals and the neighbouring

areas of the next cities: Turnu Măgurele, Zimnicea, Alexandria, Videle, Giurgiu, Olteniţa, Călăraşi, Slobozia

and Feteşti.

Table 5: Population of the South Region (NUTS II) at the end of the year

2004 2005 2006 2007 2008

Number 3342042 3329762 3312342 3300801 3284525

Evolution, % 100 99.6 99.1 98.8 98.3

Source: National Institute of Statistics

Areas in difficulty

The industrial restructuring of the last 15 years generated the closing down of some industrial units

in mono-industrial areas, leading to severe social problems in the adjacent areas of the localities: Mizil,

Plopeni, Urlaţi, Valea Călugărească, Şotănga, Costeşti, Stoieneşti şi Câmpulung Muscel - in northern

counties, but also in some localities in southern counties: Turnu Măgurele, Zimnicea, Alexandria, Videle,

Giurgiu, Olteniţa, Călăraşi, Slobozia şi Feteşti.

The economic-social problems appeared also within rural localities focused on mining industry,

located in the Subcarpathians area, some (Filipeşti and Ceptura) being declared in the past as problematic

areas in order to encourage the investments by offering fiscals advantages. Unfortunately these measures

had a reduced socio-economic impact on the localities, still needing wide actions for socio-economic

growth.

The fifth industrial restructuring area was identified within South Region. Located in North – West

region, the areas include also the towns of Arges (Costeşti, Colibaşi, Câmpulung Muscel, Curtea de Argeş,

Piteşti and Topoloveni) and Dambovita (Fieni, Găeşti, Moreni, Pucioasa, Târgovişte and Titu) counties.

Development potential

South Region has an important economic development potential, differentiated between the

northern and the southern parts of the region. Thus, in the northern part there are underground resources

represented by oil and natural gas, coal, salt, which, through processing and trading could increase the

added value in the region. On the other hand, in the southern part of the region there are large agricultural

areas that can contribute to the specialized agricultural development, according to the local pedological

conditions.

The industry contribution to the regional GDP is over 30%, especially if is taken into consideration

the share of the chemical and petrochemical industry (Prahova and Arges), machines, transport

equipments, construction materials (Prahova, Arges and Dimbovita), textiles, confections and food

industry. Ploiesti, Pitesti and Targoviste cities act both as growth development poles and as polarizing

centers for new industrial activities, besides the existing traditional activities, including the foreign

investments.

The industry represents the most important economic sector of the region, if it is considered that

the industrial enterprises realized 45.9% from the total regional turnover (2003). At county level, the

highest industrial turnover is realized in Prahova (38%) and Arges (33.3%), the last county being Calarasi

(4%).

There are 11 industrial, scientific and technologic, tourist and leisure parks (which represent 30% of

the total number of parks), 5 of them being located in Prahova County.

The agricultural potential of the region in general and of the southern part especially is very

important (71.1% from total area is represented by agrarian land, out of which 80.2% arable land).

There are also important foreign investments in the Region: Renault – Pitesti, Holcim – Campulung Muscel,

Samsung COS – Targoviste.

GDP of the South Region in 2008 was of 17,517.1 mln euro, lower than in the previous years.

Gross GDP per capita (PPP) was of 5,333 euro by 12.5% lower than in 2004.

Table 6: Economic context of the South Region Muntenia (NUTS II)

2004 2005 2006 2007e 2008e

Regional GDP (mil RON) 59472.2 36322.1 44301.4 56505.29 63192.36

Total Regional_GDP (mln Eur) 20368.7 21801.5 25139.1 16466.9 17517.1

Regional GDP per capita PPP (RON) 17795 10908 13375 17119 19239

Regional GDP per capita PPP (Eur) 6095 6547 7590 4989 5333

Regional gross domestic product - PPS per inhabitant in % of the EU-27 average 28.1 29.1 32.1 33.8 35.9

Compared to the regional GDP of EU27, GDP in the South Region accounts for 35.9%. Between

2004-2008 there was a certain trend of increase of the share of regional GDP in the European average (by

7.8 percentage points).

Table 7: Structure of regional GDP of South Region Muntenia. Total=100

2004 2005 2006 2007e 2008e

Agriculture 9.7 11.2 9.9 9.8 9.7

Industry 15.0 30.4 32.5 26.7 26.7

Services 75.3 58.4 57.6 63.5 63.6

Source: National Institute of Statistics; National Bank of Romania; Eurostat.

The structure of South Region in 2008 was: services – 63.6%, industry – 26.7%, agriculture – 9.7%.

The turnover of entreprises in the South Region, in 2008, was over 28 billion euros, an increase of

94.3% as against 2004.

The structure of the turnover in 2008 was as follows: 48.6% in industry, 51.4% in services. Over the

period mentioned, the share of industry in turnover declined in favour of services.

Table 8: Total turnover of South Region Muntenia

2004 2005 2006 2007 2008

Total turnover (mln RON) 51077 64090 77103 90116 103129

Total turnover (mln Eur) 14411 17688 21876 27003 28004

% of SME turn./Total Turn 52.0 52.6 53.3 56.1 57.3

Of which:

SME per sectors (%): 100 100

Agriculture 0 0 …

Industry … … 22.4 23.5 …

Services … … 77.6 76.5 …


The share of the turnover of SMEs in the total turnover was 52.0% in 2004 and 57.3% in 2008. Most

of their turnover – 76% - was registered in services.

Table 9: Structure of total regional turnover

2004 2005 2006 2007 2008

Total 100 100 100 100 100

Industry 52.8 55.1 53.5 49.8 48.6

Services 47.2 44.9 46.5 50.2 51.4


In average, the structure of the SMEs turnover in 2007 was: 23.5% in industrial activities, 76.5% in services. Table 10: Total turnover of SMEs from South Region Muntenia – by number of employees, between 2006-2007

Activities (by sections of NACE Rev.

1)

Total

Of wich: By range, by number of employees

0-9 10-49 50-249

2006

Total 100 100 100 100

Industry 22.4 7.7 18.9 39.3

Services 77.6 92.3 81.1 60.7

2007

Total 100 100 100 100

Industry 23.5 7.3 21.4 39.9

Services 76.5 92.7 78.6 60.1


The analysis of the turnover of SMEs by number of employees shows the following: SMEs with up

to 9 employees are mainly orientated towards services (with 92.3% of the total turnover ibn 2007); the size

of the turnover diminishes as the SME growths.

In 2008 the total number of employees in the South Region was 596 thou persons, with an increase

of 4.3% as against 2004. By main sectors it breaks down to: 5.2% in agriculture, 42.0% in industry, 52.8% in

services. Over the analyzed period the share of persons employed in agriculture increased by 0.4

percentage points and in industrial activities by 1.4 percentage points, while in services it decreased by 1.8

percentage points.

Table 11: Number of employees in South Region Muntenia

2004 2005 2006 2007 2008

Total employment (.000) 570.5 571.1 566.5 597.0 595.8

Employment per main sector:

Sector A – agriculture (%) 5.3 5.4 5.0 4.4 5.7

Sector B - industry (%) 43.9 41.8 40.3 38.5 45.4

Sector C – services (%) 50.8 52.8 54.7 57.1 49.0

Value added per employed (Eur) 49727 56383 68984 72145 80783

Average gross wage (RON) 770 952 1111 1295 1305


Average net wage (RON) 579 716 835 974 981

Average net wage (Eur) 163 198 237 292 266

Unemployment 94685 93142 81209 65517 58779

Unemployment rate (%) 7.4 7.3 6.3 5.1 4.55

Note: about 75-80% are paid unemployed, about 10-15% are paid unemployed Source: National Institute of Statistics

In 2008 in the South Region was 80.8 mln euro. As compared to year 2004, the added value per

employed person increased 1.6 times.

The average gross wage in the South Region was of 217 euro per month in 2004 and of 354 euro

per month in 2008. Directly linked to the gross wage, the average net wage was of 183 euro in 2004 and of

266 in 2008.

The number of registered unemployed was of 58.8 thou persons in 2008, decreasing by 37.9% as

against 2004.

Unemployment rate was 4.55% in 2008, diminishing by 2.85 percentage points as compared to

2004.

Traditional economic sectors in the South Region Muntenia:

Petro-chemistry equipment

Petro-chemical products

DACIA and ARO car production

Vegetal agricultural products

Meat production

Mountain tourism

Comparative advantages of the Region

Good coverage by telecommunication networks

The international airport Henry Coanda

The complex road network: sectors of the Eurocorridors IV and IX, of the motor ways A1 and A2, a

number of roads of national and European rank.

Skilled cheap labour force

Agricultural land available for eco-agriculture.

C. SHORT PRESENTATION OF TELEORMAN COUNTY (NUTS III) PART OF THE SOUTH REGION ECONOMIC CONTEXT

The average population of Teleorman County over the last years was of 417.5 thou inhabitants, i.e.

12.6% of the region’s population. The overall trend is of decrease: between 2004 and 2008 the total

population decreased by 4.8%.

Table 12: Evolution of the population in Teleorman County (NUTS III)

2004 2005 2006 2007 2008

Population, end of the year, number 427745 422314 417183 413064

407377

% in the South Region Muntenia 12.8 12.7 12.6 12.5 12.4

Evolution, % 100 98.7 97.5 96.6 95.2 Source: National Institute of Statistics

GDP of Teleorman County was in 2008 of 1310.1 mln euro, on an increasing trend, by over 3

percentage points between 2004 and 2008. In 2008 GDP of Teleorman County accounted for 7.5% of the

regional GDP.

GDP per capita in Teleorman County (ppp) was of 3216 Euro in 2008, by 51.8% smaller than in

2004.

Table 13: Economic context of Teleorman County (NUTS III)

2004 2005 2006 2007e 2008e

GDP (mil RON pret curent) 3212.1 3402.1 3847.0 4369.1 4824.6

GDP (mln Eur) 906.3 938.9 1091.5 1309.2 1310.1

% of regional GDP 4.45 4.31 4.34 7.95 7.48


% of county GDP in regional GDP 34.8 34.0 34.5 63.5 60.3

Source: National Institute of Statistics; National Bank of Romania

Foreign trade was positive over the whole analyzed period, imports accounting for an average 50%

of exports. However, we can notice a steady increase of imports (accounting for 43.1% of exports in 2004

and reaching 60.2% in 2008); in 2008 imports and exports decreased by 10.2% and 35.6% respectively and

as a result the trade balance diminished by almost 55% (from 121 mln euro in 2004 to 55 mln euro in 2008).

Table 14: Foreign Trade in Teleorman County (NUTS III) – Mln Euro

2004 2005 2006 2007 2008

Import of goods 91.87 89.52 87.18 84.83 82.49

Export of goods 213.01 194.02 175.04 156.06 137.08

Trade balance 121.14 104.50 87.87 71.23 54.59

Evolution, %

2004 2005 2006 2007 2008

Import of goods 100 97.4 94.9 92.3 89.8

Export of goods 100 91.1 82.2 73.3 64.4

Trade balance 100 86.3 72.5 58.8 45.1

Source: National Institute of Statistics; National Bank of Romania;

GDP per capita in Teleorman County accounts for 60.3% of the regional GDP.

In 2008 there were 5,319 active companies, an increase of 23.1% as against 2004. The total number

of SMEs in 2008 was 5,061, representing 95.2% of the total number of active companies. The dynamics of

the SME sector was higher than the total active companies one.

Table 15: Number of companies inTeleorman County, 2004-2008

2004 2005 2006 2007 2008

No. of active companies 4319 4552 4796 5080 5319 Out of which no.of active SMEs 3779 4023 4297 4582 5061 % SMEs in total active companies 87.5 88.4 89.6 90.2 95.2 Evolution of the no. of active companies, % 100 105.4 111.0 117.6 123.1 Out of which evolution of no.of active SMEs 100 106.5 113.7 121.2 133.9

Source: Territorial statistics

The structure of the active companies in Teleorman County is as follows: in agriculture – 7.78%, in

industry – 9.53%, in services – 82.7%. Manufacturing industry accounts for the greatest share of industrial

units, and retail and gross trade, car and motorcycle maintenance and repair account for the greatest share

of services (58.01).

Table 16: Structure of the active units in Teleorman County by size and type of activity in 2008

Activities

Total

of which categories of size by no of employees

0-9 10-49 50-249 250 and

over

Total 100.00 100.00 100.00 100.00 100.00

Agriculture 7.78 7.28 13.30 8.42 5.26

Industry 9.53 7.46 20.69 48.42 73.68

Mining Industry 0.16 0.04 0.49 2.11 10.53

Manufacturing Industry 9.13 7.35 19.95 37.89 63.16 Electric and thermal energy, natural gas, water 0.24 0.07 0.25 8.42 0.00

Services 82.70 85.26 66.01 43.16 21.05

Activities

Total

of which categories of size by no of employees

0-9 10-49 50-249 250 and

over

Construction 5.02 4.65 6.90 14.74 5.26 Retail, car and motorcycle, house appliances repair and maintenance 58.01 60.35 44.58 14.74 0.00

Hotels and restaurants 3.70 3.86 2.96 0.00 0.00 Transport, storage and communications 4.86 4.89 4.43 3.16 15.79

Real estate, leasing and industrial services 7.46 7.74 4.43 8.42 0.00

Education 1) 0.35 0.39 0.00 0.00 0.00

Health and social assistance 1) 1.75 1.84 1.23 0.00 0.00 Other collective, social and personal services 1.54 1.54 1.48 2.11 0.00

1) Includes only local units organized as commercial companies

The structure of SMEs by size Tabel 17: Structure of SMEs active in Teleorman county by size, in 2008

Activities

Total

of which: by categories of size according to the no of employees

0-9 10-49 50-249

Total 100,00 100,00 100,00 100,00

Agriculture 7,79 7,28 13,30 8,42

Industry 9,29 7,46 20,69 48,42

Mining Industry 0,12 0,04 0,49 2,11

Manufacturing Industry 8,93 7,35 19,95 37,89 Electric and thermal energy, natural gas, water 0,24 0,07 0,25 8,42

Services 82,93 85,26 66,01 43,16

Construction 5,02 4,65 6,90 14,74 Retail, car and motorcycle, house appliances repair and maintenance 58,23 60,35 44,58 14,74

Hotels and restaurants 3,71 3,86 2,96 0,00 Transport, storage and communications 4,82 4,89 4,43 3,16

Real estate, leasing and industrial services 7,49 7,74 4,43 8,42

Education 1) 0,36 0,39 0,00 0,00

Health and social assistance 1) 1,76 1,84 1,23 0,00 Other collective, social and personal services 1,54 1,54 1,48 2,11

1) Includes only local units organized as commercial companies

The turnover registered in 2008 by the companies of Teleorman County was over 1101.3 M euro,

up by 4.6% from 2004.

The structure of the turnover in 2008 was as follows: 36.2% in industry, 63.8% in services. Over the

analyzed period there was a slight decrease of the share of industry in favour of services.

Table 18: Total turnover of Teleorman County

2004 2005 2006 2007 2008

Total turnover (mln RON) 3730.8 3812.6 3894.3 3975.0 4055.7

Total turnover (mln Eur) 1052.6 1052.2 1104.9 1191.1 1101.3

Structure of the Total turnover, %

Total 100 100 100 100 100

Industry 39.6 42.4 41.0 53.1 36.2

Services 60.4 57.6 59.0 46.9 63.8


In 2008 employed population was 52.6 thou persons, down by 5.6% as compared to 2004. By main

sectors of activity: 9.5% in agriculture, 36.9% in industry, 53.6% in services. To be noted that population

employed in agriculture declined by 1.14 percentage points and in services by 0.31 percentage points, while

it increased by 1.45 percentage points in industry.

Table 19: Employment in Teleorman County

2004 2005 2006 2007 2008


Employment per main sector:

Sector A – agriculture (%) 10.3 10.1 9.4 8.4 9.2

Sector B - industry (%) 38.5 38.1 35.0 32.9 40.0

Sector C – services (%) 51.1 51.7 55.6 58.7 50.8

Value added per employed (Eur) 143612 158325 203201 226830 198267

Average gross wage (RON) 745 890 1011 1119 1254


Average net wage (RON) 560 669 760 841 943

Average net wage (Eur) 158 185 216 252 256

Unemployment 13860 15504 14269 12552 15011

Unemployment rate (%) 8.0 8.9 8.2 7.3 9.1

Note: about 75-80% are paid unemployed; about 10-15% are unpaid unemployed. Source: National Institute of Statistics

In 2008 added value per employed person in Teleorman County was 1989.3 mln euro (an increase

of 38.1% as compared to 2004).

Gross average wage was 210 euro per month in 2004 and 340 euro per month in 2008. Directly

related are net wages: 158 euro/month in 2004 and 256 euro/month in 2008.

Unemployment in 2008 was of 15,000 persons, an increase by 8.3% from 2004. The breaking down

this total shows the highest share detained by persons with primary education (84.6%) followed by those

with secondary education (13.1%); these are the categories that keep increasing over the period 2004-

2008.

Table 20: Unemployment by level of education in Teleorman County

2004 2005 2006 2007 2008

Primary 83.6 84.7 84.9 85.0 84.7

Secondary (vocat. or else) 12.5 12.8 13.2 13.4 13.5

Tertiary (university) 3.9 2.5 1.9 1.6 1.8


Unemployment rate was 9.1% in 2008, the double of the regional rate.



Over the period 2000-2007 Romania’s economy grew steadily (see above at context analysis). From

2007 the private sector and its sub-sector of SME’s benefited from propitious conditions so that the

contribution of the private sector to GDP grew from 65.6% in 2000 to 71.2% in 2007.

The 2007 Report on the activity of SMEs showed that up to 2007 the SME sector has developed

both as number of active SMEs and structure by size categories and economic sectors.

Table 1: Number of active SMEs between 2000-2007 by size

Category 2000 2001 2002 2003 2004 2005 2006 2007 Micro 375,804 374,255 377,499 417,366 358,787 386,561 410,763 431,029 Small 29,121 30,340 30,231 33,856 36,392 39,128 43,419 47,022 Medium 7,504 7,737 7,761 8,147 9,121 9,158 9,322 9,577 Total 412,429 412,332 415,491 459,369 404,300 434,847 463,504 487,628 Source: National Institute of Statistics, Ministry of Economics and Finance, Ministry of SMEs

Table 1 shows an increase of 18.2% of the number of SME between 2000 and 2007

Table 2: Number of active SMEs by sectors of activity

Sector 2000 2001 2002 2003 2004 2005 2006 2007 Agriculture & forestry 9,925 10,720 10,523 13,704 11,746 11,958 12,859 14,036

Industry, energy 45,719 47,693 52,923 59,555 54,993 55,718 56,873 59,492

Construction 11,808 13,402 18,842 24,542 25,197 29,265 34,757 45,896 Services 344,977 340,517 333,203 361,568 312,364 337,906 359,015 368,204 Total 412,429 412,332 415,491 459,369 404,300 434,847 463,504 487,628 Source: National Institute of Statistics, Ministry of Economics and Finance, Ministry of SMEs

It is to be mentioned that the most active sector was that of construction, where the number of active

SMEs increased 4 times between 2000-2007.

The main conclusions of Tables 1 and 2 are:

Most of the medium size SMEs are in the industrial sector; the average size of an industrial SMe

being bigger than in other sectors; in this sector SMEs need higher capital investment and a larger

number of skilled employees;

78.6% of micro SMEs are in the services sector;

In services, especially in retail, there are mostly micro-entreprises (92%); many of the micro-

entreprises function as market-intermediaries, as partners or sub-contractors; their large number is

due to the development of a new category of services provided to companies, based on contracts

of service provision;

The evolution of active SMEs in the service sector is significant for the whole economy of the

country. From a statistical point of view, the service sector is divided in four sub-sectors, i.e. commerce,

tourism, transport, communications and other services of specific evolution. On the whole, the number of

SMEs in retail keeps decreasing continuously and significantly, its share declining from 73.6% in 2000 to

52.5% in 2007. Tourism is less dynamic although its share increased from 4.1% in 2000 to 6.1% in 2007. On

the other hand, the share of the sub-sector of other services jumped from 17.8% in 2000 to 31.7% in 2007.

The overall picture shows the switch to fields of higher added value, such as transport and communications

(e.g. from 4.8% to 9.7% between 2000 and 2007). The decline of the retail sector and the development of

other services is an indication of the existing development potential for SMEs with a higher added value.

Legal framework

The main legal acts regulating the activity of SMEs are:

Emergency Ordinance no 139/2007 amending Law no 346/2004 on the development of small and

medium enterprises, adopted with a view to be in line with the programmes dedicated to SMEs

funding.

Government Decision no 387/2007 on the organization and functioning of the Ministry for SMEs,

Commerce, Tourism and Liberal Professions (SMECTLP)

Order of the Minister of SMECTLP on the approval of the Regulations

Emergency Ordinance no 94/2007 on amendments to Law on Public Procurement (reducing the

ceiling for tendering).

Institutional framework

At central level the activity of SMEs is coordinated by the Ministry for SMEs, commerce and

business environment (SMECBE), The SMECBE is in charge to develop and consolidate relevant legislation

in accordance with EU regulations, The development of the institutional framework for SMEs is reflected in:

The development of “Territorial Offices for SMEs” (TOSME)

Enlargingn the network of National Guarantee Fund for SMEs

Developing the post-privatisation process

One of the major tasks of the Ministry is to ensure the annual management of funds supporting

SMEs – national, PHARE, structural etc,, in collaboration with other institutions and bodies,

The Ministry prepared and adopted the “Regulations for the development and functioning of

Territorial Offices for SMEs” (TOSME) located in 12 county-capitals, The TOSMEs are subordinated to the

Ministry for SMEs, have judicial personalities and have the following competencies:

developing and managing data bases concerning the respective SMEs and their activity profile;

collaborating with the local authorities and the local business communities for the implementation

of the Government Strategy in support of the SMEs

counseling SMEs how to access the ministry’s and European programmes

facilitating SMEs access to IT services e-governance and e-business

providing information campaigns to develop business environment (in partnership with the

Regional Development Agencies, Euro Info centres, the Chambers of Commerce etc,)

facilitating access of SMEs to public procurement

organizing seminars for professional training with the Ministry of Finance,

One of the major concerns of TOSME is to advise SMEs to become competitive at European level,

A special attention is given to SMEs in regions where the industrial and social infrastructure is

weakened and unemployment rate is high.


At national level:

The Strategic National Reference Framework (SNRF) 2007-2013 establishes priorities of intervention at

national level and connections to the Structural Funds and the Strategic Guidelines for Cohesion 2007-2013

(as adopted by the Commission in 2007).

The Operational Programmes

Government Decision no 759/11.07.2007 on eligibility regulations and financing within the operational

programmes.

As of 1st January 2007 Romania is eligible for EU support and financial and technical assistance from

the following European funds:

European Regional Development Fund

Cohesion Funds

European Social Funds

European Funds for Agriculture and Rural Development

European Fund for Agricultural; Guaranties

European Fund for Fishery

The above funds can be accessed through the Operational programmes that establish country

objectives and priorities, fields of intervention and actual operations as reflected in financial support

schemes, Based on the National Strategic Reference Framework (NSRF) approved by the European

Commission in July 2007 Romania obtained financing for nine Operational Programmes within which SMEs

are supported by various management authorities (Table 1), The financial support given to SMEs takes into

account their role in the economy, both by size and by type of activities, A major consideration was also

the need to make a better use of the economic potential represented by SMEs,

Table 3: Major intervention areas for SMEs in Operational Programmes

Programme Priority axis PA Main intervention area IA Implementation structure

OP Increasing economic competitiveness

PA1 - Innovative and eco-efficient production system

IA1 – Productive investments IA2 – Access to financing IA3 – Developing a sustainable entrepreneurship

Ministry of SMEs, commerce and business environment

PA2 –RDI for competitiveness

IA1 – Research and partnership with universities, research institutions and companies IA@ - Access to ITC, especially for SMEs

National Authority for Research and Innovation

PA3 – IT&C for public and private sectors

IA! – Support for IT use IA2 – Developing e-economy

Ministry of Communication and IT

Regional PA4 – Developing IA1 – Sustainable MInistry for Regional

Operational Programme

regional and local business environment

development of BSOs at regional and local levels IA2 – Support for micro-entreprises

Development and Housing

OP Development of Human Resources

PA3 - Increasing adaptability of employees and entreprises

IA1 – Promoting enterprise culture IA2 – Training for adaptability

Ministry for Work, Social Solidarity and Family

National Programme for Rural Development

PA1 Imporving quality of life and diversifying rural economy

1 – Supporting the creation of micro-entreprises 2 – Encouraging tourism

Ministry of Agriculture and Rural DEvelopment

In dimensioning funding for SMEs their role in the economy and their development potential are

being taken into account.



The main BSOs are:

1. The National Fund for Credit Guarentee for SMEs (NFCGSME) issuing guarantees for the financing

instruments used by SMEs. The NFCGSME has a partnership with Intesa Sanpaolo Romania and working

agreements with 24 banks.

Eligibility conditions include: a maximum of 250 employees and a turnover of maximum 50 Meuro. Natural

persons and authorized family associations may also benefit of NFCGSME guarantees.

Types of guarantees:

to banks and other financing institutions

short / medium / long term credits

guarantee letters for banks

export pre/financing

lines of credit

Applicant SMEs have to address directly the banks or other partner financial institutions; if the respective

institutions consider the project as viable but lacking enough material guarantees, the NFCGSME is

requested to issue a letter of guarantee. The NFCGSME would guarantee for 80% of the total value of the

credit with a single commission of 1.75%/year. So far a number of 2,500 SMEs were issued letters of

guarantee.

The NFCGSME may conclude directly a guarantee agreement with an applicant SME. Based on the

guarantee agreement the bank would sign the credit contract with the applicant.

2. The Chamber of Commerce and Industry of Romania (CCIR) has its HQ in Bucharest and branches

in all 41 counties of Romania and in Bucharest. CCIR is the largest organisation of the business community

in Romania.

CCIR is actively supporting the business community through the services provided that include: economic

missions, professional training programmes, organizing seminars and debates, data bases with information

and business opportunities.

After Romania’s accession to the EU, CCIR disseminated relevant information for companies concerning

community standards and competitiveness criteria.

The activity of the Teleorman County Chamber of Commerce and Industry and Agriculture (established as

by Law 335/2007)

Main objectives:

Promoting local economic interests in Romania and abroad.

Representing economic interests of individual and groups by: organizing commercial, cultural

events, exhibitions, preparing studies and reports, promoting and supporting local initiatives and

programmes

Organizing professional training for specific skills

Professional certification in business as by law

Providing economic and commercial information for business opportunities

Creating own data bases and information from other relevant data bases

Issuing various certificates for business development and documents for import-export activities

Counseling on SME creation, business plans, market studies etc.

CCIA Teleorman has a permanent skilled staff. Membership consists of over 2,000 companies.

From 1991 organizes the Annual National Fair for Agriculture and food Industry AGRALIMEX, several

editions of Consumer-goods Fair ALBCO, Construction and Interior Design Fair CONSALEX and the

Automobile Salon SAALEX.

CCIA Teleorman is partner of several consortia and foundations, such asTeleorman Training Center

for Foreign Trade, Development Center for SMEs - Teleorman Branch, “Business School” - Teleorman

Branch, etc.

