The Impact of Fiscal Decentralisation on Local Economic Development in Serbia

  • Will Bartlett London School of Economics and Political Science
  • Katarina Đulić University of Graz
  • Sanja Kmezic Karl Franzens University of Graz
Keywords: Fiscal Decentralisation, Local Economic Development, Employment, Public Policy, Serbia


Serbia is a transition country that has experienced strong negative spillover effects from the global financial crisis and the subsequent eurozone debt crisis. At the same time it is a candidate for accession to the European Union. Success in local economic development is likely to affect prospects for economic recovery and a successful EU integration process and the paper analyses the contribution of fiscal decentralisation to successful local economic development. The analysis is based upon a cross-section time-series regression model that reveals a positive impact of local public expenditure on economic development. Expenditure on education has a particularly strong effect on local economic development, as does investment per capita from both public and private sources. The conclusion of the paper is that local economic development has been enhanced by the fiscal decentralisation that has taken place in Serbia.


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