Recommendations for regional policy: the Croatian case

The regional differences in entrepreneurial activity are only one manifestation of the large regional differences in Croatia. From this it is obvious that Croatia needs regional policy as a part of its overall development policy. Contemporary regional policy gives strategic importance to industrial restructuring and other structural adjustments in regions that lag in development. However, it is not limited to relatively undeveloped regions, since rich regions can create demand that can “pull” growth in relatively less developed regions. A limitation on the implementation of modern regional policy in Croatia is the inherited doctrine of the reconstruction of war affected areas. This doctrine is no longer appropriate to the needs of new regional policy, which must be formulated in the context of EU accession. This is especially important considering that the EU emphasizes that member states must be in a position to withstand competitive pressures in the single market as a key condition for accession. And regional policy has a special role in this. The next limitation lies in the strong sectoral rather than integral approach. This is best seen in the many uncoordinated actions of various ministries and other government bodies. Furthermore, the legal framework is highly compartmentalized, so that Croatia does not have a single legal act that systematically regulates regional development on the whole territory of Croatia. Finally, the greatest limitation lies in the low level of ability of public administration, which is particular deficient in regional planning, programming and evaluating the implementation of development programs. These problems can be overcome through the following four goals of regional policy, which will be as recommendations discussed in the paper: • Reach national cohesion and sustainable development of local and regional communities. • Develop human resources with the aim of maintaining the population by opening prospects for work and employment. • Preserve urban, rural and littoral space, value it and using it optimally • Develop competitive, restructured sectors with special emphasis on the development of small and medium enterprises and the entrepreneurial environment.

Role of small and medium sized enterprises in the regional development of Croatia

The paper will reflect upon the crucial role of small and medium sized enterprises (SME's) in Croatia's local and regional development, particulary in circumstances when the Croatian counties (regions) are simultaneously faced with problems related to post-war reconstruction, economic transition, industrial restructuring and future development. The paper will point out the main goals related to the development of the SME sector in Croatia as well as the importance of their development for particular categories of regions (counties affected by the war, border regions, industrial decline regions, etc.). The basic problems and needs of the entrepreneurs in these regions will be considered (on the basis of in depth surveys and interviews which are carried out in pilot regions). Furtherrmore, the paper will provide a survey of proposed policy measures aiming to encurage the start-up of new small firms, as well as further development of the already existing innovative industrial small firms - thus contributing to regional restructuring and development of Croatia's "problem regions".

The Role of the Government in Supporting SME Development in Croatia

The article focuses on the specific role of Government in the transition process with special emphasis on the policy towards the small and medium-sized enterprises (SME), as well as regional development in Croatia. Authors point out to the specifics of transitional countries, noting that the role of the Government in such circumstances should be more supportive regarding stimulation of the SME development by way of supporting the development of the economic support infrastructure. Further, the reasons for a more active role of the Government regarding SME development policy are discussed and specific policy recommendations are offered

The Role of the Government in Supporting SME Development in Croatia

The article focuses on the specific role of Government in the transition process with special emphasis on the policy towards the small and medium-sized enterprises (SME), as well as regional development in Croatia. Authors point out to the specifics of transitional countries, noting that the role of the Government in such circumstances should be more supportive regarding stimulation of the SME development by way of supporting the development of the economic support infrastructure. Further, the reasons for a more active role of the Government regarding SME development policy are discussed and specific policy recommendations are offered

Regional development assessment using parametric and non-parametric ranking methods: A comparative analysis of Slovenia and Croatia

In this paper we describe several regional development-assessment methods and subsequently apply them in a comparative development level analysis of the Slovenian and Croatian municipalities. The aim is to compare performance and suitability of several parametric and non-parametric ranking methods and to develop a suitable multivariate methodological framework for distinguishing development level of particular territorial units. However, the usefulness and appropriateness of various multivariate techniques for regional development assessment is generally questionable and there is no clear consensus about how to carry out such analysis. Two main methodological approaches are based on parametric and non-parametric methods, where in the former an explicit econometric model containing theory-implied causal and possibly simultaneous relationships is estimated using likelihood-based methods and formally assessed in terms of the goodness of fit and other test statistics, subsequently allowing for estimation of the development level on a metric scale, while in the later, territorial units or regions are essentially classified into clusters or groups differing in the development level, but no formal inferential methods are applied to confirm the validity of the model, or to establish the difference in the development level on a metric scale. The possible advantages of the first approach are in the existence of formal testing and evaluation procedures, as well as in producing interval ranks of the analysed units, while its disadvantages are in the lack of robustness; often unrealistic distributional assumptions; and possible invalidity of the theoretically implied causal relationships. In this paper we consider a parametric, inferential approach based on maximum likelihood estimation of the linear structural equation model with latent variables for metric-scale development ranking, and a non-parametric approach based on cluster analysis for development grouping. Our analysis is based on ten regional development variables such as income per capita, population density, age index, etc. which are similarly collected and generally compatible for both analysed countries. Within the parametric approach, a simultaneous equation econometric model is estimated and latent scores are computed for each underlying latent development variable, where three latent constructs are postulated corresponding to economic, structural and demographic development dimensions. In the non-parametric approach, a combination of Ward?s hierarchical method and K-means clustering procedure is applied to classify the territorial units. We apply both methodological frameworks to Slovenian and Croatian municipality data and assess their regional development level. We further compare the performance of both methods and show to which degree their results are compatible. Finally, we propose a unified framework based on both parametric and non-parametric methods, where clustering techniques are performed both on the original development indicators and on the computed latent scores from the structural equation model, and compare these results with the results from each of the two methods applied separately. We show that a combined parametric/non-parametric approach is superior to each approach applied individually and propose a methodological framework capable of estimating the development level of territorial units or regions on a metric scale, while in the same time preserving the robustness of the non-parametric techniques.