CCIA Teleorman has also international partners in Kavala-Greece, in Bulgaria, Alexandria-Egipt etc.

A number of internationally financed projects had been prepared or are in progress: addressing

laid-off personnel (the World Bank), management of human resources CIGRU (Phare through the Progress

Program), EUROFEM managerial training for women, CT-ICE managerial training for foreign trade, training

of SME managers – PIM-IMM (Phare).

CCIA Teleorman is publishing an official bulletin “Commercial Information” – a highly appreciated

periodical, distributed free of charge to companies and institutions and other Chambers of Commerce.

4. CONCLUSION

The financial crisis has demonstrated how dangerous it is for cities to depend on activities which

are strongly affected by short term speculative trends or for them to get locked into traditional low

productivity sectors which are unable to withstand global competition. In fact, the EU’s economic recovery

package explicitly recognizes that the future creation of long term and sustainable jobs will increasingly

depend upon the ability to mobilize the innovative and creative capacity of all its citizens. In this way, the

economic turmoil has given even more urgency to the fact that 2009 has been declared “European Year of

Innovation and Creativity”.

This identifies a series of functions that urban practitioners in institutions/ organizations concerned

with urban issues together with local universities can fulfill to encourage four main processes for SMEs:

• creating new industries – forefront science and engineering research; aggressive

technologies licensing policies; promote/assist entrepreneurial business (incubation services, etc.); cultivate

ties between academic researchers and local entrepreneurs; creating an industry identity (participate in

standard settings, etc.);

• industry transplantation (education/manpower development; responsive curricula;

technical assistance for different contractors, suppliers);

• diversification of old industry into related new sectors (set-up bridges between

disconnected SMM actors; filling structural holes; creating an industrial identity) and

• the upgrading of mature industry (problem solving for industry through contract research,

consulting, etc.; education/manpower development; global best practices scanning; convening foresight

exercises; convening user supplier forums).

The present project will provide a fund of experience for cities where there are supplementary

resources for SMM activities which can be put in practice by local public institutions because them sustain

long term option for the future of cities. It is necessary, at least, to follow two broad aims:

• Firstly to highlight the distinctive features which are particularly relevant for policy makers,

SMM and urban practitioners in institutions/organizations concerned with urban issues;

• Secondly, to identify the common elements this might become the focus for further joint

work for similar context.

For example, to attract institutions/organizations concerned with urban issues in sustaining SMEs it is

necessary:

• to analyze the main problems or challenges posed each SMM and try to show how can

realize their “entry point” and their problems;

• to provide a brief summary the main conceptual tools or models used by the public

institutions involved in urban issues which could be useful for other cities facing similar challenges;

• pointing out differences, similarities and the potential for collaboration;

• to show how the institutions involved in urban issues have divided their issue into different

operational sub-themes – as these could become the subjects of joint articles, reports and activities;

• to organize events like “open days” with relevance for SME- and to others institutions

involved in urban issues (possible themes: Innovating through EU cohesion policy; Knowledge Transfer:

university and industry at work in Europe’s regions; Financing innovation with EU funding; Innovation and

territorial cooperation; Innovation and Information Society, etc.).

SERBIA -Vojvodina



Table 1:

2004 2005 2006 2007 2008

STRUCTURE

GDP (mln Eur)*ND 3.695.815.533 3.510.705.654 N/A N/A N/A

GDP ( y/y) -6.00% N/A

GDP per capita PPP (Eur) 1.799 1.598 N/A N/A N/A

Structure GDP (%):

Agriculture 23.04% 22.41% N/A N/A N/A

Processing Industry 32.27% 27.09% N/A N/A N/A

Services 30.20% 32.58% N/A N/A N/A

Industrial output (y/y) 107.2 102.6 102.8 102.8 101.9

N° active companies N/A N/A 41602 45561 46188

Total turnover (mln Eur) N/A N/A N/A N/A N/A

% of SME turn./Total Turn N/A N/A N/A N/A N/A


Agriculture N/A N/A N/A N/A N/A

Industry N/A N/A N/A N/A N/A

Services N/A N/A N/A N/A N/A

EMPLOYMENT

Total employment 537.147 544.765 528.096 529.391 533343

% SME emp. on tot. emp. 24.14% 26.44% 27.87% 29.40% N/A


Agricultural A (%) 7.71% 7.04% 6.61% 6.02% N/A

Processing ind B (%) 24.97% 23.31% 22.01% 20.94% N/A

Services C (%) 17.83% 17.82% 17.70% 17.62% N/A

Value added per employed

(Eur)

N/A N/A N/A N/A 479.21

Average gross wage (Eur) 271.69 307.85 385.35 487.28 560.67

Unit labour cost (Eur) N/A

Labour productivity (y/y) 111.9 110.7 110.2 111.3 N/A

Unemployment (%) 18.84 19.85 17.98 19.08 14.19


Primary N/A N/A N/A 41.08 28.5

Secondary (vocat. or else) N/A N/A N/A 55.63 61.5

Tertiary (university) N/A N/A N/A 3.10 10.0

FOREIGN TRADE

Import of goods (mln Eur) 2,146.70 2,422.10 2,947.90 3,616.80 4,410.70

1. good category (SITC 2digit) Crude oil 33 Crude oil 33 Crude oil 33 Crude oil 33 Crude oil 33

2. good category Nature gas 34 Petroleum 33 Nature gas 34 Nature gas 34 Nature gas 34

3. good category Petroleum 33 Nature gas 34 Olis 33 Oils 33 Machinery parts 71

Export of goods (mln Eur) 879.90 1,158.10 1,584.20 2,073.20 2,424.00

1. good category(SITC 2digit) Sugar 06 Sugar 06 Sugar 06 Sugar 06 Machinery parts 71

2. good category Floor and wall covering 63

Floor and wall covering 63

Maize 04 Floor and wall covering 63

Sugar 06

3. good category Polyethylen 57 Polyethylen 57 Floor and wall covering 63

Polyethylen 57

Floor and wall covering 63

Trade balance (mln Eur) -1,266.80 -1,264.00 -1,363.70 -1,543.60 -1,986.70


1. partner (county+mln Eur) Russia 776 Russia 1.023 Russia 1.306 Russia 1.357 Russia 1.862

2. partner Germany 393 Germany 352 Germany 449 Germany 647 Germany 712

3. partner Italy 334 Italy 299 Italy 368 Italy 462 Italy 464


Main FDI sectors

Sector A (Cumulate data) Manufacturing; Wholesale and retail trade, repair; Agriculture, hunting and forestry

Sector B N/A 23,079,396 31,392,881 44,971,245 50,386,543

Sector C N/A 7,051,638 19,332,185 19,730,755 19,789,781

N/A 4,977,127 10,657,858 9,353,277 18,839,136

Due to different structure of statistics data, as well as lack of required data on the regional level,

this picture is lacking basic data needed for the analysis. Some additional data as required by this form,

exist only at National level, while on the level of Vojvodina we have presented those of them that exist,

mainly describing general employment and unemployment, while generation of income and sectoral

presentation were not possible due to unavailable official data. NUTS categorization will be implemented in

statistics in Serbia from 2010, so only after the period required to be analyzed we will have official

statistical data on indicators that have been presented in this form.

What was obvious, is the positive trend in Vojvodina related to income generation, employment

and increase of gross wages, while unemployment was permanently decreasing throughout 2004-2008.

Foreign trade, both import and export were substantially increasing, where foreign trade balance was

throughout the period negative and increasing. Namely, import of goods was twice as high as the exports,

so there is a strong imbalance of foreign trade in Vojvodina. In the structure of imports dominated import

of materials to be processes or transformed in the country. This import was at the level of ¾ of total

imports. On the other hand imports of assets and consumers goods were approximately at the same level

(between 11 and 13 % of total imports), where the distribution of data throughout the period was volatile.

In exports materials for processing or transformation were at the level of 2/3 of the export, where

consumers goods participated at the level of ¼ and assets participated in total export on the level between

5 and 7 %. If we analyze concrete products, then we can see that in imports dominate oil, natural gas and

parts for machines 8501 and 8502, while in exports dominate sugar, material for floor covering and

polyethylene with density more than 0.94. As far as countries of main foreign trade activities of Vojvodina

are concerned these are Russian Federation, Germany and Italy on import side, and Bosnia Herzegovina,

Italy and Germany on export side.

Main sources of data related to these indicators we have found in National Statistics, National

Institute for Development and Regional Chamber of Commerce and Industry of Vojvodina.

The problem is that regional planning program for Vojvodina is at the moment obsolete, while new one is

not prepared yet.

Basic Data

Surface: 21,506 km².

RESIDENT POPULATION AND DENSITY

AREAS 1991 2002 Population per km²

VOJVODINA 2013889 2031992 94

R. OF SERBIA 7822795 7498001 85

ROADS on the Territory of Magistral roads im km Regional Roads in km Local roads in km

nr total contemporary total contemporary total contemporary

1 Vojvodina 1563 1533 1797 1760 2697 1928

2 Serbia 4756 4603 10401 8818 22824 10288

1.2 Main sectors


Agriculture

2006 2007 2008


SME quota (%on total) N/A N/A N/A

Total turnover (mln Eur) N/A N/A N/A

Output volume (y/y) N/A N/A N/A

Employment (n°) 157.000 134.000 163.922

Av. gross wage (Eur) N/A N/A N/A

Unit labour cost (Eur) N/A N/A N/A

Productivity (y/y) N/A N/A N/A

Value added per employee (Eur) N/A N/A N/A

Import (mln Eur) 66.652.619 80.508.405 106.586.872


1. Country; value Country; value Country; value



Export (mln Eur) 107.471.439 120.343.359 103.978.480


1. Country; value (mln Eur) Country; value Country; value



Trade balance (mln Eur) N/A N/A N/A

FDI in the sector (cumulate mln Eur) N/A N/A N/A

Processing industry

2006 2007 2008

N° active enterprises N/A 4563 N/A


Total turnover (mln Eur) N/A 8.065.483.006 N/A


Employment (n°) 122.946





Import (mln Eur) N/A N/A N/A





Export (mln Eur)







Services

2006 2007 2008

N° active enterprises N/A 13.369 N/A


Total turnover (mln Eur) N/A 7.658.047.649 N/A


Employment (n°) 94.843





Import (mln Eur) N/A N/A N/A





Export (mln Eur) N/A N/A N/A







As for the main sectors we could identify on the regional level agriculture, industry and services

sector. However, certain data which could be collected on regional level of Vojvodina do not allow to form

any comprehensive comments.

Agriculture is based in the first line on grain production, while animal husbandry, vegetable and

fruit production, as well as industrial plants production are in the smaller scale. The trend of production in

grain production is volatile, strongly depending on weather conditions, as irrigation is not introduced to this

sector adequately. There is small number of companies being active in this field, while farms are rather

small and active with more that one activity. There are very few large producers. Animal husbandry is

during the late period in crisis and the livestock is also volatile. Vegetable and fruit production are lately

supported through various programs to be developed in more intensive way, where they still have not

reached the potentials they have in the region, having in minds soils and climate conditions.

Based on expert assessments, it can be said that related to the processing industry the most

developed sub-sectors are food processing industry, chemical industry, as well as metal processing

industries. In Vojvodina food processing industry is the most developed part of industry. In Vojvodina all of

its industry basically has been developed on income generation from agriculture. Initial industry was

oriented to food production. As having in its surrounding developed agriculture, this industry has been

developed across the diversity of sub-sectors of agriculture: bakery and pastry based on grain production,

diary based on cattle breeding, meat processing industry based on poultry and cattle breeding, leather and

clothing industry based on cattle breeding, juices based on fruit production, wines based on grapes

production, etc. Chemical Industry initially has been developed as for the needs in agriculture (fertilizers,

ingredients for protection of plants), where later by more intensive exploitation of oil and natural gas are

developed oil refineries and processing of the by-products. On the other hand, metal processing has

developed based on earlier handicrafts and needs for products. Here we include equipment (for agriculture

and other), tool and machines produced of metal. These industries were developed in Vojvodina based on

primary processed metals in other parts of Serbia and needs of developed industrial enterprises and

agriculture in Vojvodina.

In sector of services, beside the trade which is the most developed part of this sector, lively are sub-

sectors of financial services, tourism and logistics (transportation, stocking and forwarding). This sector is

the one having relatively stable growth in Vojvodina, where logistics trend is dependant on the trends of

development of industry and agriculture.


Related to the emerging sectors in Vojvodina, it can be mentioned sectors of IT (development of

software), project development and implementation services (related to future EU programs), engineering

(for the assembly, monitoring or follow up of construction and other investment works that will occur in

future in the region) and certain segments of fruit and vegetable production in particular in green houses.

In addition, the sector related to renewable energies (based on biomass and biogas) can also be expected

to be substantially more developed in the coming period. In the sector of services, in addition can be

expected substantial strengthening of the tourism sector, in particular part that relates to health tourism,

eco-tourism and congress tourism.

Driving factors of this development are University of Novi Sad, in particularly Faculty of Technical

Sciences and Faculty of Technology. In addition, it is a presence of few foreign investors that are interested

for the development of renewable energies (power generators for windmills production, or production of

biogas for example). Incubators that have been formed in Novi Sad, Subotica and Zrenjanin are also

supporting such developments, as well as developmental agencies currently existing in Novi Sad, Zrenjanin,

Subotica and Sombor.

Currently formed industrial, technological, or free zones: Novi Sad, Subotica, Zrenjanin, Indjija, Apatin,



Government of the Autonomous Province of Vojvodina, organized in its 17 Secretariats disposes

with the main infrastructure for regional development of Vojvodina. Beside, it is a founder of various

developmental institutions, such as Fund for Development of AP Vojvodina, Vojvodina Investment

Promotion (VIP), Guarantee Fund of Vojvodina and Vojvodina CESS (Strategic Economic Centre). There are

also Development agencies on a NUTS III level, as well as SME development agencies in Novi Sad, Zrenjanin,

Subotica and Sombor, covering the territory of Vojvodina through common projects. On the level of

Vojvodina there is also KEP, Office for European Integration.


On national level are brought all the laws that regulate regional development.

On national level in the period analysed was active National Agency for SMEE Development, having

various programs of support and promotion of SMEE. These programs consisted of organization of technical

assistance to SMEE (training, advising, mentoring), their promotion, organization of fairs. On the other hand

it supported start up, organizing a number of trainings and helping preparation and submission of

applications for start up loans, which have been rendered by the national Fund for Development. In

addition, SIEPA, National agency for Investments and Export Promotion has also organized various

developmental activities. Various Ministries, including Ministry for Economy and Regional Development, as

well as Ministry of Agriculture, have implemented a set of programs supporting clustering of SME,

Entrepreneurs and Farmers, rendering of loans under favourable conditions and supporting organization of

regional and local offices for technical support to SME development.

On the level of Vojvodina, Fund for Development of Vojvodina has each year organized a number of

calls for selection of developmental projects proposed by SME that are to get loans under beneficial

conditions. Similarly, Provincial Secretariat for Labour, Employment and Equality of Sexes has supported

various programs of technical support to start ups, particularly related to youth, female or marginalized

groups. On the other hand Guarantee Fund of Vojvodina had numerous programs related to support to

start ups, as well s such SME that have good business idea, but not sufficient collateral to get a loan under

commercial conditions, to have access to loans for start up or further development of their business.

Provincial Secretariat for Economy has implemented a number of project supporting SME

development, in support to their technical restructuring, clustering and associating SME and entrepreneurs

by sector or value chain criteria, development of quality control systems, etc.

Vojvodina CESS – Strategic Economic Centre has helped numerous municipalities to develop

Strategic plan for their Socio Economic development, that included a list of measures to be undertaken in

order to promote the development of SME, attract investments from abroad, resolve infrastructural

problems that will help overall economic development and SME development on their territories.

Vojvodina Investment Promotion Agency has elaborated promotion programs of Vojvodina and its

Economy, database of interest for investors as well as has undertaken numerous promotions and support

to internationalization of SME from Vojvodina (export promotion, organized visit to foreign fairs, etc).

Regional Development Agencies and SME Development Agencies have undertaken numerous

trainings of SME and for start ups, mentoring and/or advising for SME and entrepreneurs/farmers in order

to enhance their capacities and increase their competitiveness on the market, implemented various EU or

domestically funded projects in support to SME development (enhancement of surrounding infrastructure,

development of Business Incubators, Industrial Parks, Free Zones etc).

A number of Business Incubators has been founded, each of them implementing particular program

of support to their “tenants”.

As far as gaps and weaknesses of the system, they are related to the fragmentation of initiatives

and lack of integration of activities of various bodies implementing particular programs and projects.

Networking of institutions is insufficient. Also there is not sufficiently stressed the needed for support to

rural development initiatives, where in rural parts of the region the situation is the most difficult.


EU assistance to the region of Vojvodina has occurred through support to various national

programs of development. Through support to National SMEE Development agency it has implemented a

number of programs that directly had supported SME (like EDEP program, TAM, BAS, etc), or through

support to regional development strategies and institutions (RSEDP, RSEDP2), or through support on local,

municipality level (Exchange program, LED, etc).

Related to allocation of assets, the funds were on the national level, where National Ministry of

Finance is coordinating body. The assets are from there transferred to users.

Vojvodina itself has programs which are mostly oriented towards cooperation with particular

regions within EU. Among them Vojvodina has for example agreement with Italian region Friuli, Venezia,

Giulia or Austrian region of Styria.

Vojvodina had developed IRDP plan in 2002 and implemented throughout the period. The

Integrated Regional Development Plan of Vojvodina (IRDP) is a joint project of the AP of Vojvodina

Executive Council and the German Agencies GTZ und CIM. The IRDP is a multi-sectoral action plan with the

main aim of supporting the socio-economic development process of the AP of Vojvodina by stimulation of

for this process significant segments through different integrated measures. Its particular programs were

supported by various EU and EU member state programs (Support to New Technologies Transfer Scheme,

to activities of CESS, VIP, Business Standardization and Certification, Labour Costs Subvention Scheme, and

other). Programs of Friuli Venezia Giulia Region organized best practices transfer events, matching

Vojvodina entrepreneurs with Italian, like matching with Confindustria, or Vojvodina associations with

Italian clusters, etc).

The main topics of the economic development in Vojvodina relate to introduction of new forms of

organization of business, of new technologies, skills and programs how to approach new parkets, how to

develop regional and local development strategies and plans, how to set up cooperation with EU regions

and transfer/receive best practices related to the matter.


There are no particular plans of EU assistance for brown-field restructuring in Vojvodina.



Table 3

BSO Name Business Incubator Subotica

Address Magnetna polja 6, Subotica


Legal Status LIMITED LIABILITY COMPANY


Fields of activity Support of SMEE. Providing technical, business and educational services to

their tenants offers a favorable business environment for their growth and

development.

N. of employees 4

Competencies / skills Advising, training, accounting, PR

Direct Beneficiaries of BSO’s

activities

Start up SME in the region of Subotica

Main activities addressed to SMEs - provision of office space under stimulatory conditions

- Undertaking activities aimed at securing resources / production equipment

for tenants for the purpose of performing its activities

- Organizing the system of planning, monitoring and development of tenants,

as well as performance measurement and reporting system for tenants BIS

- Providing assistance in the preparation of technical and other

documentation necessary for obtaining a certificate

- Administrative and technical services (receiving and sending mail, copying

services, etc.).

- Providing advisory services in finance, law and tax policy

- Subsidize the cost of services accounting

- Organizing trade shows in the country and abroad

- Organization of training and education (business planning, marketing,


market research, etc.).

- Services use audio visual equipment, conference rooms, transportation

services

- Representation of tenants on the web portal BIS

Main activities addressed to start

ups

-provision of office space under stimulatory conditions

- Undertaking activities aimed at securing resources / production equipment

for tenants for the purpose of performing its activities

- Organizing the system of planning, monitoring and development of tenants,

as well as performance measurement and reporting system for tenants BIS

- Providing assistance in the preparation of technical and other

documentation necessary for obtaining a certificate

- Administrative and technical services (receiving and sending mail, copying

services, etc.).

- Providing advisory services in finance, law and tax policy

- Subsidize the cost of services accounting

- Organizing trade shows in the country and abroad

- Organization of training and education (business planning, marketing,

market research, etc.).

- Services use audio visual equipment, conference rooms, transportation

services

- Representation of tenants on the web portal BIS

Sources of funding Province of Vojvodina, City of Subotica

4. CONCLUSION

This analysis shows that data in Serbia are not recorded and systematized in a way that it is possible

to fill the above Form. What was possible to conclude is the following:

Environment for economic-entrepreneurial context in Vojvodina shows for the period 2004-2008

slight increase of economic activities, stagnation of employment, and decrease of unemployment.

Industrial production shows growth, while import and export of goods were steadily growing, though

showing strong imbalance in favour of imports. Percentage of employment in SME sector was growing

throughout the period, while SME employment in agriculture and industry was decreasing, and in services

sector slightly increasing. Main trade partners in imports are Russia, Germany and Italy, while for exports

Bosnia Herzegovina, Germany and Italy. Both in imports and exports are dominating materials for

processing, while equipment and consumers goods are varying, from 25 % (export of consumers goods) to

between 11 and 13 % (import of consumers goods and equipment/assets) and 5-7 % (import of

equipment/assets).

It is not possible to draw reliable conclusions from so limited data, however it can be seen very slow

recovery of economic activities in Vojvodina throughout the period, which was in addition characterized by

transition and privatization process.

We do not dispose with data for 2009, but it can be expected strong drawback of economic

activities to be registered for that year.

Any sectoral conclusions would be difficult to draw. From experience it can just be mentioned that

during the analysed period agriculture production is volatile, industry in slow recovery, while services

sector shows more positive dynamics.

As far as the existence of regional institutions for the support to economic development is

concerned, it can be stated that they have been developed, throughout the needed aspects of economic

development. However, there were not at disposition parameters to evaluate economic impact or results

of their activities.

There are regional development plans, particular programs and projects implemented that

contribute to regional economic development and measures are introduced that should foster the

development of key sectors and programs, that have been identified with the plan.

Both EU institutions and programs supporting pre-accession efforts in Vojvodina are visible, as well

as efforts of the Government of Vojvodina, its developmental institutions and agencies, as well as National

developmental institutions being active within Vojvodina region. Still remains questionable how these

efforts were mutually accorded and exerted synergy effects.

CROATIA - Osijek-Baranja County



General overview about:

Table 1.1.1:

2004 2005 2006 2007 2008

STRUCTURE

GDP (mil Euro) 1.884 1.999 2.193 N/P N/P

GDP ( y/y) 10,17% 6,10% 9,70% N/P N/P

GDP per capita PPP (Eur) 5.750 6.127 6.757 N/P N/P

Structure GDP (%):

Agriculture 16,5 14,9 14,5 N/P N/P

Industry 17,5 16,0 14,1 N/P N/P

Services 66,0 69,1 71,4 N/P N/P

Industrial output (y/y) 8,10% 5,00% 4,00% 9,30% -0,90%

N° active companies 3.126 3.225 3.315 3.535 3.326

Total turnover (mln Eur) 2.568 3.071 3.233 3.576 3.852

% of SME turn./Total Turn 46 41 58 59 58


Agriculture 13,26 12,71 10,21 9,00 N/P

Industry 28,83 30,85 34,38 33,55 N/P

Services 57,91 56,43 55,40 57,46 N/P

EMPLOYMENT


% SME emp. on tot. emp. N/P N/P N/P N/P N/P


Sector A (%) 6,2% 6,3% 5,9% 5,7% N/P

Sector B (%) 25,1% 25,3% 24,5% 25,1% N/P

Sector C (%) 68,7% 68,4% 69,6% 69,2% N/P

Value added per employed (Eur) 12.600 14.067 14.500 15.000 15.767

Average gross wage (Eur) 681 727 768 827 N/P

Unit labour cost (Eur) N/P N/P N/P N/P N/P

Labour productivity (y/y) N/P N/P N/P N/P N/P

Unemployment (%) 27,50% 26,10% 26,60% 21,90% 21,00%


Primary 29,60% 30,20% 31,70% 32,70% 33,60%

Secondary (vocat. or else) 66,10% 65,40% 63,60% 62,50% 61,30%

Tertiary (university) 4,30% 4,40% 4,70% 4,80% 5,10%

FOREIGN TRADE

Import of goods (mln Eur) 270 349 388 408 440

1. good category (SITC 2digit) 71 Power-

generating

machinery and

equipment

71 Power-

generating

machinery and

equipment

71 Power-

generating

machinery and

equipment

71 Power-

generating

machinery and

equipment

71 Power-

generating

machinery and

equipment

2. good category 77 Electrical

machinery and

apparatus

77 Electrical

machinery and

apparatus

06 sugar 78 Road vehicles 78 Road vehicles

3. good category 78 Road

vehicles

58 plastics in non

primary forms

77 Electrical

machinery and

apparatus

58 plastics in non

primary forms

77 Electrical

machinery and

apparatus

Export of goods (mln Eur) 360 430 459 417 388

1. good category(SITC 2digit) 84 clothes 84 clothes 84 clothes 71 Power-

generating

machinery and

equipment

71 Power-

generating

machinery and

equipment

2. good category 64 paper,

paperboard

71 Power-

generating

machinery and

equipment

06 sugar 64 paper,

paperboard

64 paper,

paperboard

3. good category 71 Power-

generating

machinery and

equipment

64 paper,

paperboard

71 Power-

generating

machinery and

equipment

06 sugar 06 sugar

Trade balance (mln Eur) 91 81 72 9 -52


1. partner (county + mil Euro) Italy 220 Italy 219 Italy193 Germany 145 Germany 169

2. partner Germany 86 Germany 103 Germany 117 Italy 120 Italy 83

3. partner B i H 48 B i H 63 B i H 61 B i H 82 B i H 77

FDI inflow (mil Euro) 39 52 35 124 N/P

Main FDI sectors

Sector A (Cumulate data) N/P N/P N/P N/P N/P

Sector B N/P N/P N/P N/P N/P

Sector C N/P N/P N/P N/P N/P

B i H = Bosnia and Herzegovina

Osijek-Baranja County as a unit of local self administration is a part of governing territorial structure

Republic of Croatia established in 1993. It is located in north-east part of Republic of Croatia in Pannonian

Basin with the total area of 4.155 km². This makes for 7,3% of the total area of the Republic of Croatia. Its

geography is predominantly suitable for development of agriculture and related industries.

County is located on a crossroads of major routes of European continent. Traffic and geo strategic

location of Osijek-Baranja County is established by Drava and Danube corridor, and while Danube corridor

barely touches the county border, it still remains significant part of its traffic flow. Development of Danube

and Drava corridors and eastern urban areas is recognized as particularly significant for even development

of Croatia by the Strategy of the territorial constitution of Croatia.

Development of infrastructure is much needed assumption for achieving the sustainable economic

development and for concurrent welfare of the county. There is about 1.700 km of roads and 269 km of

railways in the county. Rivers Danube and Drava (navigable to Donji Miholjac), with its status of

international waterway to Osijek (Osijek and Klisa) have great potential for further development. County is

also connected with a network of Croatian and European airports. Osijek is a part of European traffic

corridor V/c which connects north of Europe (Baltic) with its south (Adriatic Sea). The plans for building the

trans-European highway (in terms of TEM project) Budapest-Osijek-Sarajevo-Ploče are under way. This level

of infrastructural network facilitates the opportunities for sustainable economic development of Osijek-

Baranja County.

