THE IMPACT OF THE ECONOMIC CRISIS AND OBSTACLES TO INVESTMENTS AT LOCAL LEVEL

Abstract The global economic crisis had a signifi cant impact on the fi scal stance of local government units. The literature discusses this issue by explaining that fi nancial crises change budget decisions of central state authorities towards the fi nancing of those priorities which could improve the economic situation at national level. The impact of the change in national government’s decisions infl uences local government units differently depending on the level of their fi scal autonomy. Investments at the local level are below pre-crisis levels in most European Union countries. This article analyzes the impact of the fi nancial crisis on the fi scal imbalance showing that there is a lack of fi nancial resources for investments. Due to fi scal constraints and annual borrowing limits of regional and local public administration authorities, the affordability of projects and investments is limited. Furthermore, the article analyzes the obstacles to investments at local level in Croatia, a country belonging to the group of European Union Member States which was hit hardest by the crisis and experienced a larger drop in investments. The results of the survey conducted among members of regional assemblies have been analyzed with respect to the level of local development and other factors enabling to identify more precisely the obstacles to investment.


Introduction
The purpose of this paper is to analyze the impact of the economic crisis on the fi scal stance of local government units and their possibilities to manage the local development policy and fi nance capital projects.The economic crisis that began in 2007 in the U.S. has been considered within the economic literature as the worst economic crisis since the 1930's and the literature suggests that, due to its depth and prolonged duration, its consequences could be felt for ten years (Levine, Justice and Scorsone, 2013).The global fi nancial crisis has seriously deteriorated the fi scal position of governments in countries all over the world despite the level of their development.The general government defi cit rose due to the lower collection of revenues, as well as the rising expenses for additional social spending which are needed to alleviate the crisis' eff ects (United Cities and Local Governments, 2009).Local economies were faced with rising unemployment, debt fi nancing problems, business closures and bankruptcies, investment decrease, drop of property values, reduction of demand and others (OECD, 2009; Guidoum and Soto, 2010).Croatia entered the crisis in the period of unsustainable economic growth dependent on strong domestic demand, current account defi cit, and credit growth (Bakker and Klingen, 2012).High vulnerability and rather low external competitiveness of the economy further narrowed the maneuvering space to reduce the impact of the crisis (Bakker and Klingen, 2012).The case of Croatia's deep and prolonged economic decline in the period 2008-2014 has shown that EU membership did not reduce exposure to recession, neither has it buff ered the negative eff ects in the early membership phase.
The countries and, within them, diff erent levels of government had at their disposal diff erent approaches to fi ght crises.Clark's (2009) analysis of 41 local economies' responses on crises shows that they have conducted diff erent types of measures.However, measures aimed at mitigating the eff ects of the recession at local level could not prevent consequences on unemployment (OECD, 2009) and, consequently, on revenues from income taxes (Jonas, 2012;Guidoum and Soto, 2010).Although most of the transition countries conducted reforms of transfer of expenditure authorities to local government, decentralization reforms where mostly proceeded by the method of trial and error and, in some cases, with the lack of appropriate transfer of responsibilities, which caused that some local public services sometimes remained the responsibility of the central government and vice versa (International Monetary Fund, 1998).Croatia, a country where the process of decentralization started in 2001, is not an exception.Jurlina Alibegović, Slijepčević and Kordej-De Villa (2013) stress that the decentralization reform in Croatia, in its fi rst phase, was directed both to administrative and fi scal areas, but that the transfer of responsibilities was not accompanied by the adequate transfer of fi nancial resources.Despite that, a signifi cant part of public services remained under the control of local government units, while fi nancial resources remained mostly under the control of the central government.Therefore, they could be easily aff ected by central state decisions.A similar problem of mismatch between local government responsibilities and fi nancial resources has been noticed in some other European countries such as Germany, Sweden, and Austria (Pucher, Martinos and Schausberger, 2016).Eyraud and Moreno Badia (2013) analyzed the local government budgets in EU15 countries in the period 2001-2011 and concluded that in the fi rst two years of the crisis (2008)(2009) increases in local government expenses were fi nanced from transfers from the central government, while in the subsequent two years (2010-2011) there was no further increase in central government transfers, but also in local government expenses.Their analysis also showed that in EU15 local government own revenues dropped during the crisis.Jonas (2012) discussed the fi scal impact of the 2007-2008 recessions on state and local governments in the United States and showed the high volatility of revenues from income taxes.He noticed that the fi scal response to recession depended on fi scal rules on borrowings.
Reviving investments became the top European Union priority and local government has an important role in it (Committ ee of the Regions, 2016).The level of investment in two-thirds of the European Union Member States, including Croatia, remained below pre-crisis level (European Commission, 2016; Committ ee of the Regions, 2016; Pucher, Martinos and Schausberger, 2016).The purpose of this paper is to examine the impact of the fi nancial crisis on the fi scal stance of local government units in Croatia and their possibilities to fi nance capital projects which are necessary for local economic development.Researches about the regional impact of crises are rare.Since there has been noticed an alarming drop of public investment at local level in the European Union (Pucher, Martinos and Schausberger, 2016) and the European Commission (2016) stresses that the Member States should put eff orts into identifying and removing obstacles to investment at regional and local level, the article analyzes obstacles to investment at the local level from regional councilors' perspectives in the country belonging to the group of European Union Member States which was hit hardest by the crisis and experienced a larger drop in investments.The paper focuses on members of regional assemblies due to the fact that they have an important role in fostering public investments, creating a proper environment for fostering private investments and ensuring sustainable development at local level.
The article consists of four parts.After the fi rst introductory part, follows an analysis of fi scal stance of local government units in Croatia in the pre-recession and recession periods.In this part, the fi scal imbalance is analyzed in connection with the level of local units' development as measured by the development index.The analysis of regional councilors' att itudes toward possibilities and barriers to fi nance capital projects are provided in part three of this article.Part four summarizes the results and presents the main conclusions.

