Other
DOCTORAL DISSERTATION SUMMARY: MODEL OF LOCAL ECONOMIC DEVELOPMENT IN FUNCTION OF OPTIMAL UTILIZATION OF RESOURCES
Maša Trinajstić
; University of Rijeka Faculty of Tourism and Hospitality Management, Croatia
Abstract
Purpose
Local economic development (LED) can be defined as a process in which partners in the
public, business and non-government sectors work together to create better conditions
for economic growth and job creation. The LED concept is derived from the bottom-up
management model, created in response to the traditional top-down model which has
failed to resolve many negative regional and local processes and to reduce differences
with regard to under-development. LED assumes that the local self-government, private
sector and local residents have a much greater awareness of their own needs, strengths
and opportunities, and are able to exploit local resources in the best possible way, thus
contributing to the creation of new jobs and an encouraging entrepreneurial environment,
ultimately leading to improved quality of life for everyone. It is important to note that the
LED process calls for good communication, the active participation of and collaboration
among stakeholders, and a clear LED strategy and policy. Interest in local economic
development has grown in recent years. The adoption of the Law on Local and Regional
Self-government in 2001 has broadened the sphere of action of towns and municipalities,
enabling them to become increasingly more involved in the LED process.
Despite numerous researches and studies, the implementation of the LED process
has remained a current problem in most towns and municipalities of the Republic of
Croatia. Poor knowledge and insufficient understanding of the concept of local economic
development, inadequate strategic planning and lack of financial resources are present in
a large number of towns and municipalities. Therefore, the main objective of this doctoral dissertation is to put forward a model
and guidelines to ensure the successful implementation of local economic development
in the towns and municipalities of the Republic of Croatia. Special attention will be
given to the role of local self-government in this model. In some cases, the local selfgovernment fails to engage sufficiently, when it should take on a leading role and become
a coordinator of economic development. The purpose of research is to enable a broader
and in-depth understanding of the key elements of the LED process, analyse the economic
performance of towns and municipalities, and study the application and implementation
of the LED process in towns and municipalities.
Methodology
The empirical part of the dissertation focuses on the analysis of secondary and primary
data. The secondary data were collected from the official websites of the Central Bureau
of Statistics, the Ministry of Finance, and the Centre for Local Economic Development
of the Faculty of Economics, University of Rijeka (CLER). Secondary data analysis was
used to examine the differences in the economic performance of towns and municipalities
with regard to size, the county to which they belong and the broader geographical regions
in which they are located (budget analysis), and to assess the effect of educational level
on economic performance. The period from 2002 to 2018 was observed.
Primary data were collected using the survey method. To determine the content validity
and clarity of the questionnaire, a pilot study was conducted before the main research.
The main research was conducted from October 2019 to the end of May 2020. The
open-source application 1ka (http://www.1ka.si/) was used to create the questionnaire
and conduct the research. The research sample included 131 cities and municipalities. To
investigate LED activities and implementation, the mayors of the towns and municipalities
were surveyed. The analysis of local economic development includes four constructs:
responsibility towards LED, LED planning, LED operation and LED funding.
The collected data were processed using the statistical program Stata 14.2 and analysed
by descriptive and bivariate (Mann-Whitney, Kruskal-Wallis, Spearman’s correlation
coefficient, Chi-square test, logistic regression) nonparametric statistical methods.
Findings
The research results revealed a statistically significant difference in the economic
performance of towns and municipalities with regard to size, the county they belong
to, and the broader geographical region in which they are located. In terms of size, the
analysis showed that the share of tax revenues in operating income is lower in small
towns and municipalities than in medium-sized towns (this share averages 43% for small
towns and municipalities, and 50% for medium-sized ones), while the opposite applies
to the share of state subsidies in operating income (the average share is 16% in small
towns and municipalities, and 10% in medium-sized ones). The analysis also showed
that there is a difference in the maximum change in total revenues and receipts between
small and large towns, which in large towns means a certain constant in business and
efficient budget management, and in small towns and municipalities implies business
fluctuations. Furthermore, regarding counties, it was confirmed that there are statistically significant differences between the counties of Continental and Adriatic Croatia. Towns
and municipalities in Brod-Posavina and Osijek-Baranja counties as well as SplitDalmatia and Šibenik-Knin counties have a higher share of state subsidies in operating
income than do other counties (this share is 18-22% on average). The largest maximum
change in total revenues and receipts compared with the base year was recorded in
Dubrovnik-Neretva, Brod-Posavina and Požega-Slavonia counties, i.e., total revenues
and receipts increased two to three times more than in other counties in the observed
period. With regard to the region, it was found that the minimum change in total revenues
and receipts is higher in Adriatic Croatia than in Continental Croatia.