The 2001 census data shows that the county has 7,4% of the total Croatians population (330.506

residents), and is third among Croatian counties by the number of households (113.583). However, its

share in total GDP of Croatia is disproportionate with its geographic size and population, and with its

development potential based on the available natural resources. Osijek-Baranja County is ranked only 13th

among all counties by the GDP per capita (data from 2006) with 77% of the national GDP per capita

average. Osijek-Baranja County has generated the GDP of 2.193 million EUR which equals 6.757 EUR per

capita.

Economic activity of the County is presented by 9.375 business subjects (as of 31/12/2007), which

makes for 3,7% of registered business entities in Croatia. Biggest number of companies in County is

registered for other social and personal services (3.308) and trade (2.381), followed by businesses in real

estate (782), processing industry (714), construction (578), and agriculture, hunting and forestry (367).

However, only 37,7% of these businesses are „living“ businesses, i.e. those who are conducting any kind of

business activity. The Financial Agency received 3.535 statistical reports from business entities about their

business activity in 2007. Share of „living businesses” of the County in the total of “living businesses” in

Croatia in 2007 was 4,2%.

Legal entities in Osijek-Baranja County generated the total revenue between 3 and 4 billion EUR

over the 2004-2008 period. In the observed period the total revenue grew by an average annual rate of

10,7% meaning that the revenue for 2008 is over 50% higher than in 2004.

Total revenues of 2.568 million euro in 2004 in Osijek-Baranja County were generated by the total

of 86.584 employees, while the 3.852 million euro in 2008 was achieved by 97.782 employees.

The revenues generated by small and medium-sized enterprises increased their share in the total revenues

from 45,9% in 2004 to 58,5% in 2008.

Small and medium sized businesses dominate the County business structure. The share of small and

medium-sized businesses in the total number of „living businesses“ was around 99% on average over the

last 10 years. Such economic structure matches Croatian business structure with regard to size and

structure of businesses and is especially suitable for dynamic economic growth. Namely, experiences in

developed countries show that small and medium businesses play the most important role in new jobs and

added value creation. However, the majority of these businesses are yet to achieve this desirable role in

Osijek-Baranja County.

The tertiary sector industries have created 71% of the total gross value added (GVA) in the county

in 2006. The primary and secondary sectors have an approximately equal share in the county GVA, around

14%.

The rate of growth in industrial manufacturing in 2004-2008 period in Osijek-Baranja County was

slightly higher than the average growth rate in Republic of Croatia, however it started on a much lower

level after the war due to the damages all industries suffered. Current growth is still not sufficient for the

industrial manufacturing to reach the pre-war levels. Osijek-Baranja County industrial manufacturing in

2008 was at 80% of the 1990 figures, while the average industrial manufacturing of the Republic of Croatia

as a whole in 2008 reached 90% of its pre-war figures. In 2008 Osijek-Baranja County, after growing steadily

between 5 and 10%, recorded a sudden drop of 1% as a result of the incoming global economic crisis.

Watching the County international goods exchange in the last ten years (1999-2008) it is apparent

continues growth of import, while the exports grew until the year 2006, when it started to stagnate in the

past two years and fell behind the import. If the year 1999 is taken as the base year the exports in 2008

were3,9 times larger, with imports at 3,8 times larger than in base year. In the 2000-2003 period, the

county exports grew faster than imports. During the 2002-2007 period, the County recorded positive

foreign trade balance before going negative in 2008. The county share of the total goods exchange in the

Republic of Croatia in 2008 was at 2,7%, a drop from 3,0% share in 2007. EU countries in participated in the

County total goods exchange in 2008 with 68,3% (in 2007 the share was 71,4%), with CEFTA countries

(Albania, Bosnia and Herzegovina, Moldavia, Montenegro, Serbia and Macedonia) participating with 18,8%

(18,4% in 2007). The remaining 12,9% refer to EFTA member countries and other developed and developing

countries.

Osijek-Baranja County at the beginning of new millennium is faced with several significant

macroeconomic challenges which make its economic performance especially adverse, with high

unemployment rate and low purchasing power of residents standing out ad the most obvious ones. The

unemployment rate has decreased slowly over the last five years, however it is still over 20%. In 2008 the

unemployment rate in the County was an 20,7% - significantly higher that the Croatian average of 12,8%.

The low purchasing power of residents is insufficient to absorb the increase in production. Average net

monthly salary per employee is also lower than Croatian average, and this indicator is getting worse over

time. In 2000, the average net monthly salary in the County was 10% lower than the country average, and

the discrepancy was even higher in 2007, with County net salary being 15% lower than the national

average.

Foreign direct investments in Osijek-Baranja County were around 296 million EUR in the 1993-2007

period, making for only 1,68% of the total FDI in the Republic of Croatia. Observed by sectors, foreign

capital has shown most interest in financial intermediaries except insurance corporations and pension funds

(subsector S.123 by the EU classification of financial institutions by subsectors) which covers 70% of FDI in

observed period. Trade comes in the second place with the 10% share of the total. These two sectors

combined for 80% of foreign direct investments in Croatia.

War damages from the Homeland war still represent a big challenge for the County development. This in

particular applies to the problem of suspected hazardous areas (SHA) which hold back economic activity,

especially in agriculture.

The total size of suspected hazardous areas in the Republic of Croatia (as of 31/12/2008) is 954,5

km², which is 1,69% of the total area of the country.

The counties of Lika-Senj, Osijek-Baranja, Sisak-Moslavina, Karlovac, Vukovar-Syrmium, Zadar and

Požega-Slavonia suffer from significant landmine pollution. The largest part of SHA in Croatia are forests

with 557,8 km² (58,4% of total SHA), followed by agricultural areas with 269,2km² (28,2% of the total SHA).

SHAs cover 2,4% of the fields in counties with MSA, or 1,3% of the total field surface in Croatia.

The biggest number of mines is registered in Osijek-Baranja County (30.008 mines).

Possibilities for economic development and improvement of life quality in the Osijek-Baranja

County are based on the natural resources, clean environment, relatively unpolluted soil, the abundance of

waterways, moderate climate which enables rich plant and animal life, good geographic location, good

infrastructure and, always important, good human resources. The County economic development is based

on agriculture, food industry, trades, crafts, transportation, tourism and other industries.

1.2 Main sectors

a) Agriculture

Table 1.2.1: Agriculture

2006 2007 2008


SME share (% of total) N/P N/P N/P

Total turnover (mln EUR) 312 330 470

Output volume (y/y) - 105,8% 142,5%

Employment (n°) 4.310 4.181 3.749

Av. gross wage (EUR) 691 811 890

Unit labour cost (EUR) 4 5 5

Productivity (y/y) N/P N/P N/P

Value added per employee (EUR) N/P N/P N/P

Imports (mln EUR) 21 23 26


1. N/P N/P N/P

2. N/P N/P N/P

3. N/P N/P N/P

Exports (mln EUR) 3 2 4


1. N/P (mil Euro) N/P N/P

2. N/P N/P N/P

3. N/P N/P N/P

Trade balance (mln EUR) -18 -21 -22

FDI in the sector (cumulative in mln

EUR)

According to the opinions of respondents, agriculture is a sector expected to develop the most in

Osijek-Baranja County. Although this sector is currently decreasing its share in the GDP of the county, this

sector has the largest share in the total Croatian agriculture, making it the most significant county sector on

the national level. While the overall Osijek-Baranja County economy has a 5%-6% share in the total gross

added value in Croatia, agriculture, hunting, forestry and fishing have a 13% share in their respective

sector.

Republic of Croatia’s agriculture is in a process of agrarian reform to the common agricultural policy

model of the European Union, which is reflected in the implementation of the various individual sectors

such as agriculture and food industry.

Osijek-Baranja County geography provides rich and quality natural resources- fertile fields, good

climate and an abundance of water resources. Value of the agriculture comes not only from the traditional

role of providing food resources for the people, but also from its role in the preservation of rural areas,

maintaining ecological balance and keeping the traditional values, material and spiritual culture of Croatian

villages.

The fields of chernozemic soil with very high natural fertility spread across the most of the eastern

parts of Slavonia and Baranja; in central and western parts, between Sava and Drava rivers, the pseudo-clay

soil is predominant; while the washed up soil and alluvial soil deposits of the Sava, Drava and Danube can

be found mostly in the hilly and the mountain parts of the region.

Moderate continental climate is typical for Slavonia region, and its impact increases from west to

east. The summer temperature average increases and the average rainfall decreases in the same direction.

Annual rainfall (650 to 950mm) is lower than in the other regions. Flat and alluvial plains are mostly found

in the eastern lowlands, while hills with slopes dotted with river and stream valleys rise in the western part

of Slavonia.

There is a large number of small agricultural estates located near the cities of Osijek, Beli Manastir,

Našice, Belišde etc. This suburban agriculture is orientated to farming operations, capital-intensive cultures,

and livestock farming. On the other hand, a relatively small number of estates managed to enlarge their

family farms in the privatization process so the average size of their farms (with over 20 ha) is 42 ha.

Otherwise, the average size of all the farms is 2,3 hectares which is slightly higher than the average for the

Republic of Croatia - 1,9 ha.

Arable land and gardens make for 95,1% of the total county agricultural area (201.705 hectares),

followed by orchards with 1,7% (3.564 ha), meadows with 1,2°% (2.641 ha), vineyards with 1% (2.083 ha)

and pastures with 0,8% (1.763 ha).

Out of 212.013 ha of total agricultural area in the county, 141.440 ha are privately owned.

Vegetable production in the county area represents one of the most intensive areas of agricultural

production in the Republic of Croatia. The county accounts for 17,4% of the total agricultural area and

23,3% of the total arable lands and gardens area in the Republic of Croatia. According to December 2008

data from the “County in Figures” publication, the county has 201.705 ha of arable lands and gardens out of

which 199.358 ha was sown in 2007.

The sowing structure shows the predominance of grains which are sown on 67% of the total area,

with oil plants sown on 14% of the area, forage crops on 10%, sugar beets on 7%, tobacco on 0,1%,

vegetables on 1%, and flowers and aromatic herbs on 0,9%.

The main challenges for efficient livestock production lie in the insufficient usage of existing

livestock capacity, slow reconstruction of the livestock fund, the damages caused during the Homeland

War, fragmentation of family farms and uncontrolled food imports. Further reduction of livestock fund,

combined with all these factors, caused extreme market deficiencies that in turn caused the cattle food

prices to soar.

b) Food and beverages

Table 1.2.2.: Food and beverages

2006 2007 2008


SME share (% of total) N/P N/P N/P

Total turnover (mln EUR) 353 354 361


Employment (n°) 4.755 5.136 4.210





Import (mln EUR) 67 41 46


1. N/P N/P N/P

2. N/P N/P N/P

3. N/P N/P N/P

Export (mln EUR) 118 90 62



2. N/P N/P N/P

3. N/P N/P N/P

Trade balance (mln EUR) 51 49 16


EUR)

Food and beverage production is an important industry for every country. In the Republic of Croatia

most profitable industries in this sector are: tobacco production and processing, beer production,

processing milk, processing tea, coffee and production of soft drinks.

The County agriculture is an important source of raw materials for food industry because of its

natural potentials. The significant shares of total Croatian production of many cultures are grown on its

212.013 hectares of agricultural areas 36,5% of wheat, 38,9% of sugar beet, 54,8% sunflower, 31,5% of

soybean and 18,1% of the total corn production of the Republic of Croatia comes from Osijek-Baranja

County.

This natural potential is not matched by the adequately developed processing industry. Due to late

reparation of war damages and finalization of privatization, a significant market share was lost which in

turn caused the drop in the manufacturing capacities, and the lack of sufficient funding opportunities

meant that little investments were made and the manufacturing and processing technology was/is

outdated.

There were 79 companies operating in the food and beverage production in the County, employing

the total of 4.210 persons.

Among many agricultural businesses in the county territory, there are three large agro-industrial

complexes that clearly stand out - IPK Osijek, Belje and PPK Valpovo (joint stock companies), all with

traditionally widely recognized products in food industry. In addition to some other well-known companies

in the region, such as Pivovara Osijek, IPK Kandit, Sugar factory Osijek, Oil factory Čepin, MIA Osijek, some

very successful smaller agricultural companies emerged in recent times, some of those being PZ Osatina,

Novi Berak Ltd, Osilovac Ltd. and Palčok Ltd Osijek.

Small private manufacturing businesses in bread and pasta production are emerging, taking

advantage of their better productivity, wide product range and importing pasta products from well-known

Italian manufacturers.

Kandit Premijer d.o.o. Osijek is the biggest sugar factory in Republic of Croatia with the production

capacity of 65.000 tons of sugar, 27.500 tons of molasses and 27.500 tons of dry beet noodles.

Čepin edible oil factory is the most significant edible oil production factory in the Republic of Croatia, with

significant investments being made in the modernization of its facilities. Its processing capacity is

500tons/24hours (press) with the annual processing capacity of 150.000 tons of oil plants (sunflower,

soybean)

There are nine industrial fodder production plants and fodder mixing plants with total annual

production capacity of 270.000 tons operating in the county. Looking back on the last few years, the

decrease in the total fodder production was caused by low purchasing power of buyers and volatile

livestock market due to imports of cheaper meet and cheaper livestock which in turn caused the decrease

in the total domestically grown livestock numbers.

County area has a diverse manufacturing industry with a number of businesses operating in meat

processing, dairy production, production of wine and beer, fruit and vegetable processing, confectionery

industry and more.

In addition to agricultural manufacture there has been an increase in organic food production. The

project of branding the high quality and healthy homemade products of Osijek-Baranja County aims to

promote the existing and new agricultural products in this, traditionally agricultural county.

Food and beverage production has a positive balance in foreign trade. The liberalization of markets

and low level of control of imports of highly subsidized products of neighbouring countries make the sales

efforts and the launch of new products in the domestic markets more challenging for local businesses.

In addressing the agricultural products sales challenges, it is necessary to strengthen and connect

agricultural businesses with businesses in tourism industry, with the goal of enriching the tourist products

offered and create new market opportunities for businesses in both industries.

b) Trade

Table 1.2.3: Trade

2006 2007 2008

N° active enterprises 1.235 1.288 1.152

SME share (% of total)

Total turnover (mln EUR) 1.222 1.346 1.309


Employment (n°) 9.223 9.609 8.206





Import (mln EUR) 121 146 156


1. N/P N/P N/P

2. N/P N/P N/P

3. N/P N/P N/P

Export (mln EUR) 28 57 50



2. N/P N/P N/P

3. N/P N/P N/P

Trade balance (mln EUR) -92 -90 -106


EUR)

Croatian retail is a very fragmented market, which is reflected in the predominance of small retail

shops, with less than 100m2. Even so, large retail stores are rapidly increasing their market share due to

their focus on meeting the needs of the people who are experiencing changes in lifestyle. Latest

development trend is leaning to construction of modern shopping malls which provide a variety of

shopping benefits and fun activities under the same roof so they are increasingly becoming the places of

choice for socializing. According to estimates of Sector for trade of Croatian Chamber of Economy, in the

last fifteen years in Croatia over 2.000.000km2 of retail space was built in Croatia. The building of this retail

capacity in Croatia is a process that has until now been mostly concentrated around large format stores in

major cities (Zagreb, Split, Rijeka, Zadar and Osijek).

The main characteristics of Croatian retail market are concentration, internalization and

consolidation. The total share of top ten retailers six years ago was around 16,6%, and in 2008 only 15 top

retailers held 71,4% of the market. However, it should be noted that the concentration trends are not

specific to Croatia, since the same trends are taking place in most European countries were top ten retailers

hold up 60 to 80, and even 90% of the market.

FINA information on results of business activity for 2007 show that in 36,43% of the Osijek-Baranja

County businesses are in retail. At the same time, the share of County retailers in the total number of

Croatian retail businesses is 4,8%.

The most popular national retail chains in the County are: Konzum, CBA (owner of the local retail

chain Biljemerkant), Getro, Billa, Kaufland, Fliba Ltd – Emmezeta, Hipermarket COOP – Ipercoop Osijek,

Mercator, Lidl, Metro, Interspar and Plodine. In addition to these retail store chains, there are also

recognizable do-it-yourself type centres, such as Baumax and Brodomerkur. Furthermore, in the over

1000m2 of store area segment, there are Euroshop, Gorenje, Doma namještaj, Clinber, Lesnina, Mijok-

magazin, Rekord, Slavonijatekstil, Konikom, Podravina and others.

The following data shows clearly just how well the trade industry is developed and represented in

the County economy – it participates with 37,7% of the total County revenues, 27,2% of profits, 27% of the

corporate income tax and 12,6% of losses. This sector employs 19,5% of all persons employed in Osijek-

Baranja County.


Expert from the Institute of Economics Zagreb, Željko Lovrinčevid, says that European Union

announced it will be introducing a completely new methodology of economic activities measurement,

which will add several more indicators to the standard GDP, and they will include quality of life,

environment etc. “These hard indicators we know today will in five-six years take a new form, and this will

effect the tables to change. Croatia will probably rise up on all charts that measure the quality of life and

the environment.”

According to ROP the vision of Osijek-Baranja County is to achieve extremely high rate of growth so

it would achieve the balance with its wider geopolitical environment. Economic growth would be fully

based on reviving and modernization of environmentally acceptable agricultural and industrial sector as

well as the services sector with emphasis on developing intellectual services. Such growth is a precondition

for balanced social and economic development, which creates a guarantee for traditional, historical and

cultural content integration.

Small businesses are one of the most important drivers of overall economic development as they

encourage private ownership and entrepreneurial skills, generate employment and contribute significantly

to increase in production and exports.

Following these reflections, the industries in the Osijek-Baranja County with the greatest potential

for development and growth are: organic food and beverages production and processing. A large

development potential lies in the agricultural industry and processing of its products (achieving a higher

level of product finalization). The same can be applied to the development of product storage facilities

(both standard and cold storage). In the manufacturing sector there is the potential for joining

manufacturers in industry clusters by connecting them with large production, service and retail businesses.

Direct placement for the products of these industries can be ensured through the development of the

matching new continental tourism offer.

The annual growth rate of eco-agricultural sector in Europe is between 30% and 35%.

The number of registered rural and farm tourism businesses in Republic of Croatia has increased by

1100% in the 1998-2007 period (from 32 in 1998 to 352 in 2007). Osijek-Baranja County holds the third

place by registered rural and farm tourism businesses in Croatia, behind the counties of Dubrovnik-Neretva

and Istria.

Potentials for continental tourism development in Osijek-Baranja County are mostly unpolluted

environment, existing undervalued capacities: castles, hunting houses, folk tales and legends, opportunities

for year-round tourist season, possibility for selling the products in own backyard, possibility of earning

extra money from additional services (riding, souvenirs, accommodation, food and crop collection,

camping, food and drinks services, vine making, collecting mushrooms), proverbially hospitable people in

rural households, rich multiethnic and multi-confessional heritage and existence of natural sites (Kopački

rit, mouth of Drava, thermal springs in Bizovac).



The national level of political framework starts with Government. The main priorities of the

Croatian Government and its economic policy are strengthening entrepreneurship, reducing taxes,

increasing employment, strengthening social security system, reducing the cost of the state and making

greater emphasis on the role of science and new technologies in the economy.

Numerous laws and regulations govern the operation and organization of business entities as well

as the overall business activity in every industry. The legal basis exists in the Companies Act, Crafts Act,

Water Act, The Water Management Financing Act, the Public Roads Act and the Act on the Amendments to

the Public Utilities Management Act.

In 2003 the Government of the Republic of Croatia passed the System of State Administration Act

with the following provisions:

Article 1

The activities of the state administration include the immediate implementation of acts, issuing

regulations for their implementation, carrying out administrative oversight and other administrative

and professional activities

Article 2

The activities of the state administration shall be carried out by state administration

bodies. The activities of the state administration defined by a special act may be transferred to bodies

of local and regional self-government units or other legal persons vested with public authority based

on law (hereinafter referred to as: legal persons vested with public authority).

Article 3

State administration bodies are ministries, state administration organizations and state

administration offices. Ministries and state administration organizations are central state

administration bodies, while state administration offices are established as state administration offices

of the first instance in regional self-government units.

Article 4

For the purpose of carrying out specific state administration activities within the competence of central

state administration bodies, regional units may be established in counties, cities and municipalities.

Article 5

For the purpose of carrying out specific state administration activities within the competence of state

administration offices in regional self-government units, branch offices may be established in cities and

municipalities.

Government of the Republic of Croatia is the main authority in economic policy. In line with

program commitments, Government of the Republic of Croatia plans, implements and monitors programs

and development of incentive measures aimed at balanced development in all areas of Croatia. However,

the relevant actors of institutional framework are subjects of private, public and civil society both at the

state level, and at the level of the regions. In Croatia there are many business centers, business networks,

clusters and other forms of business cooperation.

Under the Program to encourage international competitiveness and internationalization of the

economy for 2009-2010, Croatia has been implementing projects with the goal of supporting Croatian

companies in their efforts to strengthen partnerships, promote tehir products and ease the process of

entering the foreign markets. The project is being implemented in collaboration of the Ministry of

Economy, Labor and Entrepreneurship, and partner institutions - Ministry of Foreign Affairs and European

Integration, the Croatian Chamber of Economy, Croatian Chamber of Crafts, the Croatian Employers

Association, the Agency for Export and Investment Promotion, the Croatian Exporters.

National Competitiveness Council acts as an advisory body which brings together representatives

of the economy, government, trade unions, science and education. It was founded in February 2002 on the

initiative of the private business sector and the Croatian Association of Employers. The Council encourages

dialogue between public and private sectors, raises awareness and knowledge about the importance of

competitiveness, develops consensus on major economic challenges Croatia is facing, recognizes strengths

and weaknesses of the Croatian economy, and recommends and monitors policies and measures that will

contribute to long-term sustainable improvements in the productivity of the national economy.

CEPOR - Center for Policy Development of SMEs and Entrepreneurship, established as the first

''think-tank'' in Croatia, deals with the problems of small and medium-sized businesses. CEPOR is a

nonprofit organization founded in 2001. on the basis of the Agreement between the Republic of Croatia

and the Open Society Institute-Croatia. CEPOR actions are directed to conducting independent research

related to policy development of entrepreneurship and SMEs in order to identify problems and propose

solutions. In addition to this, CEPOR advises governmental institutions to build institutional capacity and

legislative authority to develop and implement an effective and non-discriminatory policy of the

development of small and medium enterprises. CEPOR organizes activities that should enable SMEs to

share their problems and discuss them in public, and to present recommendations to the Government in

order to achieve concrete solutions.

Strategic development as a transformation of society implies that development strategies of all

sectors: private, public, civil, local communities, regional, etc. should not only be linked and

complementary, but consistent with the global environment that is constantly changing.

Unfortunately, it is concluded that in Croatia there is no consistency, and very often there are only

individual projects that encourage development. At the present stage of transition of the Croatian economy

the main focus should be on achieving consistency in selection of objectives and instruments of economic

policy.

The burden of taxes and contributions to GDP in more than 50% has a negative effect on the

competitiveness of enterprises and discourages the inflow of foreign investment. One of the most specific

causes of the negative impact on the competitiveness of the companies in Croatia is the inefficiency of the

judicial system.

The Global Competitiveness Report is the world's leading research on competitiveness, which this

year included 133 countries. The methodology of the World Economic Forum is based on the research

competitiveness of the 12 factors that include institutions, infrastructure, macroeconomic stability, health

and basic education, higher education, labor market efficiency, the efficiency of commodity markets,

technological readiness, business sophistication, innovation, market size and financial markets. In the

Croatian case, evaluation of the competitiveness has dropped from 4,22 to 4,03. Out of the 12 pillars of

competitiveness, the largest decrease was recorded in the efficiency of the labor market (down by 24

places) and the efficiency of the goods market (down by 18 places). Level of quality in financial markets,

business sophistication and quality of institutions was also rated poor. On the other hand, good results

from the past two years have been noted in macroeconomic stability and satisfactory position of health and

primary education, technological readiness and infrastructure.

Based on these reports, National Competitiveness Council has made recommendations for

increasing the competitiveness of Croatia, i.e. measures and policies that Croatia needs to implement to be

transformed into an internationally competitive economy. The Council has established the following seven

key areas: education(1), rule of law(2), cost and price competitiveness(3), innovation and technology(4),

development of small and medium-sized businesses(5), regional development and the development of

clusters(6), and development of positive attitudes and leadership(7).

Osijek-Baranja County is one of 21 Croatian NUTS 3 regions. At the NUTS 2 level it is a part of

Central and Eastern (Pannonian) Croatia. It is located in eastern part of the country and borders with

Hungary and Serbia. With population of 330.000 it is the 3rd largest county in Croatia. It was established in

1993 by the act that has formed new territorial organization in the Republic of Croatia. According to its

legal status, it is a regional self-government unit. The self-governmental affairs are administered by the

County Assembly, County Corporation Council, Perfect and administrative bodies of the Country. In the

exclusion of its authority, the County enacts regulations. The County encompasses 263 residential areas in

42 local self-governmental units, whereof 7 have the status of the city (Beli Manastir, Donji Miholjac,

Đakovo, Valpovo, Belišde, Našice and Osijek) and 35 have the status of municipality.

Main Economic sectors of Osijek-Baranja County are Trade with 37,7%, Manufacturing with 28,6%,

Construction with 13,6% and Agriculture with 9,2%. County share in total income of Republic of Croatia is

4,00%. Such low income can be explained with war and transition which resulted in the County economy

significantly lagging behind other counties.

The regional administration sets its development objectives through a strategic planning. Strategic

plans are set up with the participation of all the components of the regional administration and are in line

with national strategy which is determined by Government. It consists of numerous strategic documents:

Development Strategy of Osijek-Baranja County

Spatial plan of Osijek-Baranja County

Irrigation Plan of Osijek-Baranja County

Environmental Protection Program for the Osijek-Baranja County

Plan for Remediation of Soil Contaminated with Waste and Landfills in the Osijek-Baranja County

Program Activities and Measures for Improvement of Premises and Environmental Sites Inhabited

by Roma population for the Osijek-Baranja County

Regional Operational Program


Measures for regulation

Small businesses are the most dynamic segment of Croatian economy. The small businesses

account for 99.5% of the total number of companies in Croatia and for some 66.3% of the total number of

employed persons in Croatia.

Small businesses are one of the most important drivers of overall economic development as they

encourage private ownership and the development of entrepreneurial skills, generate employment and

contribute significantly to the increase of production and exports.

The official definition of the small business industry according to the size of the small business

entities in Croatia is provided by the Small Business Development Promotion Act (Official Gazette; NN

29/02, 63/07). This law distinguishes between micro, small and medium-sized business entities.

MICRO-SCALE businesses are legal entities and natural persons with an average annual employment

of less than 10 employees, who have a total annual turnover of up to HRK 14 million, or have a balance

sheet total (applies to those subject to corporate income tax) or long-term assets total (applies to those

subject to personal income tax) of up to HRK 7 million.

SMALL businesses are legal entities and natural persons with an average annual employment of less

than 50 employees, have a total annual turnover of up to HRK 54 million, or have a balance sheet total

(applies to those subject to corporate income tax) or long-term assets (applies to those subject to personal

income tax) of up to HRK 27 million.

