The Municipality of Arilje is among the first communities in Serbia to resolutely launch an initiative to design and implement a local economic development strategy based on modern principles of citizen participation and economic development.

For many years Arilje has enjoyed the reputation of a prosperous and attractive community, known for its entrepreneurial spirit. Arilje citizens, however, recognize that there is always room for progress. Therefore, a team of business, community, civil society, and municipal experts was created to assess the economic situation and to analyze economic, social and institutional factors that frame the potential for economic development. The data collected and analyzed was summarized through an analysis of Strengths, Weaknesses, Opportunities, and Threats (SWOT), which, in turn, laid the foundation for the local economic development strategy summarized herein. This plan is presented for consideration by businesses, investment partners, and the domestic and international donor community.

The strategy was prepared with technical assistance of International Relief and Development. It follows closely the World Bank’s “Cities of Change” methodology. The strategy offers guidelines for policy makers for the period 2006 – 2015 and is underlined by a vision that was crafted jointly by the principal stakeholders – municipal authorities, business people, and engaged citizens of civil society.

Arilje’s vision for the future is the following:

“Arilje is a community of vigorous and diligent citizens committed to preserving the natural environment. Our entrepreneurial spirit attracts knowledge and capital to this regional leader of economic development.”

This summary is a succinct description of current socioeconomic conditions, Arilje’s competitive advantages, and the main obstacles the municipality must overcome to realize economic growth. The plan identifies a set of projects to meet our goals for economic growth and improvement in order to enhance the quality of life for Arilje citizens. Arilje will implement this strategy in the months and years ahead, and seeks to enlist the cooperation of business partners, investors, and donors.

History and Geography

The history of Arilje dates back to 1219 when St. Sava declared the Arilje Monastery as the center of the Morava Episcopy. In addition to several preserved and sacred medieval sites, the oldest civic building standing to this day is the mansion of Colonel Jovan Micić, built in 1823.

King Milan Obrenović declared Arilje a municipality in 1882. It is located in Western Serbia in the catchment basins of the rivers of Moravica, Veliki Rzav, and Mali Rzav. The entire municipality covers 349km 2. This is a highland-mountainous area with altitude ranging from 330 to 1,382 meters above sea level. The climate has moderately continental temperatures with four distinct seasons. The municipality is 200km from Belgrade, Serbia’s capital.

Labor Market

According to the 2002 census, the population of Arilje Municipality is 19,784. The average population density is 56.6 inhabitants per km 2. Surveys and interviews conducted reveal that the professional education and training of the labor force does not optimally match the demand profile of many employers. However, Arilje’s entrepreneurial spirit, education, and training programs will meet future demands for human resources.

In recent years Arilje has experienced employment growth in the sectors of processing, production of energy, gas and water, as well as in the public sector. Employment has decreased in agriculture, the construction industry, trade, and catering.

The number of unemployed persons in the municipality is high: 2,052, or 104 per 1,000 residents. This is, however, below the average of the Republic and the county. Most of the unemployed are non-skilled workers (37.2 %). The number of the unemployed with the third level of professional qualifications is 30.4 %, and of those having the fourth and the fifth level is 28.8%, whereas the number of the unemployed having two-year post-secondary school qualifications or university qualifications is 3.5%. Note: Raspberries, a labor-intensive crop, has a high impact on local, seasonal employment. Raspberries involve both the rural and urban population during harvest. In addition to agriculture and food production, p rofessions that a re characteristic for Arilje are economics, mechanical engineering and textiles.

Agriculture

Arilje is blessed with rich and plentiful agricultural lands (ca 20,000 hectares). Large tracts of land allow for cost-efficient growing of fruit, forage crops, and potatoes. Somewhat smaller areas are suitable for corn, stubble grains, and vegetables.

Fruit growing is the most developed branch of agriculture. Arilje is famous for its raspberries and related products. Raspberries generate a high net income and earn foreign currency. The high quality raspberries are grown mainly in small family plantations (0.30 hectares on average), but rely still on manual harvest. As a labor-intensive crop, raspberries have a great impact on employment. Laying the groundwork for new, more productive varieties, harvesting, and processing will be a major challenge for local growers. Other profitable agricultural products in growing demand on world markets are berries, stone fruit, sheep and goat meat, and trout. Economically, raspberries are prominent, involving approximately 1,200 – 1,500 hectares and production of approximately 15,000 tons per year. Raspberries generate a high net income in foreign currency, which makes this production one of the most profitable for the municipality.

Small Enterprise Development and Exports

Arilje’s entrepreneurial spirit is visible in the business energy displayed within the small private workshops that emerged following the demise of the large socially-owned firms that dominated during the times of national socialist planning. These workshops are important sources of employment. They have grown into small private companies and absorbed much of the labor force left jobless when the large, socially-owned firms failed. In fact, Arilje has evolved into a leader of SME development in Western Serbia. The number of registered shops in the municipality is 1,103, while the number ofcompanies is 213. This is considerably above the average of the Republic and the county, since there are almost 56 shops per 1,000 residents, compared to 31 on average in Serbia. M ost of the companies are registered in industry, trade and agriculture. Most of the shops are registered as artisans, personal services, trade, construction, transport, communications, and catering.

Per capita income in Arilje is Euros 1,680, slightly above that of adjacent municipalities. The national average is Euros 1,650 (2003 data).

Arilje has considerable export potential. In the first eleven months of 2003 the area’s economy generated foreign trade worth $33.6 million, of which $21.9 million was through exports and $11.7 million through imports. Trade with EU countries accounts for 66% of the total foreign trade.

Arilje exports the following products: agricultural products (69% of total exports), products of mechanical engineering and metalworking industry (14% of total exports), and textiles (10.6% of total exports). The following are the predominant imports: electrical machines, equipment and parts (42%), boilers, machines and devices (12%) wood and products of wood (9%).

Infrastructure

Arilje is linked to the rest of Serbia only by roads. Some of these roads need repair and expansion to move goods more efficiently. The supply of electricity covers 100% of households. There are enough quantities of quality water in utilized water sources, but the water distribution is a challenge. The sewage systemis deficient, only 36% of households are connected to the sewage network. The municipality must improve these basic services, particularly given the importance of optimal water supply for agriculture.

Environment

Arilje has no polluting industries; therefore, the ecological standards generally meet the technical requirements of European Union markets. While in general water quality is high, Arilje has problems due to lack of a waste water treatment plant and underdeveloped sewage infrastructure.

Given the importance of the food production, special attention is paid to the quality of soil, particularly in the intensively cultivated areas. The municipality monitors the level of pollution due to the accumulation of agents and substances used in agriculture (pesticides and fertilizers).