A statistically significant relationship was also established between the economic
performance of towns and municipalities and the educational structure of their inhabitants.
A moderately strong positive relationship was confirmed between the variables “share of
tax revenue in operating income” and “share of population with a university degree”, and
a moderately strong negative relationship between the variables “share of revenue from
state subsidies in operating income” and “share of population with a university degree”.
It can be concluded that a region with a higher share of tax revenues also has a higher
share of highly-educated inhabitants, while the share of highly educated inhabitants
decreases with the increase of the share of state subsidies in operating income.
Analysis of local economic development showed that the LED process is being
implemented by the analysed towns and municipalities but to varying degrees of
success. A statistically significant difference was partially confirmed between economic
performance indicators and responsibility towards LED. Almost half of the respondents
(48.09%) believe that local self-governments have neither the leading role nor the
primary responsibility for the economic development of their towns or municipalities.
With regard to LED planning, analysis showed that most towns and municipalities
(93.89%) possess a development strategy. In the group of towns and municipalities
that have a development strategy, it was found that 66.67% use resources in an optimal
way and 33.33% do not, while in the group that does not have a development strategy,
75% of towns and municipalities do not use resources in an optimal way, and only 25%
do. Furthermore, it was established that towns and municipalities participate to a high
level in strengthening the economy. They are mostly involved in creating a positive
business climate as well as supporting small and medium-sized enterprises. In addition,
a large number of towns and municipalities seek to strengthen the economy through the
development of tourism. Improving the quality of life of inhabitants, creating new jobs
and retaining the population in the town or municipality have been identified as the main
goals of economic development. With regard to LED funding, analysis showed there is
a statistically significant difference between economic performance indicators and LED
funding, that is, towns and municipalities that have earmarked funds in their budgets
for LED activities are making greater efforts to increase overall revenue and receipts,
relative to those towns and municipalities that do not.
Ultimately, the main hypothesis was confirmed, namely LED contributes to enhancing
the quality of life of the population, increasing the level of development, and ensuring
the optimal use of resources. Based on the analysed data and confirmed research hypotheses, a model for the successful
implementation of local economic development in the towns and municipalities of the
Republic of Croatia has been proposed.
Originality of the research
The scientific contribution of this doctoral dissertation manifests itself in the study of
local economic development, a development concept that has emerged in recent years and
in which towns and municipalities have an increasingly greater role and responsibility
for driving their own development.
The theoretical contribution of this dissertation is in the analysis and systematization
of the theoretical features of local economic development, local self-government and
the importance of resources in implementing the LED process. The contribution is also
evident in the analysis of the institutional framework where the concept of development
organizations at the local level in the towns and municipalities of the Republic of Croatia
is presented. Moreover, the contribution is reflected in the analysis of performance
indicators and various aspects of monitoring and evaluation of achieved results and
effects in the area of towns and municipalities. It was found that there is no standard set
of local economic development indicators used by all cities, and due to the complexity
and multidimensionality of the LED process, different indicators or groups of indicators
are used in practice.
The empirical research contributes by providing new and clearer insights into the
implementation of the LED process in towns and municipalities in the Republic of
Croatia, and into the problems and obstacles the LED process encounters. It is also
pointed out that a large number of towns and municipalities (local self-governments) do
not feel responsible for the LED process. In this sense, this research provides a better
understanding of the LED concept, which requires the involvement, active participation
and cooperation of all stakeholders, especially local self-government. An important
finding is that the economic performance of towns and municipalities is linked to the
implementation of the LED process, in particular in large towns, and that strategic
development planning is vital for the optimal use of resources. Based on the analysed
data, a model was proposed for successful LED implementation.
Keywords
local economic development; resources; inhabitants’ quality of life; development strategy; towns and municipalities in the Republic of Croatia
Hrčak ID:
269574
URI
Publication date:
4.10.2021.
Visits: 656 *