Fiscal stance of Croatian local government units
Even though the level of decentralization in Croatia is lower than in most of the other European Union countries, the very long recession, which started in the fall of 2008, had a signifi cant impact on the local government.Most of the local government units in Croatia, in the pre-crisis period, enjoyed a relatively favorable fi scal stance, even though it has to be emphasized that it was mostly based on central government transfers to local government and not on own resources.In Croatia, local units use, for fi nancing their tasks and investments, tax and non-tax revenues, grants (mostly from the state budget) and capital revenues.However, local government units can infl uence only the tax on the use of public areas and, partially, the non-tax revenues which are in fact revenues whose purpose is prescribed through special regulations, while they do not have infl uence on most of the other revenues (Jurlina Alibegović, Slijepčević and Kordej-De Villa, 2013; Slijepčević, 2014).Municipalities, towns, and counties can independently control the rate of certain types of revenues, but within the limits prescribed by the central government.They therefore have very limited local autonomy and, in spite of the decentralization process, the revenue side of the budget is still largely centralized and depends on decisions of the central government.The limitations of such policy could be especially perceived during recession.
The total budget of 576 local and regional self-government units has been decreasing since 2008.During the recession budgets of all levels of local units decreased, but mostly those of the cities and municipalities.In 2016, budgets of cities and municipalities were still below the 2008 level, while a slight improvement of counties revenues could be observed (Figure 1).Total sub-national revenues were 7.6% lower in 2016 than in 2008.In this article fi scal imbalance is measured by two indicators.The fi rst one is share of total local government units' revenues in total expenses.The second is share of local government units' revenues without grants in total expenses.Figure 2 shows that the level of fi scal imbalance continues to be higher than in the most favorable year of the pre-recession period (2007).Local government units' were confronted with the highest fi scal imbalance in 2009 when total revenues without grant covered only 78% of total expenses.In 2016, local government units' own resources were still lower than in 2008.The fi nancial crisis had a signifi cant impact on the level and structure of local government budgets and infl uenced both sides of the budget (revenues and expenses), but also deteriorated the level of development of local government units.
The level of local development can be measured with the offi cial local development index according to the Regulation on the Development Index from 2010.The local development index is calculated as a weighted average deviation from the national average of fi ve socio-economic indicators.Those indicators are: unemployment rate (30% weight), income per capita (25% weight), local government revenues without grants, shared tax revenues from central government and surtax on income tax per capita (15% weight), population (15% weight) and educational att ainment rate (15% weight).The local government index is calculated on the basis of data from the last three years or from census data.According to the level of development, counties could be distributed in the diff erent groups based on the deviation of their development from the national average (Table 1).According to the NUTS system of classifi cation, Croatia consists of the two NUTS2 units: (i) Adriatic Croatia, which consists of 7 counties, and (ii) Continental Croatia, which consists of 14 counties.The next two Figures present data about the impact of the fi nancial crisis on local government units' resources and local development.Data imply that the development level in almost all local government units in Adriatic Croatia increased, while own resources in most of them decreased during the recession.The situation is even worse in Continental Croatia where both the level of development and fi scal capacity decreased during the recession in all counties, except in Karlovac and Zagreb counties, where the development index improved.Although one of the main goals of European regional policy is to decrease the regional disparities, the long-term fi nancial crisis and the diff erent consequences that it had on local government units in Croatia further widened the gap.The recession caused deepening of the imbalance in local government fi nances, as well as widening of the diff erence in their development dynamics (Slijepčević, 2014).Đokić, Fröhlich and Rašić Bakarić (2015) used panel growth regressions to investigate the infl uence of the economic crisis on regional disparities in Croatia and showed that average regional disparities increased during the 2008 recession.
The literature shows that the impact of the fi nancial crisis on local government depends on many factors.Roitman (2009) claims that the impact of fi nancial crises de-pends on the level of decentralization and that it is stronger in countries with lower level of decentralization.Davies, Kah and Woods (2010) claim that the crisis aff ected all regions to some extent, but it depended on the structure of economic activity.Their analysis shows that the crisis had the strongest impact on the structurally weaker regions and manufacturing regions.The impact of the crisis on the regional development policy was diff erent across European countries depending on the response of national and regional authorities to the crisis.In some countries regional policy was used to respond to the crisis, while in others the crisis had led to cutt ing some components of infrastructure spending, which could have a negative eff ect on local economic development.Eyraud and Moreno Badia (2013) used econometric models on the period 1995-2011 to analyze to what extent subnational governments contributed to fi scal vulnerabilities in the EU15 countries.The result of their analysis showed that expenditure decentralization fi nanced through transfers or borrowing, as it was mostly performed in the EU15 countries, lead to weaker fi scal outcomes.They state that a number of researches showed that local governments' propensity to spend intergovernmental transfers is signifi cantly larger than the propensity to spend own resources.
The economic crisis put additional pressures on local governments.European Union countries which were harder hit by the crisis (Greece, Croatia, Italy, Latvia, Cyprus, Portugal, Spain, Finland, Slovenia, Denmark, Estonia, Hungary and Ireland) were mostly those who were experiencing larger decrease in investments (Committ ee of the Regions, 2016).So the purpose of this article is also to investigate more deeply the major problems for reviving investments in one country which was hit harder by the crisis (Croatia) due to the fact that its counties and local units within them require additional att ention and help for recovering.The Council of European Municipalities and Regions (2015) warns that the European Union's fi nancial rules (such as the rule of the Stability and Growth Pact, the Treaty on Stability, Coordination and Governance etc.), which have been introduced or modifi ed since the beginning of the recession, strongly infl uence local governments and their budgets and thus they limit local authorities in undertaking investments.

