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The inquiry into the economic life of Croatian municipalities

Author

Listed:
  • Ivana Rasic Bakaric

    (Institute of Economics Zagreb, Croatia)

  • Hrvoje Simovic

    (University of Zagreb, Faculty of Economics & Business, Zagreb, Croatia)

  • Maruska Vizek

    (Institute of Economics Zagreb, Croatia)

Abstract

The aim of this paper is to analyze the main determinants of the economic life in Croatian municipalities. For that purpose, we collected data related to the municipal budgets and business results of entrepreneurs registered in 427 municipalities during 2007-2011 period. In order to determine and study the variations in municipal economic outcomes related to the size of municipalities, their administrative status (municipalities belonging to the areas of state national concern, hill and mountain areas, and island areas), their geographic location and dominant political party in the municipality, we apply multivariate statistics methods (Levene’s test of variance homogeneity, ANOVA, and Sheffe post-hoc test). The results suggest that size of the municipalities explains the variation related to municipal fiscal capacity and average net earnings of inhabitants living in municipalities. The political affiliation of a mayor is related to the differences in the relative amount of aid granted from the central government budget, fiscal capacity and indebtness, while the differences in administrative status of municipalities account for discrepancies observed in employment, average net earnings, indebtedness, central government aid, and expenditures for social protection. The basic conclusion of research is that Croatian municipalities differ significantly in the majority of the analyzed economic determinants and that current administrative status should be subject to the general local government reform, not only in special status and number of local units but also in fiscal equalization process.

Suggested Citation

  • Ivana Rasic Bakaric & Hrvoje Simovic & Maruska Vizek, 2014. "The inquiry into the economic life of Croatian municipalities," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 32(2), pages 285-312.
    • Handle: RePEc:rfe:zbefri:v:32:y:2014:i:2:p:285-312
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    References listed on IDEAS

    as
    1. Ivana Rašić Bakarić & Hrvoje Šimović & Maruška Vizek, 2013. "Ekonomska uspješnost gradova u Hrvatskoj - statistička analiza," EFZG Working Papers Series 1308, Faculty of Economics and Business, University of Zagreb.
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    More about this item

    Keywords

    municipalities; local government; variance analysis; entrepreneurship;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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