MEDIUM-SIZED businesses are legal entities and natural persons with an average annual

employment of less than 250 employees, which act independently and have a total annual turnover of up

to HRK 216 million, or have a balance sheet total (applies to those subject to corporate income tax) or long-

term assets (applies to those subject to personal income tax) of up to HRK 108 million.

Croatian business legislation is compliant with the guidelines of the European Charter for Small

Enterprises.

1. Small Business Development Promotion Act (Official Gazette: NN 29/02; 63/07)

2. Trade Act (Official Gazette: NN 49/03)

3. Accounting Act (Official Gazette; NN 109/07);

4. State Aid Act (Official Gazette; NN 140/05).

The most important documents regulating the promotion of small businesses in Croatia:

Promotion program for small and medium-sized entrepreneurship

Operative promotion plan for small and medium-sized entrepreneurship

Incentives for SMEs

By accepting the program to encourage small and medium enterprises, Government clearly defined

the providers of incentives. Ministry of Economy, Labor and Entrepreneurship has the most important role,

preparing and implementing annual operational incentive plans.

There are specific incentives and measures to support start-ups and to foster industrial research,

innovation, competitiveness and internationalisation projects, both on national and regional levels.

The Government of the Republic of Croatia, the Ministry of Economy, Labor and Entrepreneurship

adopted the 2008-2012 SME Incentives Program. This document contains an overview of guidelines for the

implementation of incentives for the development of small businesses in the 2008 to 2012 period and

outlines the goals, measures and tasks, including implementation mechanisms and monitoring activities for

project implementation. The most of these incentives are small in value and are not reimbursable.

The emphasis is made on young entrepreneurs, women, start-ups, crafts and a great importance is

also given to business networking, joint business activities and businesses with export potential.

Incentives on national level

Based on the programme for encouraging Croatia's international competitiveness and for the

internationalisation of the Croatian economy for 2009-2010, Croatia has been implementing projects with

the goal of supporting Croatian companies in their efforts to strengthen partnerships, promote tehir

products and ease the process of entering the foreign markets.

Ministry of Economy, Labour and Entrepreneurship incentives

The total sum of incentives provided by the Ministry of Economy, Labour and Entrepreneurship in 2009

was 174.464.956,00 HRK or 23.932.092,73 EUR. Out of this, 8.966.440,00 HRK (1.229.964,33 EUR) was

awarded to projects in Osijek-Baranja County. Most of the money was intended to projects "Construction

of enterprise zones" and "Strengthening the competitiveness of small business".

a) Project "Women’s Entrepreneurship"

GOAL:

The project aims to facilitate faster and easier economic empowerment of women, by fostering the

business start-ups by women and creating new jobs for existing small businesses owned by women.

USERS:

Businesses, companies and cooperatives (except those who perform the primary production of

agricultural products and fisheries), defined by the Act on the Promotion of Small Businesses (NN 29/2002)

and the Act on the Amendments to the Act on the Promotion of Small Businesses (NN 63/2007), in the

private ownership (51% or more) of women with Croatian citizenship.

b) Project "Youth entrepreneurship, start-up entrepreneurs and persons with disabilities"

GOAL:

The project aims to provide greater funding and development support to young entrepreneurs,

start-ups and persons with disabilities engaging in entrepreneurial activities.

USERS:

Small businesses, corporations and cooperatives conducting predominantly production activities

(except those who perform the primary production of agricultural products and fisheries) and the small

businesses that provide services related to production - companies, businesses and cooperatives, defined

by the Small Business Development Promotion Act (NN 29/2002) and Law Amendments to the Small

Business Development Promotion Act (NN 63/2007), young entrepreneurs (under 30 years of age), start-up

entrepreneurs (up to 3 years in operation) and persons with disabilities.

c) Project "Entrepreneurship in cooperatives"

GOAL:

The goal of this project is to facilitate the establishment of associations of individuals and business

entities in manufacturing and service sectors, the balanced development of cooperatives in the Republic of

Croatia and the creation of cooperation framework for cooperatives to foster the development of joint

products.

USERS:

Production and services cooperatives (except for cooperatives which mainly perform primary

agricultural production and fisheries).

d) Project "Clusters-association to success"

GOAL:

The project aims to encourage the cooperation activities of businesses within same industries with

the goal of achieving higher levels of finalization of joint products and improving overall industry

competitiveness.

USER:

Economic interest associations, Ltd. or JSC, or the legal representative of the association / cluster

manager. These organizations must operate positively, and have at least 1 scientific research institutions in

the cluster.

e) Project "Education for entrepreneurship"

GOAL:

The project objective is to foster the entrepreneurship education programs and the adoption of

specific knowledge and skills by new and existing entrepreneurs, and to promote the importance of lifelong

learning in entrepreneurship.

USERS:

Business support institutions, educational and partner institutions.

f) Project "Business support institutions"

GOAL:

The project objective is the strengthening and development of the regional business support

infrastructure with the goal of fostering entrepreneurship and entrepreneurial climate in the respective

regions via business support institutions - development agencies, centre for entrepreneurship, business

incubators and technology parks, in accordance with the objectives of balanced regional development.

The project makes an emphasis on supporting the collaboration networks of institutions and

businesses at the local, regional and national level, in particular those that evolve around establishing

cooperation among small and medium-sized businesses, universities and research institutions on

innovation and high-technology development projects.

USERS:

Beneficiaries of the project are development agencies, centres for entrepreneurship, business

incubators and technology parks.

g) Project "Construction of business zones"

GOAL:

Construction of business (entrepreneurial) zones for creating preconditions for the development of

small and medium businesses and new jobs creation.

USERS:

Local and regional government bodies (counties, cities and municipalities)

h) Project "Entrepreneurship in culture"

GOAL:

The project aims to encourage entrepreneurship in the culture, promote cultural industries and

entrepreneurial projects in culture.

USERS:

Beneficiaries of state support for this project are the small business entities - businesses, companies

and cooperatives, defined by the Small Business Development Promotion Act (NN 29/2002). And the Law

on Amendments to the Small Business Development Promotion Act (NN 63/2007), and independent artists,

institutions other than public institutions defined by the Institutions Act (NN 76/93, 29/97, 47/99 and

35/08), art organizations and cultural institutions that carry out cultural entrepreneurial projects based on

the Law on Financing Public Needs in Culture (NN 47/90, 27/93 and 38/09).

i) Project "Strengthening the competitiveness of small businesses"

GOAL:

The project aims to encourage the productivity and competitiveness of small businesses by

introducing new technologies and technological processes, improving existing technologies, technological

processes and development of new products and products with higher added value.

The term "new technology" includes the improvement of technological processes with the aim of

increasing quality, labour productivity, safety and promotion of energy and environmental efficiency,

achieved by installing new equipment and applying new knowledge in the production processes.

USERS:

Small businesses conducting predominantly production activities (except those who perform the

primary production of agricultural products and fisheries) and the small businesses that provide services

related to production - companies, businesses and cooperatives, defined by the Small Business

Development Promotion Act (NN 29/2002) and Law Amendments to the Small Business Development

Promotion Act (NN 63/2007).

Potential users are also local and regional government bodies and business associations.

j) Project New Exporter - „EXPORT FIT CHECK“

GOAL:

The project "New Exporter - EXPORT FIT CHECK" is an integral part of the program "I want to

export", whose purpose is to fulfill one of the objectives of the Croatian Export Offensive - to increase the

overall number of new exporters.

The aim of the project "New Exporter - EXPORT FIT CHECK" is giving priority to companies,

exporters and start-ups with export potential, when considering their applications for incentive programs

designed to improve competitiveness of small businesses implemented by the Ministry of Economy, Labor

and Entrepreneurship and other state institutions.

USERS:

Small businesses, corporations and cooperatives.

k) Project "Innovation for competitiveness"

GOAL:

The project objective is the application of Croatian innovation in creating new products to market,

and the encouragement of innovation-based research and development activities that would also foster

competitiveness of domestic products in domestic and international markets.

USERS:

Small and medium-sized businesses and cooperatives, inventors, associations of innovators, organizers

of innovation exhibitions / trade fairs.

l) Pilot project "Gazelles"

GOAL:

The aim of this Pilot Project is to strengthen the competitiveness of small and medium-sized

businesses who operate successfully, rapidly increase employment and achieve great market

competitiveness - gazelles.

USERS:

Small businesses conducting predominantly production activities (except those who perform the

primary production of agricultural products and fisheries) and the small businesses that provide services

related to production - companies, businesses and cooperatives, defined by the Small Business

Development Promotion Act.

m) Project "Skills and retraining in crafts"

GOAL:

The project aims to foster self-employment and improve the qualification structure of the working

population to align it with the actual market needs of small businesses in the Republic of Croatia.

USERS:

Individuals and legal entities.

n) Project "Education in crafts"

GOAL:

The project aims to improve vocational education, acquisition and improvement of IT competence

of craftsmen, to encourage high school students to work in trades and crafts and to encourage the

development of more internship programs with existing craftsmen available to students.

USERS:

Small business entities defined by the Small Business Development Promotion Act (NN 29/02 and

63/07), vocational schools, institutions for adult education, Croatian Chamber of Crafts, Trades and regional

chambers and associations of craftsmen.

o) Project "Development of the crafts"

GOAL:

The project objective is the preservation of craft traditions, encouraging the traditional art and craft

activities.

USERS:

Project beneficiaries are businesses and legal persons engaged in trades and crafts activities, whose

products are made in traditional way, proscribed by the specific regulations on the traditional arts and

crafts (NN 112/07).

Ministry of Tourism Incentives

a) Project "The new products in tourism"

GOAL: To create and promote new tourist products using the existing catering and tourist facilities and

tourist attractions of the subject areas.

b) Program "Education and training of personnel in tourism"

c) Program “Professional associations and other nonprofit organizations”

GOAL: Co-financing of program activities which aim to improve the competitiveness of Croatian tourism

offer

d) Project "Heritage in tourism"

GOAL: Assistance to the businesses in the rural, hilly and mountainous areas, areas of special state concern

and the islands, which have tourism potential in the cultural and natural heritage

e) Project "Theme routes"

GOAL: Creation of new tourist products and improvement of the tourism offer quality by development of

special theme-based routes in the Republic of Croatia

f) Project "Original souvenir"

GOAL: To encourage the promotion of development and promote the affirmation of the original souvenirs

with the aim of reviving the traditional art and crafts and local manufacture.

g) Project "Promotion of multi-sector cluster organization in tourism industry"

h) Project "Tourism without obstacles"

GOAL: Further development of tourism for people with disabilities.

i) Project "Tourism across regions"

j) Project "The green wake"

k) Project "The blue wake"

l) Project "Promotional events and activities for the development of Croatian tourism industry"

m) Project "Improving the quality of the catering industry"

Ministry of Agriculture, Fishery and Rural Development incentives

The Ministry of Agriculture, Fishery and Rural Development invested 1.993.500.000,00 HRK

(273.456.790,00 EUR) in various incentive programs in 2008. Half of this sum was invested in programs in

agriculture (142.798.354,00 EUR). It is estimated that the total incentives for 2009 will be around 3,5 bln

HRK (480.000.000,00 EUR). In addition to direct incentives to entrepreneurs, there are also some projects

implemented annually that are funded by the Ministry of Agriculture.

a) Project "Support for organizers of events within the jurisdiction of the Ministry"

b) Project "Program Planning and equipping of facilities for processing own agricultural products on

Family Farms"

c) Project "Improving infrastructure in rural areas"

d) Project "Furnishing retail outlets intended for the direct sale of own agricultural products on Family

Farms"

e) Project "Pilot program of development of production and sales of traditional and innovative

agricultural and food products"

f) Project "Calcification of agricultural land"

Project "Co-financing the natural disaster insurance premiums". The Ministry provides the funding

of the 25% of the total insurance premium.

Regional support to SMEs – Osijek-Baranja County

Osijek-Baranja County has developed a system of subsidies and incentives for different types of SME

with the main focus on agriculture and tourism industries, which are recognized as the sectors with the

greatest development potential.

a) Subsidies for capital investments in production, storage and processing of agricultural products

USERS: Family farms, crafts and cooperatives

b) Subsidies for capital investment in irrigation projects


c) Support for crop insurance against possible damages to agricultural producers

USERS: Family farms, crafts, cooperatives and companies

d) Subsidies for planting new orchards


e) Subsidies for planting new vineyards


f) Subsidies for development of commercial vegetable growing


g) Subsidies for the construction of buildings for production, processing and storing products in plant

and livestock production


h) Subsidies for the promotion and preservation of the milk quality


i) Subsidies for the costs of registration and equipping facilities for processing and storage of animal

products and the protection of indigenous agricultural products on farms


j) Subsidies for the costs of improving health and hygiene practices in cattle production


k) Subsidies for equipping cold storage for meat products


l) Subsidies for the purchase of equipment for detecting wildlife

m) Subsidies for the purchase of land for the cultivation of wildlife

n) Support for the promotion of hunting tourism

In addition to the subsidies listed above, Osijek-Baranja County has established a system of

subventions for loans called “Micro crediting project”, implemented i cooperation with business banks,

Ministry of Economy, Labor and Entrepreneurship and regional government bodies. Program beneficiaries

are small and medium-sized businesses. The loan amount range from 35.000 HRK to 200.000 HRK. The

payment period is 5 years, and interest rate is subsidized with one percent from both the Ministry and the

County, so the final user’s interest rate is lowered to 5% annually. Program is implemented annually, and

the total loan amount available for every year of the program is contracted annually for each County. Due

to lower interest rates, these loans are especially popular among entrepreneurs. The downsides are the

relatively small amount of loan funds that can be used for this program and, in some cases, inadequate

transparency of the methods for selection of the projects who receive the loans.


PRE-ACCESSION PROGRAMMES The EU pre-accession programmes are mainly intended for public sector, in charge of aligning the

national legislation with acquis communautaire, and nongovernmental organizations. Financial assistance is

focused on the most demanding compliance fields: acquis communautaire, agriculture, environment and

transport policy.

In that respect, Croatia is benefiting from the pre-accession programmes PHARE, ISPA, SAPARD and

IPA.

PHARE

PHARE programme has been established in 1989 as the EU's pre-accession instrument intended to

assist candidate countries of Central and Eastern Europe in their preparations for joining the EU. Today,

Phare programme applies to the acceding and candidate countries, and principally involves Institution

Building (mainly through twinning projects and service) measures and promotes Economic and Social

Cohesion (mainly through supply component).

Phare provides funds for institution building support through twinning and technical assistance and

for investment support to help applicant countries in their efforts:

to strengthen their public administrations and institutions to function effectively inside the EU,

to promote convergence with the European Community's extensive legislation and reduce the need

for transition periods,

to promote economic and social cohesion.

Phare programme has been available to Republic of Croatia from budgetary year 2005. Since than

167 million EUR has been allocated within Phare 2005 and Phare 2006 programmes. The Republic of

Croatia has been very successful in contracting Phare 2005 programme, with 88,34% of the available funds

contracted, totalling 55.548.297,63 EUR. Implementation of the Phare projects is foreseen until

30/11/2010.

The Phare programme entails national, multi-beneficiary and cross-border projects.

As a part of the PHARE 2006, one call for proposals was open esspecialy for SMEs in Croatia: „SME

Pilot Grant Scheme – Support for Increasing the Competitiveness and Exports of Croatians SMEs“. Through

this grant scheme, Central Finance and Contracting Agency (contracting body in Croatia) was seeking for

proposals for the projects that would contribute to increasing of competitiveness and exports of SMEs in

the following fields: food, beverages and tobacco production; manufacture of rubber and plastic products,

metal products, transport equipment, manufacturing n.e.c. and software development. This grant scheme

provided financing for 24 SMEs in Croatia in the total amount of app. 2.000.000 EUR.

Several Calls for Proposals within the PHARE programme were targeting development of SME

support institutions. Business Incubator BIOS can serve as an example of the project related to SME

infrastructure financed through the PHARE programme in Osijek-Baranja County. The co-financed project

was the construction of the new building (total of 2000 square meters for more than 20 entrepreneurs),

equipment and staff training to manage the incubator's technology section. Overall budget of the project

was 1.434.774,42 EUR (925.286,02 EUR of Comission/EDF contribution and 475.197,29 EUR of City of Osijek

contribution).

ISPA ISPA is the European Commission's preaccession financial instrument intended as a support to

candidate countries in their preparation for accession, namely for the infratructural projects in the field of

transport and environmental protection.

ISPA main priorities in preparing the applicant countries for accession are:

To familiarize the candidate countries with the policies and procedures of the EU,

To help the candidate countries to comply with EU environmental standards,

To expand and link with the trans-European transport networks.

In the period 2005-2006 under the ISPA programme, 60 million EUR was allocated to the Republic

of Croatia (25 million EUR for 2005 and 35 million EUR for 2006).

SAPARD

SAPARD program was established in June 1999 by chamber`s resolution (EC) as a program which

gives support in domain of agriculture and rural development and prepares the accession candidate

countries for using agricultural and fishing funds after reaching the status of the EU member country.

Republic of Croatia has on disposal the funds for two measures of SAPARD program: measure 1

”Investment in agricultural holdings” and measure 2 ”improving the processing and marketing of

agricultural and fisheries products” whose users are agricultural businesses, crafts and other legal entities

registered for activities for which they submit the request.

From July 2006 when the first bidding was announced for SAPARD funds, until February of 2008 and

the third bidding round, Ministry of Agriculture, Fisheries and Rural Development received the total of 120

requests. After administrative check and field control, 36 projects with the total value of 259 mln HRK were

http://ec.europa.eu/regional_policy/funds/ispa/ispa_en.htm

granted the financial support – the total support from SAPARD funds at 111 mln HRK. From the total

available amount for co-financing of projects for measures 1 and 2, around 130 mln HRK remained for the

fourth and last bidding round, which was open from 21/02 to 21/04/2009. Final round`s results have still

not been announced.

IPARD is a new EU pre-accession program for period 2007 – 2013. It is a part of IPA (Instrument for

Pre-accession Assistance) and its fifth component - Rural development.

Both SAPARD and IPARD programmes were developed directly for entrepreneurs, while other pre-

accession programmes are mainly intended to public sector and nongovernmental organizations.

IPA The Instrument for Pre-accession Assistance (IPA) provides assistance within the framework of the

European Partnership of the potential candidate countries and the Accession Partnership of the candidate

countries.

IPA is created as a flexible instrument made up of 5 components, with it's main objective to support

institution-building and the rule of law, human rights, including the fundamental freedoms, minority rights,

gender equality and non-discrimination, both administrative and economic reforms, economic and social

development, reconciliation and reconstruction, and regional and cross-border cooperation.

The IPA programme consists of the following five components:

Assistance in transition and institution building; promotes direct continuation of Phare programme

activity, with the exception of Economic and Social Cohesion component

Cross border cooperation; finances common cross-border activities between beneficiary countries

as well as member states (e.g. cross border projects between Croatia and Slovenia or Croatia and Italy)

Regional development; promotes integral part continuation of ISPA programme and Economic and

Social Cohesion component of Phare programme and finances infrastructural projects of larger extent on

the field of environmental protection and transport. Additionally, promotes national competition and

equable regional development. This integral part of the IPA programme promotes preparation for

European Regional Development Fund, available after entering the EU.

Human resources development; European Social Fund forerunner, promotes social cohesion

projects aiming at European Employment Strategy.

Rural development; directly continues on SAPARD programme and allocates financial means for

projects implementing agriculture acquis communitaire, as well as promoting rural development.

Priorities, measures and implementing procedures for each component of IPA programme are

defined in the Operational Programme of the respective components. Structure, hierarchy and

responsibility distribution among implementing bodies are shown in the two following examples:

Operational Programme for Regional Development and Operational Programme for Human Resource

Development.

270

Table 2.3.5.1. Operational Programme for Regional Development

III. Project level Contracting body Central Finance and Contracting Agency Agency Director

271

Table 2.3.5.2. Operational Programme Human Resource Development

Responsibility level Institution name Individual bodies within Operating structure

I. Operative program level

Institution responsible for Operating program

Ministry of Economy, Labour and Entrepreneurship Department of EU Aid Schemes and Projects Management State Secretary for Entrepreneurship

II. Priority / Measure level

Institution responsible for Priority / Measure

Priority 1 Ministry of Economy, Labour and Entrepreneurship Labour and Labour Market Directorate Department of EU Aid Schemes and Projects Management State Secretary for Labour

Priority 2, Measure 2.1 Ministry of Health and Social Welfare Social Welfare Directorate Department of humanitarian aid and cooperation with civil sector organizations State Secretary for Social Welfare

Priority 2, Measure 2.2 Ministry of Science, Education and Sport Directorate Secondary Education State Secretary for Secondary Education

Priority 3 Ministry of Science, Education and Sport Directorate for Secondary Education State Secretary for Secondary Education

Priority 4 Ministry of Economy, Labour and Entrepreneurship Labour and Labour Market Directorate Department of EU Aid Schemes and Projects Management State Secretary for Labour

III. Project level Contracting body Croatian Employment Service Department for financing and contracting Director

Agency for Vocational Education and Training

Croatian Employment Service Department for financing and contracting

272


No assistance



Significant institutions providing support to SMEs in Osijek-Baranja County:

Osijek-Baranja County

Economic and Agribusiness Affairs Administrative Department

Development Agency of Osijek-Baranja County

Regional Development Agency of Slavonia and Baranja Ltd.

State Administration of Osijek-Baranja County

City of Osijek

Croatian Chamber of Economy- County Chamber Osijek

Croatian Chamber of Trades and Crafts- Chamber of Trades and Crafts of Osijek- Baranja County

Croatian Employers Association- Regional Office in Osijek

Technology-Development Centre Osijek Ltd

Business incubator BIOS Ltd Osijek

Center for entrepreneurship Osijek

Entrepreneurship center Belišde

Cooperative „Entrepreneurship network“

Center for entrepreneurship Donji Miholjac Ltd

Center for entrepreneurship Valpovo Ltd

Center for entrepreneurship Beli Manastir Ltd

Business incubator OSVIT

Entrepreneurship Development Center of Erdut Municipality Ltd

273

In addition to these local institutions, in observing the framework in which the entrepreneurial

support institutions operate, it is necessary to mention the Government of the Republic of Croatia, i.e. the

Ministry of Economy, Labor and Entrepreneurship which performs the tasks related to the SME promotion

and incentive programs.

The Ministry conducts work concerning: promotion and systematic enhancement of crafts,

cooperatives (except agricultural), small and medium entrepreneurship; effects of economic system

instruments and economic policies and measures on the development of crafts, cooperatives, small and

medium entrepreneurship and business activities of craftsmen and entrepreneurs; realisation of

international cooperation, implementation of special programs of the Government of the Republic of

Croatia in the area of crafts, cooperatives, small and medium entrepreneurship.

The SME Promotion Operation Plan for 2009 contains the projects, beneficiaries, resources and

incentive measures for 2009 in line with the implementation of the 2008-2012 SME Incentives Program

adopted by the Government of the Republic of Croatia on 18/4/2008.

The Ministry combines three major segments:

economy,

labor,

entrepreneurship

The entrepreneurship segment is operated by two directorates:

1. Small and Medium Companies and Cooperatives Directorate

2. Crafts Directorate

Small and Medium Companies and Cooperatives Directorate is organized in four departments:

Entrepreneurship Development and Financing Department

Technology Development, Innovations and Clusters Department

EU Programs and Projects Department

274

Entrepreneurial Infrastructure Department

275


Osijek-Baranja County is by its legal status a unit or regional self-government. The

administration work is performed by County assembly, Council, and the other county governing bodies.

Osijek-Baranja County brings strategic development documents which determine the goals and

development path for the County. The Homeland war and transition process (war to peace, changes in

political and economic systems, privatization) have resulted in the substantial lagging behind the rest of the

Croatia and have contributed to the uneven regional development of the country. This is particularly visible

in the unemployment rate significantly above national average. These were more than enough reasons for

creating the vision of the County development. Osijek-Baranja County development strategy allows for all

interested and responsible participants in the process of achieving the vision to shape the specific actions in

creative, innovative and entrepreneurial way.

Osijek-Baranja County has developed the Regional Operating Program (ROP) as a strategic

framework to enable better preparation of projects and utilization of available EU funds. Purpose of ROP is

to prepare the County to successfully use the resources available from the EU structural funds the moment

Croatia becomes the EU member country. ROP is a fundamental document about goals and measures of

economic and social development of Osijek-Baranja County. It determines strategic development goals of

the County and measures for achieving them. According to ROP, there will be shaped project ideas which

will be used on taking advantage of local and national resources through private and public investments,

local resources and resources from available EU funds.

Osijek-Baranja County secures the funds for the promotion of entrepreneurship on annual basis

and sets the implementation program for each year. In addition to the promotion of entrepreneurship, the

County has implemented an incentive program for small businesses and tourism in rural areas. The

incentive funds are allocated after the project evaluation. In order to support entrepreneurship, Osijek-

Baranja County has taken significant actions in the creation of business zones. Business zones represent a

new form of infrastructure facilities, which in the past 20 years have been rapidly developing within the

European Union. Small and medium-sized businesses, who make for the most vital part of the global

economy, make the majority of business zone facilities users.

Administrative Department provides information on funding opportunities in agricultural

production (credit lines, incentives), support in agriculture, business loan opportunities, information on

276

programs and projects implemented by Ministry of Economy, Labor and Entrepreneurship, and information

about other measures to encourage and develop entrepreneurship.

Economic and Agribusiness Affairs Administrative Department

The Agribusiness and Forestry Affairs Administrative Department is a professional service

performing expert and technical activities connected to economic, agricultural and forestry activities under

County jurisdiction. The scope of the Agribusiness and Forestry Affairs Administrative Department activities

includes tracking and analyzing agricultural, veterinary, forestry, hunting, tourism, transportation,

energetic, water and waste management as well as other business industry issues, preparing analytical

reports and expert opinions on issues relating to its scope of activities, drawing up draft proposals and

providing expert opinions on draft documents, act proposals and other materials prepared for the County

government bodies by expert services and other legal entities conducting related businesses; implementing

rules and regulations, individual acts and County uniform acts within the Department’s scope of activities;

drawing up drafts of uniform acts relating to its scope of activities; implementing county and State

agribusiness and SME incentive measures; other expert activities under the County jurisdiction within the

Department’s scope.

Development Agency of Osijek-Baranja County

The Development Agency is a professional department performing expert and technical activities

connected to the preparation and realization of the County development programs. The scope of the

Development Agency activities includes drawing up proposals for County development programs and

projects, tracking their implementation and following up on them as well as recommending measures for

promoting these programs, conducting situation analysis and case studies, preparing proposals for large-

size economic and municipal infrastructure development programs of great significance to the local self-

government units in the County, organizing and coordinating County capital investment projects

preparation and implementation and accelerating the construction of public facilities of great importance;

preparing and implementing activities for promoting County development potentials and its projects aimed

at potential project investors as well as establishing and maintaining contacts and developing partnerships

with institutions and individuals interested in County development programs; providing potential investors

with informational, legal, and administrative-technical expertise and utilizing this expertise on other

projects County involved in; creating and promoting SME-oriented entrepreneurial incentive programs as

277

well as recommending the measures for implementation and follow up of these programs; drawing up,

tracking and evaluating international business cooperation programs and project proposals as well as the

projects applying for international grants; establishing and maintaining contracts with national

organizations and institutions in the process of planning and implementing development programs;

establishing and maintaining information database system necessary for conducting its activities;

conducting other affairs important to county development according to programs ratified by County

administrative bodies.