Methodology and sample
The previous sections of the article showed that the long recession had a significant impact of deepening the fi scal gap at local level.The purpose of this section is to examine the local councilors' opinions about the local government's budget and diff erent options for fi nancing projects.
Even though the process of decentralization in Croatia has begun more than 15 years ago, the degree of centralization has remained rather high.Local units perform mostly tasks related to environmental protection, housing and community improvement, recreation, culture and religion, and, to a lesser extent, other tasks (Bajo, 2014).Counties are responsible for the functions of regional character, which include per-forming certain tasks in the areas of education, health care, spatial planning, economic development, traffi c and transport infrastructure, public roads maintenance, planning and development of the network of educational, medical, social and cultural institutions, issuing of building and location permits and other documents in relation to construction in the county area excluding the area of the big city and others.Regional assemblies in Croatia are each a regional self-government body which adopts the statute, decisions and acts within the scope of the county, carries out other tasks in accordance with the law and acts as a representative body of the citizens.The effi cient performance of its tasks encourages local and regional development.Within their tasks regional assemblies also decide about cooperation with other local units in the Republic of Croatia and other countries, execute the budget, regulate county tax rates, establish public institutions, companies and other legal persons to conduct economic, social and other operations of interest to the county.
Research on the obstacles for investments at local level is based on the survey conducted among members of regional assemblies1 in Croatia during 2013.The questionnaire was developed in two steps.In the fi rst step, the larger international questionnaire for councilors at regional level was developed by the group of researchers as part of the project 'Policy Making at the Second Tier of Local Government in Europe.What is happening in Provinces, Counties, Départements and Landkreise in the on-going re-scaling of statehood? 2 .In the second step, additional questions necessary to get insight into their opinions about barriers to capital investments were formulated and added to the survey conducted in Croatia.The survey covered all Croatian counties.Councilors from all counties, except from the City of Zagreb, which has the status of town and county, answered the survey.The response rate was 36.9%.The sample characteristics are shown in Table 2.
The questionnaire consists of 7 questions in the form of a statement where the answers were measured by 5-point Likert-scale, ranging from 1 (strongly disagree) to 5 (completely agree).The goal of these statements is to identify regional councilors' att itudes on the main obstacles for fi nancing capital projects in Croatia and diff erences in their opinions.The analysis has been conducted using SPSS and Statistica softwares.

