engleski

Intergovernmental Fiscal Relations in Croatia and their Impact on Local Economic Development

The paper analyzes the system of local public finance and intergovernmental fiscal relations in Croatia, with a view to assessing the strengths and weaknesses of this system and identifying possible approaches to fiscal decentralization. Decentralization process is considered crucial to enable local government units to manage their development. The paper first provides an overview of the Croatian system of local government. Next, the basic structure of the present system of intergovernmental finances (assignment of policy functions, expenditure responsibilities and revenue sources, the grant system and local borrowing) is analyzed. The following section summarizes the problems of local public finance, reviews government reform initiatives and elaborates on the need for further fiscal decentralization on the basis of empirical evidence on the size and growth of the public sector in Croatia. The paper concludes with an outline of possible approaches to fiscal decentralization. The performance of central government to implement decentralization reforms and the performance of local government to manage development in the decentralized environment is highly dependent to the quality of governance at national and local level.

local and regional self-government; local public finance; intergovernmental fiscal relations; local and regional economic development

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