Regional Development Agency of Slavonia and Baranja Ltd.

The Regional Development Agency of Slavonia and Baranja was founded by Osijek-Baranja County

and the City of Osijek with the objective of creating an operating entity which will actively serve as an

instrument of facilitating economic development of the region with the emphasis on European integrations

and attraction of foreign investments. Agency’s vision is the achievement of high standard of living in

Slavonia and Baranja. Mission of the Regional Development Agency of Slavonia and Baranja is to act as the

link between the public, private and civil sector at national and international level, in building strategic

partnerships through application and implementation of projects that contribute to raising the standard of

living on the territory of Slavonia and Baranja. Agency also manages the Representation office of Slavonia

and Baranja in Brussels. This office provides the presence of the City of Osijek and Osijek-Baranja County in

the very heart of the European Union. The main activities of the Agency are: technical and advising support

in programs of international and regional cooperation; exchange of information aimed at regional

development and creation of local, cross-border and international networks; support to development

programs including public-private partnerships, direct investments and joint ventures; mediation in

cooperation with national and international financial institutions; attraction of foreign direct investments;

building up institutional capacities; technical assistance to local authorities in preparing project proposals

for applying to EU pre-accession funds.

State Administration Office of Osijek-Baranja County

State administration office in the Osijek-Baranja County is government’s body of administration

that performs tasks of state administration in the county, which are not under the jurisdiction of the

Central government bodies (ministries and state administrative organizations).

For conducting the tasks within the jurisdiction of the office, several internal organizational units

based in Osijek were formed:

278

- common affairs department

- economy department

- property-legal affairs department

- social services department

- general administration department

The economy department conducts administrative and other expert tasks related to the overall

county economy (industry, shipbuilding, energy, mining, trade, crafts, transport and communications,

tourism). Namely, the economy department is responsible for the registration of a trades and crafts

business, establishment of minimum technical requirements for the trades and crafts activity, catering and

tourism, legal and physical activities, issuing licenses in the internal road transport, giving authorizations to

conduct transportation of goods and passengers on the domestic inland public roads, conduction the

registration in the Register of grape and wine producers, and conducting the registration of Christmas trees

producers, performs management actions to achieve support in agriculture, determines the compensation

for the conversion of agricultural to building land, and keeps track of statistics. To carry out the activities of

the Office outside the central office in Osijek, local branches in Beli Manastir, Donji Miholjac, Đakovo,

Našice and Valpovo were established.

City of Osijek

Osijek, the 4th largest city in Croatia, is also the largest city of Slavonia and Baranja and the Osijek-

Baranja County seat. The city economy used to have personal traditional structure with several industrial

branches export oriented. As far as activities are concerned, the most represented ones are trade,

processing and construction industry following total income criteria, employment rate and export

orientation. The most significant economic asset of the City of Osijek is the knowledge of the educated

people. This is why the guideline of the future activities is defined by Economic Development Strategy of

the City of Osijek – from industrial to intelligent city, attracting young people and creating opportunities for

development and use of own knowledge. The aim is to allow them creation of new ideas in the field of

economy, stimulate their realization through the help of business support institutions, business locations,

fiscal advantages, etc. This implies to make the city a better living place. City of Osijek changes its outlines.

Through private investments in trades centers, Osijek has been recognized as city of great economic

possibilities. Introducing low costs flights at the Osijek Airport, city has been additionally opened towards

279

Europe and world and new enthusiasm in continental and transit tourism has been raised. Entering into

new projects with the City of Osijek, domestic and foreign inventors get a unique opportunity to participate

actively in creating new city contours with the final aim of life quality upgrading. To encourage the city

economic development and to create better business conditions for entrepreneurs, one of the most

important challenges is to ensure business facilities, for start-ups as well as for existing entrepreneurs. This

is why the city undertook the project of establishing a number of business zones. Specifically, the spatial

arrangement of business facilities located in the business zone establishes a balance between urban spatial

and economic development of the city. The main objective of these zones is to solve the problem of the

lack of business space, creating at the same time the spirit of community and networking among

entrepreneurs using the zone facilities, with the primary goal of new jobs creation and business

development. Department of Economy of the City Osijek provides information about available lots in the

business zones of the city of Osijek, information on the incentive programs for investors, information about

grants awarded by the city of Osijek (traditional crafts, innovators; technical harmonization of processes

and products, co-financing insurance of crops in agriculture, procurement of fruit seedling, greenhouses

construction and capital investments in irrigation projects), information on the support programs to

organizations implementing projects in non-profit enterprise and employment, programs of co-financing

joint visits to trade fairs and networking opportunities, information on the disposal of agricultural land

owned by the state, on the working hours of retail stores, etc.

Croatian Chamber of Economy – County Chamber Osijek

Croatian Chamber of Commerce, including the County Chamber Osijek was established as a

business and professional organization that represents and promotes the interests of its members and the

overall national economy. Organizing associations and their work, and direct contact with individual

members, Chamber of Commerce seeks to help in solving business challenges by proposing measures for

their elimination. It analyzes the economic development and monitors development activities in the

country and abroad, and encourages the adoption and harmonization of legal regulations and requirements

for managing the business or the respective industry as a whole. Associations provide professional support

and participate in solving the problems of business operations. They propose effective measures to

safeguard policies in the economy, prepare and implement promotional activities, interpret new

international and domestic standards and regulations, and propose and implement a system of education

in the chamber.

280

It also highlights the needs and undertakes activities to improve the quality of domestic products.

A long-term strategic project of marking the visual signs of Croatian products "Croatian quality" and

"Originally Croatian” with the primary aim to encourage awareness of the need for creating and

maintaining "quality culture" in the Croatian market was created and is implemented by the Chamber.

Another important role of the Chamber as an economic development institution is the continuous

promotion of the Croatian economy abroad through cooperation with foreign companies, chambers and

other organizations. The Osijek County Chamber of Commerce has good business relationship with the

Chamber of Pecs in Hungary, Vicenza in Italy, Nitra in Slovakia, Phorzheim in Germany, Cluj-Napoka in

Romania, with chambers in Bosnia and Herzegovina, Slovenia and others. During the visits of foreign

delegations, the Chamber organizes promotional meetings and business talks to connect local businesses

with foreign partners, and organizes collective presentations of domestic companies on trade fairs and

exhibitions abroad and throughout Croatia.

The activities of the Croatian Chamber of Commerce are representing the interests of the economy

to economic policy makers via the City council and professional groups, promoting the economy of the

country abroad, organizing business delegations and the introduction of county economies abroad and

accepting economic delegations from abroad, the organization performs on foreign and domestic trade

fairs, improvement of business and operations through quality improvement and business information,

public authority (certificate of origin of goods, ATA carnets, confirming other documentation accompanying

the goods on export and import, accreditation to perform international road freight transport,

harmonization of transport lines to the county line of road passenger transport), business education

through professional education activities, travel, seminars, training, visits and other specialized exhibitions,

projects to promote indigenous products and dissemination of information, assisting and advising

companies when doing business with business partners in EU countries.

Croatian Chamber of Trades and Crafts - Chamber of Trades and Crafts of Osijek-Baranja County

Croatian Chamber of Trades and Crafts is the basic institution for assistance to craftsmen. Regional

chambers of crafts operate on the county level with associations of craftsmen working in cities and

municipalities. Crafts association of Osijek-Baranja County, together with other associations of craftsmen

carries out activities to promote trades and crafts, provides technical assistance in establishing the trades

and crafts business and conducts examinations of professional qualification. The main objectives and

activities are representing the interests of members of the Chamber before local and regional self-

government institutions, and organizing and co-financing promotional activities at fairs, establishing

281

business contacts, helping with management concerns about education and training of potential

employees in crafts, conducting professional examinations of the professional qualification and master

exams (the precondition for registering some trades and crafts businesses), and providing expert assistance

in the establishment and operations of the association of craftsmen and crafts.

Croatian Employers Association (CEA) – Regional Office in Osijek

CEA was founded in 1993 as a voluntary, non-profit and independent employers association which

protects and promotes rights and interests of it members.

The association is one of the social partners in tripartite Croatian scene. Since the Labour Law came

into force in 1996, as a completely new way of regulating labor relations in the Republic of Croatia, the CEA

as a voluntary and independent representative of the employers got a legitimate right for lobbying

activities and concluding collective agreements. CEA, in addition to the activities in the field of social-work

legislation and industrial relations, protects private property, promotes the development and regulation of

market conditions, strengthening of competitiveness and a favorable entrepreneurial climate. CEA

represents a strong and independent voice of employers and entrepreneurs with more than 5.000

members who employ over 400.000 workers in total. With establishment of regional offices not only in

Osijek, but also in Rijeka and Split, CEA has created a powerful business network covering entire Croatia.

Branch association activities (there are 25 branch offices) is providing protection and promotion of

specific interest of different economic sectors, and in relation to other European employers’ associations.

Continuous activities of the CEA are participating in creating the system of legislation, taking active

measures in creating a favorable entrepreneurial and investment climate by influencing the state

administration bodies and local self-government and other policy makers, participation in social dialogue

and partnerships, promotion of social responsibility, actively communicating with key public figures and

lobbying with the state and local authorities, and the bodies of the European Union, participation in

integration processes and expansion of international cooperation, promoting the interests of region

members and responses to economic problems in the region through the work of the regional offices in

Rijeka, Osijek and Split.

282

Technology Development Center Osijek Ltd.

Technology-development center was registered in 2002 as result of cooperation between the Josip

Juraj Strossmayer University, City of Osijek and Osijek-Baranja County. Mission of Technology development

center is:

Development of knowledge based economy by using significantly developed existing technology

(products, services, processes and procedures with newly added values),

Commercialization of publicly financed research of Josip Juraj Strossmayer University,

Organization and coordination of scientific research and development projects of needs of industry

with cooperation of University members and other relevant institutions,

Supporting regional development and keeping entrepreneurial and qualified work force in region,

Business support to companies which have entered the incubator of Technology development

center in Osijek Ltd. and beyond.

Activities of the Technology development center in Osijek are: promotion of new technology,

innovation and entrepreneurship aimed at connecting science and economy and providing the

infrastructure, financial and advisory support to innovative and technology based projects. Besides this,

TERA performs the commercialization of publicly funded research of J.J. Strossmayer University, protects

and manages intellectual property and technology assessment or definition of a planned effort, and helps

in procurement of the needed equipment. The primary task is the development of a knowledge-based

economy using new and/or significantly improved technology solutions. With the help of the Josip Juraj

Strossmayer University, Ministry of Science, Education and Sports, and local governments, the Technology

development center creates the conditions for rapid and successful transformation of research results and

innovation to competitive products, encourages the international transfer and development of small and

medium-sized companies. Areas of particular interest are biotechnology, environmental protection,

information technology, and projects that provide entrepreneurs in the region with the opportunity for

development. TERA achieves its goals by incubating technology based businesses and providing

development and consulting services for the economy in the region.

Ministry of Defense of Republic of Croatia, Ministry of Science, Education and Sports, Ministry of

Interior and Osijek-Baranja County had signed the Agreement on the Transfer of rights for usage and

conversion of the barracks to the University of J.J. Strossmayer of Osijek. The purpose of the Agreement is

the conversion of the barracks in Osijek and giving them to the use of University.

283

Specifically, the agreement is concluded on the basis of the following facts:

- that the development of the University of Josip Juraj Strossmayer is of great importance for long-

term academic and economic development of Croatia, and especially its eastern part, and it is necessary to

create space and other material conditions that allow long-term program transformation of the University

into scientific-research and educational institution equipped to deal with scientific challenges of the

modern world.

- That the war devastation of Osijek and its environment significantly damaged and destroyed

facilities of the University which has reduced the possibility of its development and regular activities

- that the further development of the defense system as well as peacetime deployment of Croatian

Armed Forces and special units of the Ministry of the Interior predicted their deployment outside of towns

and villages.

Business Incubator BIOS Ltd Osijek

BIOS mission is to support development of small and medium entrepreneurship through ensuring

business space and providing business and other service in the most critical stages of business development

and in this way contribute to the economic development of the region and to lowering its unemployment

rate.

Activities that BIOS conducts are:

Providing advisory and organizational help (publishing brochures First step into Entrepreneurship)

Leasing business space to small and medium-sized start-up businesses, and other businesses in ICT,

multimedia, digital graphics, bio-informatics, biotechnology, electrical engineering, electronic business; i.e.

all businesses with innovation potential

Organization of expert seminars for clients

Technology education (Microsoft BizSpark- new global program designed to increase the success of

start-up businesses. BizSpark gives fast and easy approach to latest Microsoft development platform, which

includes the biggest version of Microsoft development tools and license for server products. In addition to

software, this program provides young entrepreneurs with professional Microsoft technical support, and

the possibility for connecting with business experts via the global network of BizSpark partners)

Transfer of knowledge and technology

Providing administrative services

Providing help to tenants with preparing and implementing their business plans

284

Presentation of incubator tenants on seminars

Promotion of entrepreneurship and networking opportunities for entrepreneurs (organizing the

international conferences about entrepreneurship, establishment and operation of clusters – cluster of ICT

companies in Slavonia and Baranja, Printing and publishing cluster, surveys on cluster development in

Croatia)

Providing additional services to clients (web design, printing and publishing, applying to EU

projects)

The largest successfully completed project by BIOS is the construction of the technology part of the

incubator (with the area of 2000m2) with the purpose of increasing incubator capacity for admission of

new tenants and creating the space for support of high-tech companies with the ultimate long-term goal

to contribute to the development of entrepreneurship activities in the region and lower the

unemployment rate. This project was mostly funded (almost one million EUR) by the EU pre-accession

funds.

Center for Entrepreneurship Osijek

Center for Entrepreneurship Osijek was founded in March 1997 with the goal of facilitating and

promoting entrepreneurial business behavior. It is a non-profit organization founded by entrepreneurs

from Osijek area, professors from Josip Juraj Strossmayer University in Osijek, and representatives of local

administration.

The main activities of Center for entrepreneurship Osijek are:

Education and training activities for start-up entrepreneurs and entrepreneurs in the growth and

development phase (organization of education programs: Generate your business idea, Start your Business,

Strategic and operative planning, Business plan writing, Financial management for trades and crafts

businesses, Selling skills, Presentation and communication skills, How to employ and keep the best people,

and other seminars and workshops based on the existing demand)

Providing advisory and consulting help for entrepreneurs (assistance with business registration,

establishing or joining in various forms of business cooperation – cooperatives, clusters etc., organization of

networking opportunities for entrepreneurs and others)

Dissemination of information (publishing Investment guide of Osijek-Baranja County, organization

of entrepreneurs forum whit specific themes, presentation of available incentive programs,

implementation of SMS entrepreneur project – sending free and timely information about topics of interest

285

for entrepreneurs – grants, incentives, education programs and other; publishing materials for promotion

of entrepreneurship in local community)

Preparing business and investment plans, and development projects (help with realization of loans

and grants, cooperation with local administration and Osijek-Baranja County in the preparation and

implementation of entrepreneurship development projects, assistance in gathering documentation and

preparation of projects for EU pre-accession funds.

In addition to these activities, the Center for Entrepreneurship Osijek is focused toward

encouraging and creating entrepreneurial culture and fostering entrepreneurial thinking and behavior in

everyday life and in the workplace through various projects, business forums, etc. In the last decade of

successful work and actions, Center for entrepreneurship Osijek experts held over 200 different seminars

with over 3,000 entrepreneurs participating (in Osijek-Baranja County, and other Croatian counties). Since

1997, around 7850 entrepreneurs have requested information and/or consulting services from Center for

Entrepreneurship Osijek.

Entrepreneurship Center Belišde

Entrepreneurship center Belišde is a non-profit organization founded on 6/10/2003. Organization

was formed as result of inter-sectored cooperation of City Belišde, non-governmental organizations and

businesses from the local area. Activities of Entrepreneurship center Belišde are:

providing advisory and consulting service to entrepreneurs on economic and legal aspects of

business,

dissemination of information about incentive programs of ministries, Osijek-Baranja County, banks

and other institutions for development and promotion of entrepreneurship,

providing information to entrepreneurs and media promotion of programs for promotion of

entrepreneurship,

organization of education of seminars, workshops and promotional stands for existing and start-up

entrepreneurs,

preparing business plans and investment studies

Cooperative „Entrepreneurship Network“

Cooperative „Entrepreneurship Network“ has the vision to provide full support to entrepreneurs

through active involvement in the implementation of the enterprise development projects by the County,

the relevant ministries, local administration and self-government and other institutions for the promotion

and development of entrepreneurship in Croatia. Cooperative activities are:

286

- providing advisory and consultancy help to entrepreneurs,

- preparing business plans and investment studies,

- accounting and bookkeeping services to entrepreneurs,

- organization of informative business stands with actual themes,

- promotion of entrepreneurship

Cooperative Entrepreneurship Network has worked on the Osijek-Baranja County publication

“Cooperative for XXI. Century”, and the specialized portal for cooperatives in the County

www.zadruga.obz.hr.

Center for Entrepreneurship Donji Miholjac Ltd

Center for Entrepreneurship Donji Miholjac is focused on:

- providing expert and advisory help to entrepreneurs,

- providing expert help for local and regional self-government in shaping the policies and

programs around the concept of promoting technology development and innovative

entrepreneurship,

- encouraging establishment and development of small businesses,

- entrepreneurship promotion,

- preparing business plans,

- other professional tasks related to encouraging the development of the small businesses

established by incentives programs on local, regional and national level.

Center for Entrepreneurship Valpovo Ltd

Center for Entrepreneurship Valpovo was established by the city Valpovo as a limited liability

company. Center’s task is to encourage business activity and promote the economic development of small

and medium-sized businesses on the local level.

Center provides the following services to existing and potential entrepreneurs in the area:

- free advisory and consulting services in entrepreneurship,

- free information about projects and programs in entrepreneurship,

- market research and promotion of entrepreneurship,

- business mediation for entrepreneurs’ needs,

- preparing business and investment plans,

http://www.zadruga.obz.hr/

287

- organization of education seminars for entrepreneurs,

- organization of workshops on entrepreneurship,

- access to internet and networking opportunities for entrepreneurs,

- making catalogs, studies and programs for local environment,

- organization of entrepreneurship fairs and participation on fairs,

- coordination of business activities in the local environment.

Center for Entrepreneurship Beli Manastir Ltd

Center for Entrepreneurship Beli Manastir was founded by the City of Beli Manastir, and the

municipalities of Kneževi Vinogradi and Čeminac as a local institution for development and promotion of

entrepreneurship. As most of entrepreneurship centers they conduct the following activities:

- provide information about entrepreneurship incentive programs and support institutions,

- provide information about sources of funding,

- advisory help in support programs,

- preparing business plans,

- organization of seminars for entrepreneurs,

- connecting entrepreneurs – networking activities

Business incubator OSVIT

OSVIT was founded as an entrepreneurship cooperative in 2003 by the City of Donji Miholjac.

Business incubator conducts the following activities:

- providing business support by leasing business space,

- organization of the administrative and bookkeeping services,

- providing a common commercial service and processing market,

- providing constant advisory help,

- focusing on encouraging innovation and technology development,

- providing other services according to the needs of incubator tenants

Entrepreneurship Development Center of Erdut Municipality Ltd

Center for entrepreneurship Erdut is focused on:

- providing information about entrepreneurship incentive programs,

288

- providing information about sources of funding,

- advisory help with emphasis on start-ups,

- preparing business plans (especially in the field of tourism and production of vine),

- entrepreneurship promotion

Conclusion can be made that Osijek-Baranja County, through this network of business support

institutions, provides adequate support to entrepreneurs in form of consultancy, dissemination of

important information and business education programs for start-up entrepreneurs and entrepreneurs in

the growth and development phase.

In 2008, market research agency AUDEO Ltd. conducted a research in the City of Osijek about the

disadvantaged position of the youth in the labor market and their insufficient interest in entrepreneurship.

The aim of the research was to determine attitudes, opinions and dilemmas of the youth regarding their

future in the labor market and possibilities of starting their own businesses.

Picture 1. Recognizability of business support institutions

37,00%

33,20%

16,00%

11,30%

55,40%

48,00%

33,10%

20,40%

0,00% 10,00% 20,00% 30,00% 40,00% 50,00% 60,00%

Center for

Entrepreneurship

Development Agency of


Business Incubator BIOS

Technology Development

Center TERA

high school seniors university graduates

289

One of the questions was related to the recognizability of entrepreneurial institutions, that is,

institutions that support entrepreneurship at the local level in Osijek and Slavonia and Baranja. Graph 10

shows that both populations are familiar the most with the Center for Entrepreneurship Osijek. It is clear

that all the institutions are significantly more recognizable among the population of university graduates

than among that of high school seniors, which was expected, since university students are usually better

informed and probably have more opportunities to get in touch with these institutions through some of

their projects.

Among university graduates, students of the Faculty of Economics knew much more about these

institutions than their colleagues, except in the case of Technology-development centre (TERA) with which

graduates of the Faculty of Economics and the Faculty of Electrical Engineering are about equally familiar

(both around 25%). With regard to the differences in recognizability of these institutions among high school

seniors, results show an interesting occurrence, which can again be explained by the type of school.

Namely, except in the case of BIOS, gymnasium students knew less about these institutions than the

vocational high school students, and that difference is statistically significant in case of the two most

recognizable institutions.

290

The list of the information provided by BSO from Osijek-Baranja County Table 3.2.1.

BSO Name Development Agency of Osijek-Baranja County Address STJEPANA RADIDA 4 , 31000 OSIJEK E-mail [email protected] Legal Status Administrative department of the regional body of government Years of activity Since1993. Fields of activity Section for Entrepreneurship and Development Projects, Section for

Capital Investments, Section for European Integrations and Regional Development

No. of employees 15 Competencies / skills The Development Agency is an expert service administering analytical-

planning, organizational-coordination, legal and other affairs connected with the preparation and realization of the County-based development program.


Realization of the County-based development program

Main activities addressed to SMEs Helping entrepreneurs in obtaining credit funds, informing on subsidy programs for entrepreneurship, counselling, permanent education programs, development of “start-up” and “young” companies, initiating the founding of entrepreneurial zones, stimulating employment, co-financing of introducing quality management systems, co-financing of presentations on fairs, cooperation on innovation and introducing new products, stimulating cooperation, stimulating craftsmanship, new investments and stimulating of export, cooperation with institutions dealing with entrepreneurial support


Projects intended for entrepreneurs starting their business ventures (start-up) and “young” companies are conducted on the territory of the County. The purpose is to create a stimulated environment for increasing the number of business subjects, and creating preconditions for their success and presence on the market. Seminars for entrepreneurs – beginners, “Entrepreneurial Notebook” with all the relevant information and the address-book of institutions, possibility for using of premises of entrepreneurial incubators, “Best Entrepreneurial Idea Award”, “SMS Entrepreneur” and various counselling are all activities conducted with a goal of facilitating the new business and new jobs creation.

Sources of funding Osijek-Baranja county budget


291

Table 3.2.2.

BSO Name Center for Entrepreneurship Osijek

Address J. J. Strossmayera 341, 31000 Osijek

E-mail [email protected]; [email protected]

Legal Status Association, non-profit


Fields of activity development and promotion of entrepreneurial business behavior

No. of employees 7

Competencies / skills Expertise, long experience, large number of external associates


SMEs, start-ups, family farms, cooperatives, non-profit organizations, unemployed persons, students

Main activities addressed to SMEs Education and training Advisory and consulting help Info center Preparing business and investment plans, and development projects


Education and training Advisory and consulting help Info center Preparing business and investment plans, and development projects

Sources of funding Revenues from own activities, Ministry of Economy, Labour and Entrepreneurship, City of Osijek, Osijek-Baranja County, EU funds



292

Table 3.2.3.

BSO Name REGIONAL DEVELOPMENT AGENCY OF SLAVONIA AND BARANJA ltd

Address S. Radica 4, 31000 Osijek, Croatia


Legal Status Ltd, non-profit

Years of activity 3

Fields of activity Regional development, EU integrations, regional and transnational cooperation, education, consulting

No. of employees 9

Competencies / skills Technical and advising support in programmes of international and regional cooperation; exchange of information aiming at regional development and creation of local, cross-border and international networks; promotion of the territory; support to development programmes including public-private partnerships, direct investments and joint ventures; mediation in cooperation with national and international financial institutions; attraction of direct foreign investments (FDI); building up institutional capacities; technical assistance to local authorities in application of project proposals meant for financing by pre-accession funds of the EU, regional and local development programming, etc.


Local and regional public authorities, NGOs, SMEs, operators of the agricultural sector, academic community, …

Main activities addressed to SMEs Business consulting on funding opportunities for SME sector and agriculture sector (technical assistance, information providing, preparation of business plans, etc.)


Information providing on funding opportunities, HAMAG partner institution

Sources of funding Local and regional government, EU and other national and international projects, providing specific services (own revenue), …


293

Table 3.2.4.

BSO Name Center for Entrepreneurship BeIi Manastir Ltd

Address 31300 BELI MANASTIR, KRALJA TOMISLAVA 53.


Legal Status Ltd

Years of activity 6

Fields of activity Business support organization

No. of employees 1

Competencies / skills Expertise, long experience in working with target groups, established cooperation with the regional and local authorities and other institutions which directly and indirectly affect target groups


Family farms, crafts, ltd, start ups, high school students, unemployed persons

Main activities addressed to SMEs Free consulting services, information about sources of financing, assistance in business plan and investment plans writing, economic programme, organization of educational activities and workshops, connecting entrepreneurs


Free consulting services, information about sources of financing, assistance in business plan writing, education and workshops organization

Sources of funding Local and regional authorities, different ministries , own revenues

Table 3.2.5.

CROATIAN EMPLOYERS ASSOCIATION – REGIONAL OFFICE OSIJEK

Address Trg Ljudevita Gaja 6, 31000 Osijek



Years of activity 1996.

Fields of activity Labour law

No. of employees 3

Competencies / skills Legal services (labour and social legislation), lobbying


To protect the rights and interests of our members and represent them in relations with government bodies, regional and local authorities and trade unions

Main activities addressed to SMEs Legal protection, improving local and national business environment


Legal protection, improving local and national business environment

Sources of funding Membership fee




294

Table 3.2.6.

BSO Name Center for Entrepreneurship Valpovo Ltd

Address Kralja P. Krešimira IV 2 31550 Valpovo


Legal Status Ltd

Years of activity 7

Fields of activity Business support organization for SMEs

No. of employees 3

Competencies / skills 2 lawyers and 1 economist


Start ups, SMEs

Main activities addressed to SMEs Preparation of project documentation for tenders for the implementation of grants, business and investment plan preparation, organization of fairs


Education, consulting, business and investment plan preparation, organization of fairs

Sources of funding City of Valpovo, Ministries, Osijek-Baranja County, own revenues

Table 3.2.7.

BSO Name ENTREPRENEURSHIP DEVELOPMENT CENTER OF ERDUT MUNICIPALITY Ltd.