Sample characteristics
Number of analyzed regional councilors 345 Share of analyzed counties in the total number of counties in Croatia 95.2 % Share of regional councilors -respondents in the total number of regional councilors 36.9 %

Source: Author's analysis
The questionnaire consists of 7 questions in the form of a statement where the answers were measured by 5-point Likert-scale, ranging from 1 (strongly disagree) to 5 (completely agree).The goal of these statements is to identify regional councilors' att itudes on the main obstacles for fi nancing capital projects in Croatia and diff erences in their opinions.The analysis has been conducted using SPSS and Statistica softwares.

Survey results
The analysis of survey results consists of several steps.The fi rst step in the analysis was to assess which are the main obstacles for fi nancing capital projects from regional councilors' perspective.The goal of the second step is to identify diff erences in their opinions and att itudes with respect to the diff erent characteristics of the county (level of development of the county, NUTS2 classifi cation, etc.) or respondent (gender, age and others).Diff erences in regional councilors' att itudes towards diff erent obstacles were analyzed using the ANOVA and t-test.The results show that most of the regional councilors fi nd that counties are not able to fi nance capital projects from their own resources.The overall picture shows that most of the local units in European Union countries have a small share of own tax revenues in their total revenues, while the majority of resources comes as transfers from the central state authorities or from revenues on which local government has no infl uence (base or rate).Thus, it could be a large problem for local government units in other European Union countries as well.European Commission (2013), in the analysis of fi scal relations across government levels in the European Union during the economic crisis, stresses that a signifi cant part of the deterioration in the fi scal position during the crisis occurred at the local level.However, they noticed that some local government units conducted the policy of waiting that the central governments cover the funding gap that occurred during the crisis because of the decrease of local government revenues.Besides increasing fi scal autonomy at the local level, the European Commission (2013) fi nds that it is equally important to introduce the performance-based transfer system.
More than 50% of regional councilors fi nd that a transparent and sustainable system of gett ing grants from the central government is a necessary precondition for expense planning and planning borrowing on fi nancial markets.In Croatia, a system of fi nancing community needs has been designed in such a way that grants are used solely as funds to support local government units with poor fi scal capacity 3 .In add-  tion, equalization grants for decentralized functions are ensured from the state budget to cover public expenses in the area of primary and secondary education, social welfare and health care 4 .
As shown in the previous section, the fi nancial crisis had a signifi cant impact on local government budgets.Thus, it is not surprising that a weak tax collection rate has been seen, by 54% of regional councilors, as a signifi cant obstacle for planning capital projects and borrowing.Apart from the aforementioned taxes and grants, local government units have introduced numerous other revenues on the basis of laws and/ or decisions of representative bodies, such as charges and fees, which are contained and stated in the non-tax revenues of their budget.The non-tax revenue is the autonomous revenue of sub-national government for which the purpose is set in advance.Sub-national government units independently set the rate of the non-tax revenue and independently carry out the collection of this revenue.The main non-tax revenue consists of municipal utility charges and contributions.These funds are used for the 4 Grant revenues from the state budget allocated to the counties, cities and municipalities which belong to the fi rst and second category of special state concern.Grant revenues from the state budget allocated to the cities and municipalities for the personal income tax returns in the area of special state concern and in the hill and mountain areas.Grant revenues from the state budget allocated to the cities and municipalities for the profi t tax returns in the area of special state concern and in the hill and mountain regions.Grant revenues from the state budget of other public bodies allocated to the cities and municipalities for the local development projects.Grant revenues from the state budget as equalisation fund allocated to the cities, municipalities and counties for fi nancing decentralized functions.
