An initial attempt to implement the OECD criteria for rural and urban area in BiH was described in a document called BiH Strategic Plan for Harmonization of Agriculture, Food and Rural Development 2008-2011. Document was produced during the EU SESMARD project aiming to provide support for the establishment of the state level Ministry of Agriculture and Rural Development. Document stated that BiH is one of the most rural countries in Europe. According to OECD methodology regions with less than 150 inh.per km2 are classified as rural. For BiH this results in 81% of the overall land and 61% of the overall population being rural.
Rural areas in B&H are characterized by their mountainous nature with 66% of the total land area considered to be mountainous or hilly. Unsurprisingly, high mountainous and hilly areas are largely covered by forests of which there are approximately 2.7 million hectares in B&H. Arable land is confined to northern areas though very small parcels are also found on river valley floors. Shrubs predominate in the southwest where the land is hilly and precipitation very high. There are some high pasture areas in the western region. Analysis indicates that there is a significant area of abandoned land in the north of B&H. This land is predominantly low-lying and fertile. However, the continued presence of land mines and unexploded ordnance prevents the land being returned to productive agriculture. Pollution from the River Sava also negatively impacts on the agricultural productivity of this region. The challenging physical geography of the country has a significant impact on the distribution of economic activities and population and the location of transportation and communications infrastructure, much of which is confined to the river valleys that bisect the country (Strategic Plan for Harmonization).
Rural economy in BiH is dominated by agricultural activities which, as a rule, depends on agriculture, except for some areas that tend to be transformed into suburban areas. However, the rural economy is never just agriculture. It is a network of economic activity covered villages, settlements, and can include both cities (Mirjanic et all, 2009). Thus, the development of rural areas can not be based solely on agriculture, while the diversification of business activities within and outside agriculture is essential to create economically sustainable and viable rural communities. Competitiveness of the manufacturing sector should be the main objective of rural development policy, taking into account the diversity of agricultural potential in some rural areas. Sustainable economic development of the agricultural sector has a future diversification of activities, introducing innovations and products with added value required by the market (Mirjanic et all, 2009).
B & H does not have a common policy for rural development. Objectives of Agriculture and Rural Development are defined by the Law at the state level, but the policies in this area are implemented at the level of entities and Brcko District within their legal, institutional and strategic framework. The process of harmonization of RD policy at all government levels is in progress.
An analysis of the legal and institutional framework shows that the rural development support policy measures mainly fall within the mandate of the three Entities and, to a certain degree within the mandate of Cantons – in the Federation of BiH and municipalities – in RS. Due to a need to align policies with EU standards, a harmonization process was initiated at the state level and the BiH Strategic Plan for Harmonization of Agriculture, Food and Rural Development (2008-2010) was adopted. Strategic documents defining the policy framework in different Entities include: Republika Srpska Strategic Plan for Rural Development and Mid-term Agricultural Sector Development Strategy (2006-2010) in FBiH, while DB has never adopted its Strategic plan for Rural Development.
The BiH Ministry of Foreign Trade and Economic Relations is a competent authority at the level of BiH in charge of issues related to rural areas. This Ministry, via its Sector for Agriculture, Food and Rural Development is in charge of formulation, coordination and harmonization of agriculture and rural development related policies. In RS and FBiH, entity Ministries of Agriculture, Forestry and Water Management and Department for Agriculture in DB, are a competent authority in charge of issues related to integrated rural development.
By comparing the structure of support for rural development at the entity level in Bosnia and the EU framework for supporting rural development, significant differences can be noticed. While most existing measures of support in BiH can be linked with the EU type of measures, analysis of budget expenditures for rural development indicates a dominant share of Axis I (improving competitiveness) in total budget, while the allocation of funds for the Axis II (support to sustainable use of resources) is negligible at the level of all three entities. Support to Axis 3 (improving quality of life and diversification of activities) is not identified in RD program at Brcko District; at the other two entities Axis 3 measures are well present in the Program structure, but funds for this Axis go primarily for investment in rural infrastructure. Also at the entity RS and FBiH there is at least one measure of support to local development initiatives or LAG, but the level of utilization of this type of support is very small compared with other measures of support.
This only confirms the fact that the in the pre-accession process it is not enough only to align types of support for rural development with the EU framework, but perhaps more important is to provide mechanisms for the successful implementation of the approach for rural development recommended by the EU policy. Program approach oriented towards beneficiaries and with the integration of all stakeholders of the importance for rural development is clearly missing in the RD policies in BiH (Rokvic, 2012).