Address BANA JOSIPA JELAČIDA 4, 31 226 DALJ


Legal Status Ltd

Years of activity 2

Fields of activity Providing expert and advisory help to entrepreneurs Entrepreneurship promoting Advising local government units

No. of employees 1

Competencies / skills Director (graduated economist ) of centre


Small and medium-sized enterprises and local government

Main activities addressed to SMEs Providing support to development of entrepreneurship Providing support to growing businesses Help with utilizing available government and EU support funds


Start up package: seminars, round tables, dissemination of relevant info Providing assistance with applying for different projects

Sources of funding Erdut municipality, Ministry of economy , others ( in small amount).

295

Table 3.2.8.

BSO Name City of Osijek

Address Kuhačeva 9, Osijek


Legal Status Local government unit


Fields of activity Arrangement of settlements and housing Spatial and urban planning Economic Development Utilities Traffic and transport infrastructure Childcare Education Social welfare Education and basic education Culture, physical culture and sports Consumer protection The protection and promotion of natural Environmental Protection Fire and civil protection The issuance of building and location permits Maintenance of public roads and other

No. of employees 271 + 3

Competencies / skills Qualified employees and quality equipment to work


City for the life of youth and family life

Main activities addressed to SMEs Creating the preconditions for economic development-construction of economic zones and the allocation of land to entrepreneurs with a "de minimis" support, the allocation of grants, interest subsidies for loans, connect entrepreneurs and the provision of space for presentation at fairs, etc.


The establishment and subsidy of Business Incubator BIOS, reductions for beginner entrepreneurs who enter into economic zones, promotion of employment, etc.

Sources of funding - Taxes, surtaxes, municipal contributions, municipal fees, grants, etc.


296

Table 3.2.9.

BSO Name Entrepreneurship Center Belišde

Address Vij. S. H. Gutmanna 1, Belišde

E-mail [email protected] [email protected] [email protected]


Years of activity 6

Fields of activity Providing technical support to the development of SMEs at the local level through counseling, information and educational services to launch economic activities, creating conditions for self-employment and entrepreneurship.

No. of employees 2

Competencies / skills Sanja Majstorovid Stanid, lawyer Kristina Mandid, economist


- entrepreneurs from Belišde area - City of Belišde - associations

Main activities addressed to SMEs - Economic and legal advice, - Monitoring and informing entrepreneurs about the programs of individual ministries of the Government of the Republic of Croatia, Osijek-Baranja County, HBOR , HAMAG, HZZ, EU and other national and international institutions - Organization of educational content (seminars, workshops, panels), - Business plan writing


- Economic and legal advice - Organization of educational content (seminars, workshops, panels)

Sources of funding Donor funds

297

Table 3.2.10.

BSO Name Center for Entrepreneurship Donji Miholjac Ltd

Address Trg Ante Starčevida 1/I, 31540 Donji Miholjac


Legal Status Ltd

Years of activity 7


No. of employees 4

Competencies / skills Development of investment programs, management of investment projects, production and project management of EU pre-accession funds, consulting business start-ups and entrepreneurs in the phase of growth and development


Entrepreneurs, entrepreneurs in the phase of growth and development, agricultural economy, local self-government

Main activities addressed to SMEs Education, business consulting, business plans and investment programs, information on open calls designated for development of small and medium enterprises, filling requests for the same composition and the required documentation


Seminars, information and business consulting related to the start up operations and realization of potential aid, assistance in drafting a business plan

Sources of funding Own revenues

Table 3.2.11.

BSO Name Croatian Chamber of Economy, County Chamber Osijek

Address Europske av. 13, 31000 Osijek


Legal Status Public Law Body

Years of activity since 1853

Fields of activity Business support services and institutions

No. of employees 24



All legal entities engaging in business

Main activities addressed to SMEs Promoting, representing and protecting members’ common interests before governmental authorities home and abroad


Sources of funding Membership fees, contributions, income from the public authority services, income from own activities


298

Table 3.2.12.

BSO Name BUSINESS INCUBATOR BIOS Ltd

Address J. J. Strossmayer 341, 31000 Osijek, Croatia


Legal Status Ltd

Years of activity 8 years

Fields of activity Business consulting, technical assistance and educational services in addition to preferential prices of business facilities rental aimed to manufacturing and innovative start-ups

No. of employees 5

Competencies / skills Business Incubator BIOS is active in many entrepreneurship supporting projects. It has established Slavonia and Baranja ICT Cluster IKS with eight IT companies and BIOS Printing and Publishing Cluster which gathers 10 companies from Osijek-Baranja County. BIOS organizes annual international conference about entrepreneurship. It has published two handbooks and special DVD set containing basic information on starting your own business, where all the entrepreneurship support organizations are listed. BIOS has conducted surveys about entrepreneurs, incubators and clusters in Croatia and made them public on its web site. It is also involved in INTERREG projects Slovenia - Hungary - Croatia. BIOS is also the Microsoft® BizSpark™ and WebsiteSpark™ Network Partner.


BIOS tenants (manufacturing and innovative start-ups) and other SMEs

Main activities addressed to SMEs Business support activities, education, technology transfer, consultation, SMEs promotion


Rental, education (seminars and trainings)and trade fairs subsidy, start-ups promotion, technology transfer support activities aimed to innovative start-ups

Sources of funding Projects, rental income, donations


299

Table 3.2.13.

BSO Name Technology Development Centre Osijek Ltd

Address Trg Ljudevita Gaja 6, 31000 Osijek, Croatia


Legal Status Ltd

Years of activity 7

Fields of activity Development of the knowledge – based economy implementing significantly improved technologies (product, services, processes and procedures with new added value Commercialization of publicly funded research by J.J. Strossmayer University of Osijek

No. of employees 5

Competencies / skills Business incubator, registered at the Croatian State Intellectual Property Office for services in IPR, member of European Enterprise Network – EEN (support structure for the commercialization of innovations in Europe), organizer of International exhibition of innovations, prototypes and business plans


Support to enterprises in the business incubator and outside companies

Main activities addressed to SMEs Incubation for knowledge-based companies, protection of intellectual property, rapid prototyping, information on the supply and demand for goods or services on the national and European markets, links to a network of consultants and researchers from different scientific branches, identification of partners interested in technology transfer, legal and advisory support for negotiation activities


Incubation for knowledge-based companies, protection of intellectual property, rapid prototyping, information on the supply and demand for goods or services on the national and European markets, links to a network of consultants and researchers from different scientific branches, identification of partners interested in technology transfer, legal and advisory support for negotiation activities

Sources of funding Croatian and EU funds, own revenue


300

Table 3.2.14.

BSO Name Osijek-Baranja County, Economic and Agribusiness Affairs Administrative Department

Address OSIJEK, TRG A. STARČEVIDA 1/II


Legal Status Osijek-Baranja County Governing Body

Years of activity 8

Fields of activity Agribusiness and economy

No. of employees 14

Competencies / skills Administrative, Analytical Planning, organizational and co-ordination, normative-legal and other professional services related to the economic activity or activities in the field of agriculture and forestry of the jurisdiction of County


Family farms, SMEs

Main activities addressed to SMEs Activities related with encouraging the development of agricultural production and entrepreneurship in small and medium enterprises


Subsidizing of investments and interest rates on business loans

Sources of funding Osijek-Baranja County budget

Table 3.2.15.

BSO Name Business Incubator OSVIT

Address Vukovarska 142, 31540 Donji Miholjac


Legal Status Cooperation

Years of activity 7

Fields of activity Providing professional, bookkeeping services and rental space

No. of employees 3 in administration; 100 employees in tenant companies

Competencies / skills Administration – economists Tenants – different competencies and skills


Tenants

Main activities addressed to SMEs Education, bookkeeping services, providing information from the city, county, banks, ministries


Start-up seminars, information and business consulting related to the start-up operations and realization of potential aid, assistance in drafting a business plan, marketing presentation

Sources of funding Rental income, Osijek-Baranja County, Ministry of Economy, Labour and Entrepreneurship

301

Table 3.2.16.

BSO Name Croatian Chamber of Trades and Crafts - Croatian Chamber of Trades and Crafts of Osijek-Baranja County

Address Osijek, Svilajska 35


Legal Status Established under the Law on Crafts


Fields of activity -promoting the trades and crafts businesses - represent the interests of craftsmen before the local and regional self government - organizing trade fairs, exhibitions, business contacts, seminars, lectures - conducts master examinations and examinations of the professional qualification -trade licensing procedure -education for trades and professions

No. of employees 6

Competencies / skills Advisory, educational, organizational


Craftsmen, potential trade/craft business owners

Main activities addressed to SMEs -Consulting -Education -organization of joint trade fairs presentations - education for the trades -enforcement proceedings before the Court of Honour Croatian Chamber of Crafts - Conciliation proceedings


-Consulting -Education -organization of joint trade fairs presentations - education for the trades -enforcement proceedings before the Court of Honour Croatian Chamber of Crafts - Conciliation proceedings

Sources of funding Chamber contributions

Osijek-Baranja County SME Promotion Program

Strategic Development Framework 2006-2013 is a document that provides comprehensive vision

and an overview of priorities of economic development of the Republic of Croatia in the 2006-2013 period.

This text defines the general strategic objective, the priority fields of activity, as well as the instruments and

activities required for their fulfillment. The general strategic objective of the document is growth and

employment in competitive market economy acting within a European welfare state of the 21st century.

The priority objectives that represent the drivers of development in a short period according to the

stated document are:

- strengthening the entrepreneurial climate:


302

- affirmation of the new role of the state, and

- privatization and restructuring.

Foundations of development that have to be continuously strengthened are: human resources and

infrastructure. Therefore, measures have to be implemented in the following areas:

- education and labor market efficiency;

- science, technology and ICT;

- development of transport and energy infrastructure

fostering social cohesion and justice.

Finally, the synergy of prosperity can be achieved only if priorities marked as cohesive elements are

achieved:

- macroeconomic stability and liberalization of the flow of capital;

- efficient and integrated financial services system:

- sustainable development (space, nature and regional development).

The Strategic Framework for Development is based on the existing sector strategies, and it has been

created through a process of consultations with representatives of public administration, business and

academic community, civil society and general public, and was adopted by the Government of the Republic

of Croatia in 2006. Successful implementation of policies defined in this document will result in acceleration

of the rate of national growth and in faster convergence of average income per capita in Croatia and the

European Union. Economic openness, competitiveness, and the need to change the traditional role of the

state and to include all layers of society in the results of economic growth and development are the

essential starting points for the achievement of the main strategic goal in this seven year period: growth

and employment in competitive market economy acting within a European welfare state of the 21st

century. This strategic goal may be achieved only by simultaneous and harmonized action in the following

ten strategic areas: people, knowledge and education; transport and energy infrastructure; science and IT

technology; social cohesion and justice; macroeconomic stability and openness; integrated financial

services; environmental protection and balanced regional development; entrepreneurial climate;

privatization and restructuring and new role of the state..

303

The Republic of Croatia is currently at just above 50% of the European GDP per capita average, and

the Strategic Framework for Development 2006-2013 provides projections that Croatia, with the

implementation of the established measures and actions, could reach 75% of that percentage.

Osijek-Baranja County SME promotion program is submitted to the Osijek-Baranja County Assembly

by the Development Agency of Osijek-Baranja County.

The County implements the SME promotion program in collaboration with units of local self-

government, entrepreneurship centers and incubators, and all the other institutions that provide support

to small and medium-sized businesses.

Striving to actively contribute to creation of assumptions and environment that will facilitate the

development of entrepreneurship, the County has been undertaking the following activities during 2009:

1. PROVIDING LOANS TO ENTREPRENEURS; 2. DISSEMINATION OF INFORMATION ON AVAILABLE SME INCENTIVE PROGRAMS; 3. PROVIDING CONSULTING SERVICES TO ENTREPRENEURS; 4. PERMANENT EDUCATION; 5. DEVELOPMENT OF START-UP AND YOUNG COMPANIES; 6. STIMULATING ESTABLISHMENT OF ENTREPRENEURIAL ZONES; 7. STIMULATING EMPLOYMENT; 8. CO-FINANCING INTRODUCTION OF QUALITY SYSTEMS; 9. CO-FINANCING PRESENTATIONS ON TRADE FAIRS; 10. COLLABORATION ON PROJECTS IN INNOVATION AND INTRODUCTION OF NEW PRODUCTS; 11. INCENTIVES FOR COOPERATIVES; 12. INCENTIVES FOR TRADES AND CRAFTS BUSINESSES; 13. NEW INVESTMENTS AND EXPORT PROMOTION; 14. COOPERATION WITH ENTREPRENEURIAL SUPPORT INSTITUTIONS.

These activities are aimed at achieving the following:

- increasing employment and increasing the average number of employees per business;

- increasing the number of small and medium-sized businesses;

- building new entrepreneurial zones;

- simpler, faster and cheaper access to business loans;

- increasing competitiveness and the level of presentation on foreign markets;

- increasing domestic and foreign direct investments;

- introducing new technologies;

- changing the structure of business activities in favor of production;

- strengthening export orientation and substitution of imports

304

The conclusion can be drawn that the stated objectives are identical both at the regional and the

national level, i.e., that Osijek-Baranja County's Strategy and Regional Operational Program are clearly

compatible with the Strategic Framework for Development 2006-2013.

Strategic Development Framework 2006-2013 is a document that provides comprehensive vision

and an overview of priorities of economic development of the Republic of Croatia in the 2006-2013 period.

This text defines the general strategic objective, the priority fields of activity, as well as the instruments and

activities required for their fulfillment. The general strategic objective of the document is growth and

employment in competitive market economy acting within a European welfare state of the 21st century.

The priority objectives that represent the drivers of development in a short period according to the

stated document are:

- strengthening the entrepreneurial climate:

- affirmation of the new role of the state, and

- privatization and restructuring.

Foundations of development that have to be continuously strengthened are: human resources and

infrastructure. Therefore, measures have to be implemented in the following areas:

- education and labor market efficiency;

- science, technology and ICT;

- development of transport and energy infrastructure

fostering social cohesion and justice.

Finally, the synergy of prosperity can be achieved only if priorities marked as cohesive elements are

achieved:

- macroeconomic stability and liberalization of the flow of capital;

- efficient and integrated financial services system:

- sustainable development (space, nature and regional development).

The Strategic Framework for Development is based on the existing sector strategies, and it has been

created through a process of consultations with representatives of public administration, business and

academic community, civil society and general public, and was adopted by the Government of the Republic

305

of Croatia in 2006. Successful implementation of policies defined in this document will result in acceleration

of the rate of national growth and in faster convergence of average income per capita in Croatia and the

European Union. Economic openness, competitiveness, and the need to change the traditional role of the

state and to include all layers of society in the results of economic growth and development are the

essential starting points for the achievement of the main strategic goal in this seven year period: growth

and employment in competitive market economy acting within a European welfare state of the 21st

century. This strategic goal may be achieved only by simultaneous and harmonized action in the following

ten strategic areas: people, knowledge and education; transport and energy infrastructure; science and IT

technology; social cohesion and justice; macroeconomic stability and openness; integrated financial

services; environmental protection and balanced regional development; entrepreneurial climate;

privatization and restructuring and new role of the state..

The Republic of Croatia is currently at just above 50% of the European GDP per capita average, and

the Strategic Framework for Development 2006-2013 provides projections that Croatia, with the

implementation of the established measures and actions, could reach 75% of that percentage.

Osijek-Baranja County SME promotion program is submitted to the Osijek-Baranja County Assembly

by the Development Agency of Osijek-Baranja County.

The County implements the SME promotion program in collaboration with units of local self-

government, entrepreneurship centers and incubators, and all the other institutions that provide support

to small and medium-sized businesses.

Striving to actively contribute to creation of assumptions and environment that will facilitate the

development of entrepreneurship, the County has been undertaking the following activities during 2009:

1. PROVIDING LOANS TO ENTREPRENEURS; 2. DISSEMINATION OF INFORMATION ON AVAILABLE SME INCENTIVE PROGRAMS; 3. PROVIDING CONSULTING SERVICES TO ENTREPRENEURS; 4. PERMANENT EDUCATION; 5. DEVELOPMENT OF START-UP AND YOUNG COMPANIES; 6. STIMULATING ESTABLISHMENT OF ENTREPRENEURIAL ZONES; 7. STIMULATING EMPLOYMENT; 8. CO-FINANCING INTRODUCTION OF QUALITY SYSTEMS; 9. CO-FINANCING PRESENTATIONS ON TRADE FAIRS; 10. COLLABORATION ON PROJECTS IN INNOVATION AND INTRODUCTION OF NEW PRODUCTS; 11. INCENTIVES FOR COOPERATIVES; 12. INCENTIVES FOR TRADES AND CRAFTS BUSINESSES; 13. NEW INVESTMENTS AND EXPORT PROMOTION; 14. COOPERATION WITH ENTREPRENEURIAL SUPPORT INSTITUTIONS.

These activities are aimed at achieving the following:

306

- increasing employment and increasing the average number of employees per business;

- increasing the number of small and medium-sized businesses;

- building new entrepreneurial zones;

- simpler, faster and cheaper access to business loans;

- increasing competitiveness and the level of presentation on foreign markets;

- increasing domestic and foreign direct investments;

- introducing new technologies;

- changing the structure of business activities in favor of production;

- strengthening export orientation and substitution of imports

The conclusion can be drawn that the stated objectives are identical both at the regional and the

national level, i.e., that Osijek-Baranja County's Strategy and Regional Operational Program are clearly

compatible with the Strategic Framework for Development 2006-2013.

Number and amount of requested subsidies by county in 2009 Table 6.

County Number of requested subsidies Amount of requested subsidies

Bjelovar-Bilogora 398 42.651.734

Brod-Posavina 379 55.396.870

Dubrovnik-Neretva 126 12.360.929

City of Zagreb 2.947 207.454.255

Istria 450 40.172.800

Karlovac 395 28.210.027

Koprivnica-Križevci 378 38.653.589

Krapina-Zagorje 350 44.831.277

Lika-Senj 97 21.686.371

Međimurje 501 53.605.835

Osijek-Baranja 672 77.707.004

Požega-Slavonia 219 19.951.934

Primorje-Gorski Kotar 593 41.799.479

Sisak-Moslavina 397 29.349.280

Split-Dalmatia 647 63.219.743

Šibenik-Knin 137 18.179.198

Varaždin 573 82.963.230

Virovitica-Podravina 178 29.789.223

Vukovar-Syrmia 269 21.768.780

Zadar 259 42.291.783

Zagreb 824 67.747.072

TOTAL: 10.789 1.039.790.413

307

Picture 2. Number of requested subsides by county

0

500

1.000

1.500

2.000

2.500

3.000

3.500

Cit

y o

f Za

greb

Zagr

eb

Osi

jek-

Bar

anja

Split

-Dal

mat

ia

Pri

mo

rje-

Go

rski

Ko

tar

Varaždin

Međ

imurje

Istr

ia

Bje

lova

r-B

ilogo

ra

Sisa

k-M

osl

avin

a

Kar

lova

c

Bro

d-P

osa

vin

a

Koprivn

ica-Križevci

Kra

pin

a-Za

gorj

e

Vu

kova

r-Sy

rmia

Zad

ar

Požega

-Slavo

nia

Vir

ovi

tica

-Po

dra

vin

a

Šib

enik

-Kn

in

Du

bro

vnik

-Ner

etva

Lika

-Sen

j

Total number of requested subsidies

Picture 3. Amount of requested subsidies by county

0

50.000

100.000

150.000

200.000

250.000

Cit

y o

f Za

greb

Varaždin

Osi

jak-

Bar

anja

Zagr

eb

Split

-Dal

mat

ia

Bro

d-P

osa

vin

a

Međ

imurje

Kra

pin

a-Za

gorj

e

Bje

lova

r-B

ilogo

ra

Zad

ar

Pri

mo

rje-

Go

rski

Ko

tar

Istr

ia

Koprivn

ica-Križevci

Vir

ovi

tica

-Po

dra

vin

a

Sisa

k-M

osl

avin

a

Kar

lova

c

Vu

kova

r-Sy

rmia

Lika

-Sen

j

Požega

-Slavo

nia

Šib

enik

-Kn

in

Du

bro

vnik

-Ner

etva

Total amount of requested subsidies

308

Subsidies granted by county Table 7.

County Number of subsidies Amount of granted subsidies

Bjelovar-Bilogora 125 13.257.920

Brod-Posavina 135 8.767.080

Dubrovnik-Neretva 34 1.513.500

City of Zagreb 825 31.744.110

Istria 95 4.654.320

Karlovac 101 3.064.824

Koprivnica-Križevci 114 9.415.439

Krapina-Zagorje 102 5.469.829

Lika-Senj 24 1.435.060

Međimurje 153 11.118.384

Osijek-Baranja 158 8.966.440

Požega-Slavonia 56 3.333.600

Primorje-Gorski Kotar 158 8.349.250

Sisak-Moslavina 100 3.117.418

Split-Dalmatia 155 13.371.113

Šibenik-Knin 33 1.965.800

Varaždin 154 12.842.681

Virovitica-Podravina 51 4.484.718

Vukovar-Syrmia 68 4.614.372

Zadar 60 10.786.298

Zagreb 225 12.192.800

TOTAL: 2.926 174.464.956

309

Picture 4. Number of granted subsidies by county

0

100

200

300

400

500

600

700

800

900

Cit

y o

f Za

greb

Zagr

eb

Osi

jek-

Bar

anja

Pri

mo

rje-

Go

rski

Ko

tar

Split

-Dal

mat

ia

Varaždin

Međ

imurje

Bro

d-P

osa

vin

a

Bje

lova

r-B

ilogo

ra

Koprivn

ica-Križevci

Kra

pin

a-Za

gorj

e

Kar

lova

c

Sisa

k-M

osl

avin

a

Istr

ia

Vu

kova

r-Sy

rmia

Zad

ar

Požega

-Slavo

nia

Vir

ovi

tica

-Po

dra

vin

a

Du

bro

vnik

-Ner

etva

Šib

enik

-Kn

in

Lika

-Sen

j

Total number of granted subsidies

Picture 5. Amount of granted subsidies by county

310

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

Cit

y o

f Za

greb

Split

-Dal

mat

ia

Bje

lova

r-B

ilogo

ra

Varaždin

Zagr

eb

Međ

imurje

Zad

ar

Koprivn

ica-Križevci

Osi

jek-

Bar

anja

Bro

d-P

osa

vin

a

Pri

mo

rje-

Go

rski

Ko

tar

Kra

pin

a-Za

gorj

e

Istr

ia

Vu

kova

r-Sy

rmia

Vir

ovi

tica

-Po

dra

vin

a

Požega

-Slavo

nia

Sisa

k-M

osl

avin

a

Kar

lova

c

Šib

enik

-Kn

in

Du

bro

vnik

-Ner

etva

Lika

-Sen

j

Total amount of granted subsidies

311

4. CONCLUSION

Differences in entrepreneurial activity in a country are normally associated with differences in

development of specific areas – and Croatia is not an exemption. Therefore, the indicators of TEA (Total

Entrepreneurial Activity) indices for regions of Croatia complement the “hard-fact” indicators of the general

economic development of these areas, measured by GDP per capita and the rate of unemployment.

TEA index by regions

Table 8.

Region 2002. 2003. 2004. 2005. 2006. 2007.

Zagreb and surroundings 4,89 4,30 4,42 8,43 7,77 7,27

Slavonia and Baranja 2,11 1,00 4,44 4,91 8,94 7,18

Lika and Banovina 2,71 1,78 3,99 5,11 8,69 8,81

Istria, Primorje and Gorski Kotar 4,47 3,05 5,29 5,74 7,10 9,60

Dalmatia 3,95 2,43 1,68 6,34 9,85 8,92

TOTAL 3,62 2,56 3,74 6,11 8,58 8,92

Osijek-Baranja County was in the last place by the share of new businesses in the total among all

counties (2006 data). The share of new entrepreneurs was only 12,8°%.

By competitiveness of its economy, Osijek-Baranja County ranks 14th among all the counties and

the city of Zagreb. By the quality of business sector it ranks 13th and only 15th by the business

environment.

These results reflect a clear and present need for urgent cooperative efforts on local level in

strengthening of competitiveness, and be an open call to key people in national politics for regional

development, to make additional efforts in balancing regional development and implement programs for

improving business environment factors.

It is apparent that the region hasn’t used its economic potentials (natural and human resources) to

its advantage. The measures which are supposed to enable better utilization of those potentials are not in

the right sense strategically and operationally designed.

For solving this problem it is necessary to create local strategies and operational programs which

would be composed of all kinds of supports in function of quicker and more quality development of those

potentials.

312

Despite the fact that institutions on national and regional level offer all kinds of different

development projects and incentive programs, and the fact there is a significant number of both public and

private business support institutions operating in the County, this sector still did not yield the expected

results.

All the business support institutions covered in this context analysis (public institutions, local and

regional government bodies, business incubators, technology development centres, centres for

entrepreneurship) offer various types of support to entrepreneurs. However, not all of them are recognized

in their business environment or even effective enough in achieving their main goals.

The entrepreneurs themselves say that the most important day-to-day challenges they face are: the

system and habits of payment (not paying), dumping prices and lack of market standards, lack of education

and adequate personnel, funding sources (especially for micro-scale businesses), lack of regional

development plan, which would enable the business activities and products to be formed in a more suitable

way, frivolous economic policy (which discourages investments), and the short-term threat to the entire

economy due to ongoing recession.

Generally everybody agrees that the region needs new business support institutions that would

help entrepreneurs with new products creation, development of marketing plans and projecting possible

models of favourable funding opportunities for start-up investments.

The type of assistance entrepreneurs would expect from the ideal new business support institution:

- Connecting businesses for applying to EU pre-accession funds

- Market research for entrepreneurs

- Sales assistance

- Export assistance

- Collection of debt assistance

In the development of a competitive economic environment it is essential to align all the

development strategies, supporting operating programs, action plans and identify organizations

responsible for carrying out these activities which will raise the overall economic activity based on using all

313

productive resources and comparative advantages in relation to other participants at the local, national and

international markets.