construction and maintenance of the utility infrastructure.This regulated purpose of using non-tax revenues is also seen as the large barrier for implementing capital projects in Croatia (by 49% of respondents).General principles on local and regional government borrowing and borrowing restrictions prescribed by the Budgetary act has been seen as the least signifi cant barrier for fi nancing capital projects in Croatia.Local and regional self-government units may incur debt in two ways: borrowing by taking a loan or issuing securities (municipal bonds).All borrowing, guarantees and obligations, cannot exceed the maximum rate prescribed by law and presented in Table 4.A lack of transparency in fulfi lling the criteria that must be met for gett ing the approval from the Government of the Republic of Croatia for issuing private or public debt by local units is the problem noticed within the literature dealing with public sector investment (e.g., Grubišić Šeba, Jurlina Alibegović and Slijepčević, 2014).Approvals for borrowings have been issued in the order of their submission until reaching the legally prescribed limits on borrowing.This means that approvals are granted according to the principle of the fi rst-comer and not based on the quality of the project and this could be a barrier for fi nancing capital investment projects.Source: Author's compilation according to the data published in the Offi cial Gazette The goal of the second part of the analysis was to test the existence or non-existence of diff erences between the diff erent groups of respondents.The survey data was analyzed using one-way analysis of variance (ANOVA) and t-statistics.One-way ANOVA was used to test the existence of diff erences in respondents' answers based on their age and political orientation, as well as the regional diff erences.In additional to the usual division of the country in two NUTS2 regions, to analyze more deeply cross-regional diff erences, the country was divided into fi ve regions (Central, North, South, East Croatia, and Istria and Primorje).The literature suggests that such a division into fi ve spatial entities for the purpose of such analysis is justifi ed (Rajh, Budak and Anić, 2016).T-test was used to test the diff erences in the average scores between two groups of respondents (based on gender, level of development of their county and NUTS2).ANOVA and t-test results are presented in Table 5.The results show that the lack of own revenues for fi nancing capital projects is considered a larger problem by regional councilors from less developed counties (counties whose value of development index is lower than the national average).Younger regional councilors (less than 40 years old) fi nd the lack of local government unit revenues to be larger barrier for capital investment than respondents older than 40 years.In addition, younger regional councilors consider that local government units' borrowing restrictions prescribed by regulations are larger barriers for investments than respondents older than 40 years.
The results show that regional councilors from diff erent regions have diff erent opinions about the prescribed purpose of using non-tax revenues.Councilors from North Croatia consider that the prescribed purpose of using non-tax revenues by regulations is a less important issue when considering the sources for fi nancing capital investments than the other councilors.Most of regional councilors fi nd the lack of a transparent and sustainable system of gett ing grants from the central government as a barrier for capital investment.However, councilors from Continental Croatia fi nd it a bigger barrier for investment.Also, the same opinions have councilors from Central and East Croatia.
The results confi rm that weak tax collection is a bigger problem for fi nancing longterm investments in less developed local government units.The analysis also shows statistically signifi cant diff erences in answers of respondents from diff erent regions about tax collection.Respondents from Central and East Croatia consider poor tax collection as a barrier for fi nancing investments.This is in line with expectations, as local units with lower budgets are largely dependent on grants from the central government.On the other side, as noticed in Jurlina Alibegović, Slijepčević and Kordej-De Villa (2014) local government units in Croatia are highly dependent on income tax imposed by a rate defi ned by the central government and on which they cannot have an infl uence.From 2016, according to the Law on Financing of Local and Regional Self-Government Units (Offi cial Gazett e 117/93, 69/97, 33/00, 73/00, 127/00, 59/01, 107/01, 117/01, 150/02, 147/03, 132/06, 73/08, 25/12, 147/14 and 100/15) income tax revenues are distributed among local units as follows: municipalities and cities receive 60% of income tax revenues generated in their area and counties receive 16.5%.In addition, the income tax is distributed in a manner that distinguishes whether the municipality, city or county fi nances or not decentralized functions in selected public services including education, health care, social welfare and fi re-fi ghting.The maximum amount for decentralized functions amounts to 6% (1.9% for primary and 1.3% for secondary education, 0.8% for social welfare, 1% for health care and 1% for fi re-fi ghting).Local government units can also receive equalization grant for decentralized functions (165 of personal income tax) and grants for co-fi nancing projects fi nanced from European funds (1.5% of personal income tax).
Knowledge and data exchange and the sharing of best practices have been widely recognized as the important factors for increasing the absorption capacity of EU funds and almost half of councilors in Croatia recognized it as the problem.Right wing regional councilors fi nd that this is a larger problem than the others.Also the results of the survey show that it is a larger problem for councilors from Continental than from Adriatic Croatia.

Conclusions
Global fi nancial crises deteriorate the fi scal position at central and local level across European countries.Local government units' fi scal autonomy is rather low and the decentralization process in many countries has been stopped due to recession.Overlapping of spending functions across diff erent levels of government and mismatch between local government responsibilities and allocated fi nancial resources further aggravated the situation at local level.
The analysis in this paper aims to investigate the impact of recession on the level of local economic development and obstacles for investments in the post-crisis period.The survey has been conducted in Croatia, the European Union country which has been hit hard by long recession.This is the country whose local government units were faced with similar consequences of the crisis as the other European countries.Due to the crisis, the diff erences in local government units' levels of development have widened and the level of fi scal imbalance became worse than in the pre-crisis period in Croatia.The fi nancial pressure on the local level of government has increased.Such a situation in Croatia is similar to that in other EU countries.Pucher, Martinos and Schausberger (2016) stress the signifi cant drop in public investments at the local and regional level across the European Union and that both private and public investments remained at pre-crisis levels in most of the European Union countries, including Croatia.Countries which are hit harder by the crisis are those who were experiencing larger decrease in investments (Committ ee of the Regions, 2016).
As stressed by Council of European Municipalities and Regions (2015), underinvestment in the long-term has a devastating impact on the sustainable development at the local and regional level.
The goals of the regional policy in Europe are aimed at reducing regional disparities and this need is even more pronounced after the crisis.The budgets of many local units are small, and the level of fi scal autonomy is such that it does not allow them to cover the operational expenses and investments.Given that the divergence between local government units further deepened, less developed local units are now in an even harder position than in the pre-crisis period.The results of the survey conducted among regional councilors show that there are two major obstacles to investment: the lack of own revenues and the lack of a transparent and sustainable system of gett ing grants from the central government.Both of these obstacles are consequences of the way decentralization has been implemented in Croatia.Fiscal decentralization has been implemented only partially and with the maintenance of a high level of central government control over tax revenues.The disadvantages were especially evident during the crisis, when the central government measures had mitigated the decline of central government revenue.Local units, on the other hand, had very limited maneuvering space to do the same and thus local budgets shrank.Administrative decentralization should be accompanied by fi scal decentralization that would allow local units to realize larger own revenues.This kind of decentralization has led to the deepening of diff erences between local units, as well as their slow recovery, as could be seen in Figure 3.
Investigating the variance in att itudes with respect to diff erences between the several groups of respondents enables to bett er identify the obstacles for investments from diff erent angles.The results show that less developed local government units have larger problems with lack of own resources and weak tax collection than others.Also, in the policy att empt to revive investments at the local level, more focus should be placed on introducing a more transparent and sustainable system of gett ing grants from the central government and on increasing knowledge and exchange of data and information about how to apply for European Union funds for fi nancing investments, especially in local government units in Continental Croatia.

Figure 1 :
Figure 1: Change of the sub-national government budget in the recession period (2016/2008) Source: Author's calculation based on the Ministry of Finance data

Figure 2 :
Figure 2: Local government fi scal imbalance Source: Author's calculation based on the Ministry of Finance data

Figure 3 :
Figure 3: Impact of the fi nancial crisis on own resources and local development Source: Author's calculation based on the Ministry of Finance and Ministry of Regional Development and EU Funds (2017) data FR DE GR HU IT NO PL RO ES SENote: BE -Belgium, HR -Croatia, CZ -Czech Republic, FR -France, DE -Germany, GR -Greece, HU -Hungary, IT -Italy, NO -Norway, PL -Poland, RO -Romania, ES -Spain, SE -Sweden, UK -United Kingdom.

Figure 4 :
Figure 4: Own tax revenues of sub-central government as % of the total local government revenue Source: Eurostat and the survey

Table 1 :
Categorization of counties according to the development index Source: Ministry of Regional Development and EU Funds(2017)

Table 3 :
Regional councilors' attitudes toward obstacles for investments

Table 4 :
Conditions for local government borrowingDid not exist until 2002.From 2003 the boundary is prescribed on an annual basis.From 2007 to 2012 was set at 2.3% of realized current revenues in the previous fi scal year of all Croatian local authorities.From 2013 it was increased to 2.5% and in 2017 to 3.0% of outturn of current revenues in the previous fi scal year of all sub-national government units.

Table 5 :
Analysis of differences