314

BOSNIA AND HERZEGOVINA – SARAJEVO CANTON



Table 1:

2004 2005 2006 2007 2008

STRUCTURE

GDP (mln Eur) 1621 1880 2181 2542 2790

GDP ( y/y) 109,24 1,16 1,16 1,17 1,10


Structure GDP (%):

Agriculture ** ** ** ** **

Industry ** ** ** ** **

Services ** ** ** ** **

Industrial output (y/y) 102,3 99,4 108,5 121,8 123,8

N° active companies* 5148 5148 9444 10203 11124

Total turnover (mln Eur) 4532 5356 ** ** **

% of SME turn./Total Turn ** ** ** ** **


Agriculture ** ** ** ** **

Industry ** ** ** ** **

Services ** ** ** ** **

EMPLOYMENT

Total employment (.000) 90 80 95 109 118

% SME emp. on tot. emp. ** ** ** ** **


Manufacturing (%) 13,3 15,22 13,17 12,52 12,07

Wholesale and retail trade (%) 12,24 13,06 13,90 17,80 18,92

Public administration and

defence (%)

12,32 12,10 11,70 11,07 10,92

Value added per employed ** 4547734 4955325 5620705 6597417

315

(Eur)


Unit labour cost (Eur) ** ** ** ** **

Labour productivity (y/y) ** ** ** ** **

Unemployment (%) 41,5 39,65 41,8 37,3 34,5


Primary 44213 45618 46063 43736 41113

Secondary (vocat. or else) 16300 18062 18456 17509 16977

Tertiary (university) 3198 3857 4037 4099 4385

FOREIGN TRADE

Import of goods (mln Eur) 832 1530 1411 1703 2187

1. (78 Road Vehicles) N/a N/a N/a 154 220

2.(71 Power generating machinery and

equipment)

N/a N/a N/a 89 76

3. (33 Petroleum and petroleum

products)

N/a N/a N/a 36 346

Export of goods (mln Eur) 137 269 321 371 383

1. (35 Electric current) N/a N/a N/a 57 96

2. (71 Power generating machinery and

equipment)

N/a N/a N/a 88 60

3. (82 Furniture and parts thereof) N/a N/a N/a 31 31

Trade balance (mln Eur) -695 -1261 -1090 -1332 -1804


1. Germany ** ** ** 252 295

2. Croatia ** ** ** 102 437

3. Slovenia ** ** ** N/a 156

FDI inflow (mln Eur) ** ** 370 598 584

Main FDI sectors

Sector A (Cumulate data) ** ** ** ** **

Sector B ** ** ** ** **

Sector C ** ** ** ** **

** - this information is not available in local statistics for cantons in FBIH

Total gross value of goods and services produced by producers in Canton Sarajevo in 2007 was

4.588 million €. 67% of total gross value has been produced by transportation, warehousing and

316

communication sector, processing industry, public administration and defense, obligatory social insurance,

wholesale and retail and electricity, gas and water supplies.

Gross Domestic Product (GDP) is amounted to 2,542 billion €. The biggest share in GDP has

transportation, warehousing and communication sector with 18, 6%, then goes public administration with

17, 6%. Trade participates with 11, 4%, and industry with 10, 6%.

The biggest share in number of employees has trade sector, then industry, public administration,

transportation, warehousing and education.

According to statistical register for 2007, Sarajevo Canton has 26.932 businesses that represent

over 28% of all businesses registered in Federation of Bosnia and Herzegovina that has 108.742 registered

businesses. Out of total, 10.203 are legal persons, 4.887 are business units and 11.842 are crafts.

Over one third is registered for trade, 33, 4%, and 44% of legal persons/businesses comes from four

main sectors where industry sector covers 10, 8%.

Total value of realized investments in new fix assets in 2007 is 462 million €. Analysis of investment

structure shows that around 65% of investments are placed in following sectors: wholesale and retail sector

(24, 9%), processing industry (21, 8%) and public administration and defense; obligatory social insurance

(18, 2%). Total income/revenue in 2007 was around 6, 5 billion € that is more then 67, 8% higher than in

2003. Income average growth rate has been 13, 8%.

In the period of 2003 – 2007, the biggest income has been achieved by trade sector, 43, 5% in 2003

and 47, 6% in 2007. Right after the trade by volume of revenues generated in 2003 and 2007 come industry

with 14.1% or 17.1% share in total income. Revenue generated in the industry is doubled and it’s 1,3 billion.

It grew at a rate of 19.4% per year.

Total expenditure was over 6, 2 billion €, and higher about 1.6 times then actual expenditure of

2003rd.

In the period 2003-2007 year, the biggest expense was realized in trade, 42.5% in 2003 and 48.1%

in 2007 followed by the industry with actual expenditure of 14.7% in 2003, or 17.1% in 2007.

317

Profit realized in the Sarajevo Canton area in 2007 was around 293 million € that is 1.8 times more

than in 2003.

Of the total profit in the period 2003-2007, the largest share has traffic, warehouse and

communication, 49.4% in 2003 and 32% in 2007. Profit in industry sector is increased for 77, 2% and grow

15,4% yearly.

The actual loss in 2007 was over 133, 5 million €, which is 1.8 times less than in 2003. In creating a

loss of 2003 the largest share had a sector of electricity, gas and water supply, 37.7%, and in 2007 the

largest share had the industry with 23%. In this period the loss in industry was reduced by over 50%.

Since 2003 until 2007, population of Sarajevo Canton has been growing at a rate of 1.1% annually

and reached number of approximately 419 030.

In comparison to 2003 there was a change in age structure by reducing the number of younger

population and an increase in the elderly population above 65 years. Thus, in 2007 the population under 15

years of age accounts for 16.7%, working population 67%, and the population above 65 years of age, 16.3%

of the total population.

Gross domestic product per person (GDP / pc) is doubled, reached $ 8,299, and grew at a rate of

18.5% annually. Export is also doubled and amounted to 371 million €, and imports are 4.5 times larger

than exports, and amount to 1703 million €. The scope of foreign trade was 2.074 million € and grew with

an average of 24% per year. Exports record a lower growth of 19.7%, while imports grew 25.1% annually.

Number of employees is increased over 34% and amounts to 115.569. The rate of employment growth in

this period is 7.6% per year. Level of population employment ratio increased from 21.5 in 2003 to 27.6 in

2007.

Analysis of employment by industry / area displays the dominance of industry and commerce

throughout the entire period, but with a tendency to reduce the participation of industry in total

employment by 17.1% (14.704 employed) in 2003 to 12.1% (13.990 employed) in 2007, and with a

tendency to increase in trade with 13% (11.197 employed) in 2003 to 19.7% (22.751 employed) in 2007.

In 2007, there were 65.344 unemployed persons. The number of unemployed has increased by

about 9% and grew by 2.2% annually. The unemployment rate decreased from 41% to 36.1%.

318

In the period from 2003 until 2006, in the area of Canton Sarajevo around 1.94 million €

investments were paid, and the realization was 1.43 million € or 74.2%.

During this period the amount paid for the investment grew at an average annual rate of 10.2% and

realized investments grew at a rate of 9.2%.

Income of legal persons/businesses, that keeping accounting records according to the valid

accounting regulations, is increased from 3.88 billion € in 2003 to 6.54 billion € in 2007, or 68%. It grew in

average of a 13.8% annually.

In the same time, the expenditures grew from 3.93 billion € to almost over 6.34 billion €, or around

60%.

Profit has been increased for almost 80% and reach amount of 293 million €. Profit grew at average

annual rate of 15.8%.

Loss is decreased by 50% and reach amount of 133.5 million €. It has been decreased at average

annual rate of 13.4%.

Value to business assets is increased from 8.94 billion € in 2003 to 10.4 billion € in 2007, and capital

is decreased from 6.69 billion € to 6.08 billion €.

Net salaries are increased for about 75%, from 208 € to 364.5 €.

1.2 Main sectors


2006 2007 2008


SME quota (%on total) n.a. n.a. n.a.






319


Value added per employee

(Eur)

n.a. n.a. n.a.

Import (mln Eur) n.a. n.a. n.a.

Main import partners: n.a. n.a. n.a.




Export (mln Eur) n.a. n.a. n.a.

Main trade partners: n.a. n.a. n.a.

1. Country; value

(mln Eur)

Country; value Country; value



Trade balance (mln Eur) n.a. n.a. n.a.

FDI in the sector (cumulate

mln Eur)

n.a. n.a. n.a.


IT sector of Bosnia and Herzegovina can be considered as an emerging sector. It size for 2009 was

162 million USD. Divided in a several segments like IT services, Packaged Software, Hardware systems,

Storage, Hardcopy peripherals and networking equipment, presents potential for future development.

Bosnia and Herzegovina is a small market that to the certain extent limits development potential of the IT

sector that is drove by domestic demand concentrated in three sectors Finance, Government and

Telecommunication. So in order to overcome development limitation of domestic market focus should be

given to the companies that offer its IT services and products on international market. Of course those

certain segments like 0utsourcing and Application Consulting and Customization already providing service

to foreign costumers and markets. It has modest market share but big development potential. Segment

needs enough number of young professionals capable to answer to all service requests as well as good

business connections abroad. Quality and Prices of IT experts in Bosnia and Herzegovina still give enough

space for success in the international markets. Potential IT Outsourcing Centre that should support

connections between domestic IT companies and foreign markets could be an IT development project.

320

Centre would also provide service to young IT experts who wants to start it own company or to join to the

existing ones.

In 2006, Ministry of Defense of Bosnia and Herzegovina has sent information to the Presidency of

Bosnia and Herzegovina about non perspective facilities/locations for Army Forces of Bosnia and

Herzegovina. After this information BiH Presidency has brought decision in July 2006 about size, structure

and locations of BiH Army Forces, and in January 2008 Decision about changes and amendments of a first

decision that defines perspective military locations for Army Forces of Bosnia and Herzegovina. Total

number of military locations is 69, 21 in the Republic of Srpska and 48 in the Federation of Bosnia and

Herzegovina. Number of non perspective military locations is 54, 11 in Republic of Srpska and 43 in

Federation of Bosnia and Herzegovina. Till now, 21 military locations can be handover to the entities, which

will define final purpose of these locations.

In a Sarajevo Canton there are 10 perspective and 29 non perspective military locations. Out of 29

non perspective locations, 4 are temporary needed to Army Forces. These 4 locations will be handover to

civil authorities in certain period of time. 3 locations are ready for handover to civil authorities. 16 locations

are already handover to certain levels of civil authorities and some of them are used by BiH Court.

Municipalities show an interest in these location and some of them already create project for future

economic development use of these sites (Municipality Hadžidi).

Tables below give a list of perspective and non perspective military locations in Canton Sarajevo.

Table of perspective military locations

NO LOCATION NAME TYPE PERSPECTIVES CITY/MUNICIPALITY SURFACE AREA (M2)

SIZE OF BUILDINGS (M2)

NUMBER OF BUILDINGS

NOTE

1 Butile Barrack Perspective Sarajevo/Novi Grad 1.099.183 40.526 56

2 Rajlovac Barrack Perspective Sarajevo/Novi Grad 1.136.608 16

3 Zaim Imamovid Barrack Perspective Hadžidi 96.240 9.414 23

4 Krupa Warehouse Perspective Hadžidi 399.750 6.422 32

5

FMO H.Kreševljakovida 98 Administration Perspective Sarajevo/Stari Grad 21.818

6 MO BiH Bistrik no. 5 Administration Perspective Sarajevo/Stari Grad 2.685 5.204 4

7 Šavnici Poligon Training ground Perspective Hadžidi 1.592.881

321

8 Location Butmir Barrack Perspective Ilidža 60.000

9 Trebevička 72 "BOSUT" RR Hub Perspective Sarajevo/Stari Grad 15.990

10 Dom OS BiH House of Army Perspective Sarajevo/Stari Grad 2.213 3.703 1

Table of non perspective military locations

NO LOCATION NAME TYPE PERSPECTIVES CITY/ MUNICIPALITY

SURFACE AREA (M2)

SIZE OF BUILDINGS (M2)

NUMBER OF BUILDINGS

NOTE

1 Blažuj Barrack Nonperspective Ilidža 94.614 6.581 23 Temporary needed

2 Enver Šehovič-Semizovac Barrack Nonperspective Vogošda 149.005 12.558 54 Temporary needed

3 SBS Žunovnica Barrack Nonperspective Hadžidi 1.725.188 6.925 10

Temporary needed -Municipality Hadžid have created project for this site already

4 Šemso Baručija Barrack Nonperspective Sarajevo/Novo Sarajevo 52.103 1.155 5 Temporary needed

5 Safet Zajko Barrack Nonperspective Sarajevo/Novi Grad 109.618 16.923 53 For handover

6 Safet Hadžid-Jajce Barrack Nonperspective

Sarajevo/Stari Grad 8.800 7.370 6 For handover

7 Delijaši Barrack Nonperspective Trnovo 2.100 4 Handover in 2009

8 RR Bjelašnica RR Hub Nonperspective Trnovo 30.130 Handover in 2008

9

FMO H.Kreševljakovida 96

Administation Nonperspective

Sarajevo/Stari Grad 1.500 1.200 1 Handover in 2006

10 Aerodrom Butmir Airport Nonperspective Ilidža 60.000 Handover

11 Misoča Warehouse Nonperspective Ilijaš 404.403 2.799 21 Handover in 2006

12 Tarčin Barrack Nonperspective Hadžidi 650 1 Handover

13

Mustafa Hajrulahovid-Talijan - Zmajevac Barrack Nonperspective

Sarajevo/Stari Grad 68.700 2.370 6 Handover

14

Kasarna komande 1. Korpusa Barrack Nonperspective

Sarajevo/Novi Grad 8.200 3.300 1 Handover

15 Vojna Bolnica Hospital Nonperspective Sarajevo/Centar 22.000 7 Handover

16 Ušivak Barrack Nonperspective Hadžidi 95.129 4.794 21 Handover in 2005

17 Zamo Dučid Barrack Nonperspective Ilijaš 1.120.000 1.563 4 Handover in 2005

18 Bijela Tabija Barrack Nonperspective Sarajevo/Stari Grad 12.541 Handover in 2006

19 Džamija na Igmanu

Administation Nonperspective Ilidža 120 1 Handover

20 Betanija land Nonperspective Sarajevo/Centar 88.464 Handover

322

21 Kasarna Maršal Tito Barrack Nonperspective

Sarajevo/Centar 309.000 45

Handover in 1996 and one part is sold to American Embassy

22 Kasarna Ramiz Salčin Barrack Nonperspective

Sarajevo/Novi Grad 28.000 BiH Court

23 Strelište "Pašino Brdo" land Nonperspective

Sarajevo/Stari Grad 411.380 For handover

24 Daljani Poligon Training ground Nonperspective Hadžidi 756.215

Facility is in Army register but never occupied and used by Army Forces

25 Zemljište Brezovača land Nonperspective Hadžidi 8.040


26 Rajlovac land Nonperspective Sarajevo/Novi Grad 486

land is usurp (Facility is in Army register but never occupied and used by Army Forces)

27 Trubačeva kosa land Nonperspective Sarajevo/Novo Sarajevo 22.703

unlicensed construction (Facility is in Army register but never occupied and used by Army Forces)

28 Strelište "Grbavica land Nonperspective

Sarajevo/Novo Sarajevo 63.694

unlicensed construction (Facility is in Army register but never occupied and used by Army Forces)

29 Grdonj land Nonperspective Sarajevo/Centar 22.300


Municipalities of Canton Sarajevo are reported 14 industrial entrepreneurial zones, 6 Greenfields, 7

Brownfield’s and 1 Tourist zone. Table below gives a rank of industrial-business zones in Canton Sarajevo

according to the Study of Industrial zones in Sarajevo Macroeconomic Region.

323

Brownfield Total score

RANK Name Municipality Canton Rank of Ind.

zones Rank of

Municipalities Total

1

Slobodna zona Vogošda Vogošda

Canton Sarajevo 1,22 1,55 1,35

2 Energoinvest Stup Ilidža


3 Vlakovo Blažuj Ilidža


4 Famos Holding Ilidža


5 Boce Binježevo Hadžidi

Canton Sarajevo

1,84 1,85 1,84

6 Rajlovac Novi Grad Sarajevo

Canton Sarajevo

1,96 2,32 2,10

7 Željezara Ilijaš Ilijaš


Greenfield Total score

RANK Name Municipality Canton Rank of

Ind. zones Rank of

Municipalities Total

2 3 4 5 6

1

Merdžanovida polje Hadžidi


2

Boce Binježevo Hadžidi


3 Bačidi Novi Grad Sarajevo


4 Ugorsko Vogošda


5

Donje Telalovo Polje

Novi Grad Sarajevo


6 Lučko Polje Ilijaš Canton

Sarajevo 2,96 3,67 3,39

324

Most of industrial business zones in Canton Sarajevo still offer sites for interested investors.

Brownfield’s are mostly privatized by local companies and private investors, but they in the most cases do

not use these for business activities. These owners usually sell a land and industrial halls to the interested

companies. Problem lies in a fact that most industrial business zones does not have management

infrastructure that should provide information about available business facilities, so interested investor

needs to investigate what is available, who is the owner and other.

Greenfield’s can be divided on those already prepared for investors and those who are in the

preparation phase. Greenfield’s that is ready for investors are Merdžanovida polje, Boce Binježevo and

Ugorsko. Municipalities have managed to build basic infrastructure and to sell a land to investors through

public procurement procedure. Greenfield Ugorsko in a municipality Vogošda is fully equipped with all

infrastructures and 19 parcels are sold to the potential investors three years ago. Unfortunately only three

investors have realized investments till now.

Greenfield’s in municipality Hadžidi can be seen as a good successful case of Greenfield

development since their Greenfield zones are populated with Greenfield investments that have created

many jobs in previous period.

Others are still in the development phase, preparing planning documents and projects for

construction of needed infrastructure. Basic problem of these sites is ownership of a land that is in a private

possession and requires big investment in a land acquisition by municipalities. Second problem is a

substantial investment in necessary infrastructure.

New fully equipped industrial business zones (ready to investment) in Canton Sarajevo are needed

together with organization that will manage and promote those new zones.



Institutional administration framework related to the economic development management is

divided on several levels of authority. The first and highest level is entity level, where entities governments

throughout the ministries for economy and development implements various programs aimed at

325

development of the SME sector and business infrastructure. Second level is cantonal level in the

Federation of BiH entity, while in Republic of Srpska second and basic level are municipalities. The third and

lowest level in Federation of BiH is municipality level.

All above mentioned levels cooperates in the implementation of economic development programs

and projects, and all have their own projects and budgets for economic development support as well.

Entities, cantons and municipalities have their own economic development policies and strategic

economic development plans. Joint characteristic of these policies and plans are support to the SME

development and entrepreneurship, as well as development of the business supporting infrastructure e.g.

industrial, entrepreneurial, business zones, technology parks and business incubators.

In the Federation of BiH, Ministry of Development, Entrepreneurship and Crafts is responsible for

administrative, expert and other duties from Federation jurisdiction related to support to development,

entrepreneurship and crafts, provision of support for application of the innovations and introduction of

modern technologies in area of entrepreneurship and crafts, enlargement of the entrepreneurship and

crafts share in overall economy, organization of the entrepreneurial institutions and creation of the

entrepreneurial infrastructure, training of entrepreneurs and crafters through regular and additional

education and other duties specified by law (Official gazette 19/03 and 38/05 Law on Federal Ministries and

other bodies of Federal Authority).


Law on Incentives for Development of SME Sector (Official gazette of Federation of BiH No. 19/06)

of the Federation of BiH regulates:

planning, provision of resources/funds and implementation of measures for development

of the SME sector in the Federation of BiH;

Activities and measures of the Federal Government related to support to the SME sector

development;

Monitoring of the Law implementation;

Penalties and other issues related to support to the SME sector.

In 2010, Federal Ministry of Development, Entrepreneurship and Crafts has funded projects in 196

crafts, 158 old traditional crafts, 80 SMEs and 41 municipalities through a Program for Development of the

326

SME sector. Total assets (2005 - 2010) allocated for the development of entrepreneurial infrastructure in

the Federation of BiH are amounted to 9.170.000 KM, from which 3.000.000 KM goes for development of

industrial, business zones in municipalities.

Federal Ministry of Energy, Mining and Industry have certain support for companies, as well.

Ministry of Economy of Canton Sarajevo hadn’t have funds to support development of the SME

sector in 2009 and 2010. Financial support in 2010 has been available to 154 old traditional craft in the

amount of 590 KM per craft. In the period from 2005 to 2008, Ministry of Economy of the Canton Sarajevo

has had a credit fund for SMEs under the very supportive conditions. Funds have been available through

the contracted bank under very favorable conditions (one year grace period, 5 years return period, 2%

interest rate, credits from 100.000 KM to 1.000.000 KM). In 2008, 12 SMEs has been used this credits in the

total amount of 2.850.000 KM. In 2007 a 43 SMEs has been used this credits in total amount of 5.500.000

KM and in the period 2006, 2005, 60 SMEs has been used this credits in total amount of 10.000.000 KM.

Support for a start ups are available through business incubators and business centers. In the

Canton Sarajevo there is a one Service Business Incubator that is founded and managed by the regional

development agency SERDA. It provides office space under favorable prices for startups. Municipality

Center Sarajevo and Novi Grad Sarajevo has Business Center that provides training and education services

to craft, entrepreneurs and unemployed persons.

According to the Strategy for Development of the Business Incubators in BiH for 2010/2011,

business incubators manage 27.000 m2 of business space. Since 2001, more than 230 companies have been

used services of business incubators (or still using) with around 1.100 employees. There are 12 registered

business incubators in BiH. Investment in their development is amounted to 7.727.611 KM + cca 3.000.000

for BIT Center in Tuzla.

Incentives for foreign investors:

ESTABLISHED FOREIGN INVESTORS SUPPORT FOUND. In order to encourage foreign investors and

contribute to the predictable business environment the Council of Ministers established the Foreign

Investors Supports Fund in 2007 as a financial incentive for investors.

The Law on the Policy of Foreign Direct Investments of Bosnia and Herzegovina (Official Gazette of

BiH, 17/98, 13/03) ensures national treatment of foreign investors, i.e, foreign investors have the same

rights and obligations as residents of BiH.

327

Foreign investors are entitled to open accounts in any commercial bank in domestic and/or any

freely convertible currency on the territory of BiH.

Foreign investors are entitled to freely employ foreign nationals, subject to the labour and

immigration laws in BiH.

Foreign investors are protected against nationalisation, expropriation, requisition or measures

having similar effects; such measures may take place only in the public interest in accordance with the

applicable laws and regulations and against the payment of an appropriate compensation, i.e.

compensation that is adequate, effective and prompt.

Investment capital is exempt from paying import customs and customs duties (with the exception

of passenger cars, slot and gambling machines).

In order to enjoy this benefit, the foreign investor should submit a written request for exemption

from paying import duties to the competent customs authority (according to the place of seat of the

company) along with the following documents:

- contract or other relevant document about the investment on the basis of which the equipment is

being imported,

proof of registration of the investment at the competent authority,

- equipment of specification with tariff number, tariff mark (with quantity indication), single and total

value, certified by the investor,

- statement of the investor that the equipment is not older than 10 year age limit,

- certificate of the competent institution confirming that the imported equipment complies with the

environmental and employment protection standards.

The Customs Office issues a decision within 15 days upon submission of the request.

The rights and benefits of foreign investors granted and obligations imposed by the Law on the

Policy of Foreign Direct Investment (mentioned above) cannot be terminated or overruled by subsequent

laws and regulations. Should a subsequent law or regulation be more favourable to foreign investors, the

investor will have the right to choose the regime by which the investment will be regulated.

Foreign investors may own real estate in BiH. Foreign investors enjoy the same property rights in

respect to real estate as BiH citizens and legal entities.

Foreign investors are entitled to transfer abroad, freely and without delay, in convertible currency,

proceeds resulting from their investment in BiH.

328

Free trade zones in BiH are part of the customs territory of BiH and have status of legal entity.

According to the Law on Free Trade Zones, free trade zone founders may be one or more domestic and

foreign legal entities registered in BiH. The users of free zone do not pay VAT and import customs for

manufacturing equipment. Investment in the free zone, transfer of profit and transfer of investment are

free of charge. The free zone establishment is considered economically justified if the submitted feasibility

study and other evidence can prove that the value of goods exported from a free zone will exceed at least

50% of the total value of manufactured goods leaving the free zone within the period of 12 months.

Tax exemptions. The Federation Law on the Corporate Income Tax enables the taxpayer, who in the

year for which the corporate income tax is being determined, has achieved 30% of their total revenue by

export to be exempted from the tax payment for that year.

Taxpayer who in the period of five consequent years invests into production in the value of

minimum 20 million KM, on the territory of the Federation of Bosnia and Herzegovina, is being exempted

from the payment of corporate income tax for the period of five years beginning from the first investment

year, in which minimum four million KM must be invested.

If taxpayer from the above paragraph, in the time period of five years, does not achieve the

prescribed census for investment, they lose the right of tax exemption, and the unpaid corporate income

tax is being determined in accordance with the provisions of the Law on the Corporate Income Tax

augmented for penalty interest payable for untimely paid public revenues.

In the Federation of BiH, taxpayer who employs more than 50% of disabled persons and persons

with special needs longer than one year is being exempted from the payment of corporate income tax for

the year in which more than 50% disabled persons and persons with special needs were employed.

FDI insurance instruments in Bosnia and Herzegovina

Foreign investors concerned about risks of transfer restrictions, expropriation, war and civil

disturbances and denial of justice, can be insured against these risks with the European Union Investment

Guarantee Trust Fund for Bosnia and Herzegovina, administered by the Multilateral Investment Guarantee

Agency (MIGA, member of the World Bank Group).

BiH is eligible for assistance from the US Overseas Private Investment Corporation (OPIC), which

also provides political risk insurance for investors.

http://www.miga.org/index.cfm?aid=263

http://www.miga.org/index.cfm?aid=263

http://www.opic.gov/

329

Bosnia and Herzegovina have signed free trade agreements with Albania, Macedonia, Kosovo,

Serbia, Moldova, Montenegro and Croatia.

Bosnia and Herzegovina have Preferential Export Regimes with EU and several other countries.

According to the preferential export regime with the European Union, all goods of BiH origin that fulfill EU

technical-technological standards and conditions, can be imported to all 27 EU countries until the end of

2010 without any quantitative restriction and without paying customs and other similar duties.

BiH also has preferential regimes with USA, Australia, New Zealand, Switzerland, Norway, Russia,

Japan, Canada and Iran.

At the end, we can say that the amount of funds allocated for economic development needs at all

levels are fare from sufficient to satisfy economic development needs. For example, for industrial,

entrepreneurial, business zones development in the Federation of BiH only 3.000.000 KM is awarded for

these projects in 41 municipalities that cover only a small fraction of overall costs of industrial,

entrepreneurial zones development. Certain support comes from Cantonal funds that co-fund these

projects in their municipalities.

Business incubators are in the most cases struggling to cover its running costs, unable to offer

additional support services to startups and entrepreneurs. Most of them have certain financial support

from their host municipality, but it is in the most cases very limited. They are usually supported by

multilateral or bilateral donors through its economic development assistance.

FDI are mostly supported by Foreign Investments Promotion Agency – FIPA, that offers information

about conditions for investments in BiH and manage some instruments for investments attraction on the

national level. Unfortunately, FIPA cannot do this important task alone. It needs to be used by lower levels,

especially municipalities that in the most cases do not have enough understanding about importance of

local economic development, and possibilities that could arise from a proactive approach to investors.

Sufficient government funding will enable growth and development of BSOs and enable them to

support entrepreneurship and SME sector more effectively.

330


EU assistance for supporting SMEs has been realizing through economic development projects.

During the CARDS program, several projects have been realized. Projects that have been realized in the

CARDS framework are EU Quick Impact Facilities Project I and II (EU QIF) implemented by the CARE

International, EU Regional Economic Development I and II (EU RED) implemented by Eurecna consortium,

EU Training and Consultancy Project (EU TAC). All of them have had one of the goals to support

development of SMEs in Bosnia and Herzegovina. All are implemented by the foreign consulting companies

and provided training and consulting services to the SMEs as well as limited funding for its development

activities. Projects have also supported establishment of several business support organizations like

Association of Business Consultants in Bosnia and Herzegovina-LESPnet, Association for Capacity Building

and Development EU TAC, Business Incubators in Mostar and Sarajevo as well as 5 regional development

agencies (SERDA; NERDA; REZ; REDAH and ARDA). Estimated total value of these projects is 15 to 20 million

€.

From 2007, Instrument of Pre-Accession – IPA, has replaced former pre-accession instruments:

PHARE, CARDS, ISPA and SAPARD. 11 projects for support of micro, small and medium enterprises

(MSMEs) and development of tourism in Bosnia and Herzegovina is financed in 2010 by the EU through

Instrument of pre-accession assistance (IPA) in the amount of 3,8 million Euros thus helping the economic

growth as well as harmonization of standards in countries that are programme users with European

standard. Selected projects will also focus on creation and strengthening of tourism products in protected

eco zones, actions of networking among entrepreneurs, associations and local authorities in tourism sector.

IPA Component II – Cross Border Cooperation is also available for BiH. Under IPA – Component II,

BiH is participating in six Programmes: IPA Adriatic CBC Programme, three bilateral CBC programmes with

neighbouring countries: Croatia, Serbia and Montenegro and two trans-national programmes, the South-

East European Space (SEES) and the Mediterranean trans-national programme (MED).

The European Investment Bank (EIB), the European Union's long-term financing institution, is

lending EUR 30 million to Raiffeisen Bank Bosnia Herzegovina and to Raiffeisen Leasing. The funds will be

used to provide long-term financing for small and medium-sized enterprises (SMEs) and infrastructure

investments in Bosnia and Herzegovina.

331

The EIB global loan (line of credit) to the two subsidiaries of the Raiffeisen Zentral Bank Austria aims

at tackling the scarcity of funds for investment needed to sustain development and economic growth in the

country. With the funds stemming from the EIB, up to 50% of the eligible project cost may be financed. The

term for infrastructure projects is 15 years; loans for SMEs may go up to 12 years.

Raiffeisen Bank Bosnia Herzegovina will be able to respond to the long-term needs of small and

medium scale businesses that represent an important source of job creation, and of local authorities,

particularly of municipalities, which contribute to raising the living standards of the populations concerned

through investments in urban infrastructure. Raiffeisen Leasing will be in the position to support, in

particular, industrial SMEs contributing as well to develop leasing operations in the local financial market. .

Both financial institutions will be passing on to their clients the long-term benefits offered by the EIB.

Up to April 2005 the EIB has signed loan contracts totalling EUR 185 million for projects located in

Bosnia and Herzegovina. Four projects have been supported: roads, railways, electricity and a cement

factory. Towards the future the EIB aims at underpinning transport infrastructure, SMEs, urban

infrastructure and health.


Industrial/Business zones have been treated by several domestic institutions and BSOs. Regional

development agencies of Sarajevo Macro Region (SERDA) and Central BiH Region (REZ) have studies about

possibilities for development of the industrial business zones in their municipalities. Those studies have

clearly indentified all Brownfield’s and Greenfields and collect information’s about size, available

infrastructure, land prices and ownership status of the land and suggest steps for its development.

Federal Ministry of Development, Entrepreneurship and Crafts since 2005 has a line that financially

supports industrial business zone development. Initially those funds has been very limited and divided on

certain number of municipalities for creation of necessary planed documents and construction of needed

infrastructure. This fund growing every year and overall available funding for industrial zones development

in 2010 in the Federation of BiH was 3.000.000 KM.

332

Some cantons have funds for development of the industrial business zones and other business

support infrastructure like business incubators. From 2003 up to 2006 Canton Sarajevo have supported

development of industrial zones in municipalities Ilidža, Hadžidi and Vogošča with more than 2.000.000 KM.

EU didn’t support development of the industrial business zones in BiH so far. Several Business

incubators have been supported.

Under IPA 2009, EU announced plans to support development of the industrial zones through a

project called Support to Establishment and Strengthening of Business Infrastructure to Improve SME

Competitiveness. The project will provide technical assistance to generate economic growth and

employment by supporting the development of business zones. The assistance will establish and

strengthen business infrastructure to improve SME competiveness. The purpose and goal of establishing

business zones in this project is to encourage a more rapid development of entrepreneurship through

suitable and easier access to a physical space where entrepreneurs can conduct their businesses. Forecast

tender is already announced at the Delegation to European Union to BiH web site. It will be implemented

as a service contract with indicative budget of 1.5 million €. Publication of official procurement notice is

scheduled for June 2010. Unfortunately, funding for construction of industrial business zones infrastructure

(e.g. power supply installations, water supply and sewage, est.) isn’t planed. Expected date of the project

start is second half of 2011.


Business support organizations in Canton Sarajevo are consists of Chamber of Economy of Canton

Sarajevo, Sarajevo Economic Region Development Agency-SERDA, Business Support Centers of

municipalities Center and Novi Grad Sarajevo, Association of Business Consultants in BiH-LESPnet,

Association for Capacity Building and Development EU TAC and Foreign Trade Chamber of BiH.

Chamber of Economy of Canton Sarajevo during 2003 has been face with changes based on a Law

on modification and supplement of the Law on Chambers of Economy in the F B&H (Official Gazette 34/03)

that terminated obligatory membership in the Chambers of Commerce’s in FBiH. This change leaves

Chamber of Economy of Canton Sarajevo without many members and revenues, and forces them to

restructure entire business philosophy toward market oriented approach that should ensure sustainability.

As a result of these changes Chamber of Economy of Canton Sarajevo has developed set of commercial

333

services that has been offering to the its clients, private and public companies and organizations. Chamber

also offers education seminars in different areas like ISO, CE marking, finances, management, marketing

and whole range of business related issues. Beside education/capacity building program, Chamber is active

in field of connecting local businesses with counterparts from abroad. This activity is usually done in

cooperation with Foreign Chambers of Commerce through organization of B2B events in Sarajevo and

abroad. Chamber maintains relationship with Cantonal and local authorities and always attempt to support

and participate in planning and implementation of a Cantonal and local economic development activities.

Sarajevo Region Development Agency – SERDA is established in 2001. Various types of international

donors and development agencies has been supporting concept of regional development in Bosnia and

Herzegovina, and SERDA is one of five RDAs in Bosnia and Herzegovina that is heavily involved in all

regional economic development projects. SERDA offers several support services to SMEs and start ups. The

most important ones are Business Service Incubator and Credit Warranty Scheme. They are also very active

in the development of business infrastructures in 32 municipalities of Sarajevo Macroeconomic Region.

They have realized several studies related to development of industrial business zones, development of

rural areas, ecology and other. SERDA have been implemented project that have supported establishing of

Business Centers in municipalities of Sarajevo Macroeconomic Region.

SERDA is also heavily involved in capacity building of private and public sector. They have been

organizing education seminars and trainings for Cantonal and Municipality officers in area of PCM and

other related fields. They are organizing vocational seminars for unemployed persons as well as trainings

for startups and entrepreneurs.

Business Centers of municipalities Center Sarajevo and Novi Grad Sarajevo are funded through

municipal budget and implements municipal local economic development projects and provide services to

companies, crafts and entrepreneurs. Capacity building, vocational trainings and other different types of

education are provided by these Centers. They also assist startups and craftsmen through development of

business plans.

Association of Business Consultants in Bosnia and Herzegovina – LESPnet is established in 2001.

Association provides different types of services to its members, domestic management and business

consultants. Association is a good source of information about available consulting services offered by

334

members. Association has one employee and funding its activities through implementation of various

economic development project aimed at development of SME sector and business infrastructure.

General aims of The Association for Capacity Building and Development EU TAC activities are:

• To support to the initiatives leading towards economic and social development of communities,

business entities and institutions.

• Promotion of cooperation between local authorities and organizations of civil society with objective to

provide support to social and economical revitalization of communities in B&H, with special attention to

development of SMEs in general, tourism and rural development,

• To strengthen the role of civil society organization and business entities in the provision of support to

B&H and whole region in stabilization and EU accession processes.

Association is spinoff of the EU TAC project funded by European Delegation to Bosnia and

Herzegovina. EU TAC project train the trainers and establish association of trainers.

Foreign Trade Chamber of B&H is setup by Law about Foreign Trade Chamber. Membership is

obligatory for Bosnian private companies. The Chamber is a reliable source of information for domestic and

international partners, and provides a number of services (business and market information, information

on regulations and laws, advisory services, promotional activities, databases, etc). Foreign Trade Chamber

of BiH is a member of numerous international associations (Euro chambers, International Chamber of

Commerce-ICC, ABC, FIATA, IRU, SECI, GS1), which enables her to successfully participate in various projects

aimed at strengthening and improving regional and international business cooperation.

Table 3

Chamber of Economy of Sarajevo Canton

Address La Benovalencija 8, 71000 Sarajevo, Bosnia and Herzegovina


Legal Status Chamber of Commerce / Association

Years of activity Founded in 1909, pass through different organization settings over the life

period. From 1999 in this organization form.

Fields of activity 1. Representation of its members' interests in the authorized state bodies, especially in preparing economic legislation, in passing measures and mechanisms of economic system and economic policy and in determining macro development policy;

335

2. Provision of various services to its members (business information, expert advices presentations in the country and abroad, organized participation's in exhibitions, fairs etc.).

3. Organization of functional and permanent education in order to innovate knowledge of managing and expert persons in economy;

4. Mediation in solving disputes among its members, ensued due to the disregard of the business morale and good ethical standards;

5. Carrying out public jobs, including preparation for concluding collective agreements on salaries and other job conditions.

N. of employees 30



activities

Companies, MSME, Startups

Main activities addressed to SMEs 1. Provision of various services to its members (business information, expert advices presentations in the country and abroad, organized participation's in exhibitions, fairs etc.).



ups

1. Provision of various services to its members (business information, expert advices presentations in the country and abroad, organized participation's in exhibitions, fairs etc.).


Sources of funding Membership fees and income from provided services

SARAJEVO ECONOMIC REGION DEVELOPMENT AGENCY SERDA d.o.o. Sarajevo

Address Hamdije Cemerlica 2/11, 71000 Sarajevo, Bosnia and Herzegovina

E-mail Web: www.serda.ba; E-mail: serda@serda.

Legal Status

Years of activity

Fields of activity

N. of employees



activities



ups

Sources of funding

Association of Business Consultants in Bosnia and Herzegovina –LESPnet

http://www.serda.ba/


336

Address Dajanli Ibrahimbega 16, 71000 Sarajevo, BiH



Years of activity 9

Fields of activity Services, consulting services to companies

N. of employees 1

Competencies / skills Management consulting services


activities

Consulting companies from BiH as well as private companies and public

sector organizations.

Main activities addressed to SMEs Consulting services


ups

N/a

Sources of funding Revenue from consulting services and implemented projects


337

GENERAL CONCLUSIONS OF THE CONTEXT ANALYSIS

The context analysis carried out by the project partners have high-lightened the profound

differences between the involved territories in terms of economic structure, economic development level,

institutional framework governing development policies, legal framework, BSO’s framework. Thus, it turns

quite difficult to draw some general conclusions that would apply to all the partner territories. One feature

that seem common is the need for some structural change that has been further deepened by the ongoing

international economic crisis and increased business uncertainty. On one side there are territories that

have already reached a high level of development but need some structural adjustment to cope with the

growing competitive pressures on the international markets. In particular, SMEs needs to further build up

their innovation capacity, develop cooperation models between companies in order to approach global

markets, while institutions and BSOs need to coordinate policies and strengthen tech transfer. On the other

side there are territories that are mostly rural and need to foster entrepreneurship as well as territories

that after the transition process still have a poor score in SMEs development with a productive base still

highly reliant on low value added productions or dependant on few FDIs. Usually these territories also have

to bridge gaps in terms of institutional and BSO’s support capacity.

As far as the single territories is concerned, the Italian Regione Friuli Venezia Giulia has a

productive base formed by a large number of small and very small enterprises, that has been regarded as a

positive model of widespread entrepreneurship, typical for the so called Italian “North East”. This

widespread entrepreneurship model brought to the development of strong territorial specializations that

led to the development of a number of productive districts with hi tech productive bases and high quality

standards. The regional economy is strongly export oriented as exports nearly double imports.

Notwithstanding the listed positive features, the regional economy is undergoing a difficult

transition that can be just partially related to the recent international financial and economic crisis. In fact,

difficulties stems from structural problems that are mostly related to the main characteristic of the

enterpreneurial system: the average small dimension of enterprises. In particular, small dimensions hamper

companies’ internationalization processes, render difficult to finance their investments and to analyze their

competitive position on the markets. Small companies poor exporters. The largely positive trade balance

338

registered by the regional economy is thus mainly the result of the strong export flows of large and

medium companies. The high operational flexibility granted by the small dimensions that traditionally was a

cornerstone of their competitiveness is not supported by a strategic flexibility. Small companies are highly

dependent on big players in terms of turnover (single buyers) and in terms of technological platform as

usually small companies work as outsource for big players and technology is simply supplied them by the

latter. These dynamics result in a low demand for innovation and research by SMEs.

Although important national and international research centers based on the regional territory

form a relevant regional research potential, low level of private spending in R&S, scarce patents

applications and a constant deficit in the regional technology balance of payments clearly indicate that the

technology transfer process is still too weak. The weak tech-transfer is to be related to deficiencies of both

sides: a) the activities of research centers sometimes appear too distant from real SMEs needs; b)

enterprise’s demand for innovation and research is low as companies managed to foster their

competitiveness mainly through extreme product specialization and was to a lesser extent research based.

Nowadays this model is not suitable to cope with global competition and renders the SMEs particularly

vulnerable. Furthermore, the support measures displayed are mostly suited for medium and large

enterprises that have the internal human and capital resources to access programs and projects.

Althouhg the BSO network is well developed, and the policies set up by the regional administration

to address the different problems/weaknesses of the economic system are well designed and related to key

aspects, the results reached so far has been just partially satisfactory. In fact, the BSO’s system presents

weak coordination and integration among the different actors that usually embody different interests.

The foreseen pilot action to be developed in the nautic sector in Latisana seem to meet some of the

needs and factors just pointed out: it’s a joint initiative of several entrepreneurs that have envisaged that

individually they would not be able to cope with the evolution of their market, that they need a common

technical –market support facility to support their activity, and that this new facility would serve also as an

interface tool to interact with research entities and their support programs.

In the Italian Regione Umbria the main s strengths pointed out by the context analysis are as

follow: high capacity to attract people and qualified workforce, low unemployment rate compared to the

national average, high public spending for R&D, highly qualified human resources, higher than average use

of alternative energies, wide presence of protected natural portions of territory, high concentration of

natural, cultural and urban resources, high level of schooling of the workforce. On the weaknesses side the

analysis pointed out: the high incidence of population over 65 years of age, the low level of added value for

339

worker unit, the low infrastructure network, the low patent capacity, the low turnover coming from new

products, the low propensity towards science-based innovation, the concentration of Umbrian enterprises

in mature sectors, the low transport accessibility, the increase in long term unemployment.

Such a context presents therefore a general situation of structural fragility and difficulty to

transform innovative potential into productive aims. At the same time, the high level and skills of the

workforce and the extremely high participation of all social and economic stakeholders to the regional

policies processes, are the main features of an attractive territory, where favourable conditions have

increased the flows of people, capital, resources and investments.

In the course of the last years the region has faced a difficult economic situation, partly caused by

the difficulties at global level, but also due to the federal reform in Italy and the progressive limitation of

the traditional financial sources. In order to face this challenge and preserve a growth based on a network

system of cities and territories, on social cohesion, on environmental wellbeing and on the qualification and

enhancement of all territorial resources and potential, Region Umbria has chosen an integrated approach

that brings together all regional stakeholders into sharing all choices concerning regional programmes.

The macro-objectives that have been set by the Region Umbria in its action to support local

development are: providing support to strategic themes of research, innovation, strengthening of network

of enterprises in order to enhance competitiveness; support innovation processes, promotion of innovative

investments, strengthening of small-dimension enterprises through development projects and introduction

and enhancement of the use of information and communication technologies; promotion and support the

technological transfer towards companies and innovation processes related to organisation, management

and internationalisation; strengthening of financial structure of enterprises; meeting transversal objectives

of energy saving and environmental protection; improvement of the infrastructures.

In the Greek regions of Kavala and Drama the FATE project provided a good opportunity to open

and put forward the discussion concerning the stage of economic development, the nature and needs of

entrepreneurship, the use of new investment and the exploitation of the available land in the brown fields

that can be used for entrepreneurial purposes. This dialogue was carried out for the first time ever and the

FATE project was the catalyst for such an achievement. It was concluded that the final decisions on the use

of the old brown fields will have to be evaluated based on their: importance for the local society and

economy, and the feasibility or applicability of the solution proposed. In times of economic upheaval and

demand for increased fiscal restraint, it is natural to ask for shorter periods for the “Return on Investment.”

340

Engaging into long-term investment without any partial short-term gains may not be attractive to local or

national politicians or even the public opinion.

The main project results can be summarized as follows: adoption of recommendations on military

brownfields restructuring by regional administrations as programming tool for the spatial planning;

adoption of a common strategy to promote entrepreneurship and attract FDI; Urban/territorial planning for

and starting up of the creation of BI/BSCs with high technological and management standards;

recommendations to manage military brownfields property transfer process from central to local level;

durable partnerships, transnational network of BI/BSCs and transnational cooperation among productive

clusters

From the context analysis Drama and Kavala partners articulated a compact set of criteria for the

exploitation of former military camps with respect to two main decision variables: location and activities

housed.

As per the choice of location: they should be located near the city of Kavala and near the city of

Drama so as to achieve a faster economic impact and affect positively a large part of the population, it

should be preferably located near an underprivileged, neglected or degraded neighbourhood of the urban

web, so as to have a social impact through the upgrading of the local economy.

As per the choice of activities housed it is recommended to house a blend of activities as follows:

direct business opportunities in the fields of recreation, tourism, entertainment etc.; host grouped

commercial activities of prime business sectors of Drama so as to achieve economies of scale; facilities in

support to innovation and entrepreneurship for promising business sectors, primarily new technologies

related to Information and Communication Technologies (ICTs), organic agriculture, environmental

protection, renewable energy sources, and energy efficiency.

In the Hungarian West – Transdanubian Region the context pointed out that earlier traditional

sectors of the region - food industry, light industry, textile industry - have devaluated and lost their role

while engineering industry that has also age-old traditions stopped short after the collapse of the eastern

markets, then it renewed step by step owning to the inflow of multinational investments (Audi, Opel,

Flextronics, General Electric and so on).

The dynamic growth of the industry is based on the powerful export orientation that is

characteristic not only for the foreign enterprises settled in the region but also for the Hungarian

341

companies. Unfortunately, it is characteristic for one part of the foreign investments (for ex. electronics)

that they established an assembling activity with lower added value, as well as they were not able to

integrate into the economy of the region by developing Hungarian supplier chains. In fact, most of the

existing export oriented sectors rely on strong imports, and their production mainly consist in a low-tech

assembly based on less qualified labour force. At the beginning of the years 2000, disinvestments were

experienced in textile industry and in electronics concerning the activities with low added value that

produced a strong impact on the employment levels in certain small regions.

From the year 2000 some cluster initiatives were launched in the most important sectors of the

region, with the aim of promoting the cooperation and interaction of enterprises, to provide special

services and infrastructure for the most important sectors of the economy. Many projects were realised

developing the connection between the economic sphere and municipalities involved the brownfield

reconstructing. The whole surface of the 24 business parks in the region of West Pannonia exceeded 1300

hectares in 2005. The number of enterprises that settled in the region increases dynamically and more than

350 companies located here at the moment. Certain business parks are nearly completely full and therefore

other areas, for example the military brownfield areas, have to get involved into the development projects.

As far as the Slovenian partner is concerned, the context analysis of the Pomurje region confirms

that this is one of the less developed areas in Slovenia. In fact, the traditional structure of its economy is

based on agriculture and textiles, sectors that are facing huge difficulties. Regional development agency

Mura and the Pomurje technology park have been very active on the promotion of entrepreneurship in the

past 6 years. There has been some success but not enough to compensate negative economic

developments in this period. As the development of entrepreneurship is always connected to some specific

know-how of the entrepreneur, the regional education level is very concerning and does not allow a

booming entrepreneurial development. From another point of view, it does not allow the development of

high-tech activities on a larger scale.

The development of new types of business support services is for the Pomurje region crucial.

Economic development can be achieved by supporting 3 different areas of development: development of

existing companies through developing competence centers for most important economic sectors;

development of entrepreneurship offering risk capital funds, promoting entrepreneurship and offering very

342

active support in the development phase; attraction of investments in form of Greenfield and Brownfield

investments.

Another problem that has been stressed is that Slovenia has no regions that would have decision

power and budget to promote priorities for its development. The region is preparing a Regional

development programme, but mostly it comes down to the support of projects applying on national

tenders. The government of the Republic of Slovenia has adopted a law for Pomurje, which should

contribute to solving the present critical situation of the region. The law identified the following

competitive advantages of the region: Geothermal energy and renewable energies, Agrofood and rural

development and Tourism.

In the Osijecko – baranjska County’s context analysis the project partner pointed out the urgent

need for cooperative efforts on local level in strengthening competitiveness of the business sector and that

people in national politics in charge for regional development should make additional efforts in balancing

regional development and implement programs for improving business environment factors. In fact it

seems that the region hasn’t used its economic potentials (natural and human resources) to its advantage

so far. The measures which are supposed to enable better utilization of those potentials are not in the right

sense strategically and operationally designed.

To solve this problem it is necessary to create local strategies and operational programs which

would be composed of all kinds of supports in function of quicker and better development of those

potentials. Also, this ‘’New strategies and programs’’ needs to focus more on the key sectors of the

County’s Economy in order to create more working places for young educated people. Therefore it is

necessary to invest in education on all levels, but this is only the beginning. Those educated people would

need a place to work and grow their potentials. In order to achieve that it is necessary to focus and

specialise in key sectors of economy such as Agriculture, Food and Beverage Production, Wood Industry

and Rural Tourism.

In Agriculture, one of the recommendations is investment in Organic Production which has a great

export potential but it is still in the early phase of development. Joining in cooperatives or clusters will

strengthen agricultural producer’s influence on the market in both ways, negotiation power with suppliers

and with distributors.

343

Many sectors export row material or semi-finished products instead of final products. Several row

materials that are exported come back as imports of final products. Therefore, it is essential to raise the

level of finalization through investments in machinery and production. This can be ensured through direct

investments, credits, loans, finding business partners, EU founds, grants.

Regarding to the emerging new sector of Rural Tourism which is developing rapidly, this sector still

did not yield the expected results despite the fact that institutions on national and regional level offer all

kinds of different development projects and incentive programs.

Not all the business support institutions covered in the context analysis (public institutions, local

and regional government bodies, business incubators, technology development centres, centres for

entrepreneurship) are recognized in their business environment or even effective enough in achieving their

main goals. In the development of a competitive economic environment it is essential to align all the

development strategies, supporting operating programs, action plans and identify organizations

responsible for carrying out these activities which will raise the overall economic activity based on using all

productive resources and comparative advantages in relation to other participants at the local, national and

international markets.

The Romanian partner CDCAS Caras Severin has developed their context analysis at national level

with a special focus on urbanism issues. As the EU’s economic recovery package explicitly recognizes that

the future creation of long term and sustainable jobs will increasingly depend upon the ability to mobilize

the innovative and creative capacity of all its citizens, there are a series of functions that urban

practitioners in institutions/ organisations concerned with urban issues together with local universities can

fulfill to encourage four main processes for SMEs: 1)creating new industries – forefront science and

engineering research; aggressive technologies licensing policies; promote/assist entrepreneurial business;

cultivate ties between academic researchers and local entrepreneurs; creating an industry identity; 2)

industry transplantation; 3)diversification of old industry into related new sectors (set-up bridges between

disconnected SME actors; filling structural holes); 4) the upgrading of mature industry (problem solving for

industry through contract research, consulting, etc.; education/manpower development; global best

practices scanning; convening foresight exercises; convening user supplier forums).

The FATE project will provide a fund of experience for cities where there are supplementary

resources for SME activities which can be put in practice by local public institutions because them sustain

long term option for the future of cities. It is necessary, at least, to follow two broad aims: to highlight the

344

distinctive features which are particularly relevant for policy makers, SME and urban practitioners in

institutions/organisations concerned with urban issues; secondly, to identify the common elements this

might become the focus for further joint work for similar context.

The context analysis by SMER on the AP of Vojvodina finds that it is quite difficult to draw a

comprehensive picture of the regional economy due to the lack of some statistical data. However,

disposable data show that in the period 2004-2008 the recovery of economic activities in Vojvodina

throughout the period is very slow. The regional economy registered a slight increase of economic

activities, stagnation of employment, and a decrease of unemployment. Industrial production showed

some progress, while import and export of goods were steadily growing, though showing strong imbalances

in favour of imports. The percentage of employment in SME sector was growing throughout the period,

while SME employment in agriculture and industry was decreasing, and slightly increasing in services

sector. Main trade partners in imports are Russia, Germany and Italy, while for exports Bosnia Herzegovina,

Germany and Italy. Both in imports and exports are dominating materials for processing.

The transition and privatization processes are still incomplete. Any sectoral conclusion would be

difficult to draw. As far as the existence of regional institutions for the support to economic development is

concerned, it can be stated that they have been developed, throughout the needed aspects of economic

development. However, there were not at disposition parameters to evaluate economic impact or results

of their activities. There are regional development plans, particular programs and projects implemented

that contribute to regional economic development. However it is not easy to assess how these efforts

fostered by EU programs supporting pre-accession, Government of Vojvodina specific policies, as well as

National developmental institutions and policies were mutually accorded and benefited from synergies

effects.

The context analysis developed by SERDA for the Sarajevo Canton highlight that the economy is

still struggling to recover and suffer from structural deficiencies.

In a Sarajevo Canton there are 10 perspective and 29 non perspective military locations. Out of 29

non perspective locations, 4 are temporary needed to Army Forces. These 4 locations will be handover to

civil authorities in certain period of time. 3 locations are ready for handover to civil authorities. 16 locations

are already handover to certain levels of civil authorities and some of them are used by BiH Court.

345

Municipalities show an interest in these location and some of them already create project for future

economic development use of these sites.

Most of the existing industrial business zones in Canton Sarajevo still offer sites for interested

investors. Brownfield’s are mostly privatized by local companies and private investors, but they in the most

cases do not use these for business activities. Most industrial business zones does not have management

infrastructure that should provide information about available business facilities, so interested investor

needs to investigate what is available, who is the owner and other.

New fully equipped industrial business zones (ready to investment) in Canton Sarajevo are needed

together with organization that will manage and promote those new zones.

Support for a start ups are available through business incubators and business centers. According to

the Strategy for Development of the Business Incubators in BiH for 2010/2011, business incubators manage

27.000 m2 of business space. Since 2001, more than 230 companies have been used services of business

incubators (or still using) with around 1.100 employees. There are 12 registered business incubators in BiH.

The amount of funds allocated for economic development needs at all levels are fare from

sufficient to satisfy economic development needs. Business incubators are in the most cases struggling to

cover its running costs, unable to offer additional support services to startups and entrepreneurs. Most of

them have certain financial support from their host municipality, but it is in the most cases very limited.

They are usually supported by multilateral or bilateral donors through its economic development

assistance.

Documents

Analysis+of+economic%2C+policy%2C+and+business+support+framework+in+partner+regions