The Impact of Fiscal Decentralisation on Local Economic Development in Montenegro

  • Jadranka Kaludjerovic University Donja Gorica
  • Milika Mirković University Donja Gorica
  • Mijat Jocović The Faculty of Economics, University of Montenegro
Keywords: fiscal decentralisation, local economic development, Montenegro, local government

Abstract

The goal of the paper is to determine the extent to which local governments in Montenegro have managed to direct their increasing fiscal autonomy towards supporting local economic development. Our analysis of local business support programmes has shown that local governments have space to improve their business environments and business support programmes. Econometric analysis of data for 21 municipalities for 2007-2014 period, showed that the increase of own-source and shared revenues has a positive impact on local economic development. However, these findings are insufficient to conclude the extent to which decentralisation influences economic development and identify channels whereby it exerts this influence.

Author Biographies

Jadranka Kaludjerovic, University Donja Gorica

Assistant Professor

Mijat Jocović, The Faculty of Economics, University of Montenegro

Assistant Professor

References

Bartik, T. J. (2004) Evaluating the Impacts of Local Economic. Development Policies on Local Economic Outcomes, Evaluating Local Economic and Employment Development Local Economic and Employment Development (LEED) (Kalamazoo: UPJOHN Institute).
Šišević, B. (2013) Regional Policy and Decentralisation in Montenegro, In: Bartlett, W., Maleković, S. & Monastiriotis, V. (eds.) Decentralisation and Local Development in South East Europe. Studies in Economic Transition (Basingstoke: Palgrave Macmillan).
Blakely, Edward J. & Bradshaw, T. K. (2003) Planning local economic development: theory and practice (New Delhi: Vistaar Publ.).
Blöchliger, H. & Balázs, E. (2013) Decentralisation and Economic Growth. OECD Working Papers on Fiscal Federalism (Paris: OECD).
Cantarero, D. & Perez Gonzalez, P. (2009) Fiscal Decentralisation and Economic Growth: Evidence from Spanish Regions, Public Budgeting & Finance, 29(4), pp. 24-44.
Coulson, A. (1997) Local Economic Development: A Guide to Practice (Birmingham Birmingham University).
Huther, J. & Shah, A. (1998) Applying a simple measure of good governance to the debate on fiscal decentralisation. Policy, Research working paper ; no. WPS 1894 (Washington, DC: World Bank).
Investment and Development Fund of Montenegro (2013) Report on IDF activities in 2013. Report Montenegro (Podgorica: Investment and Development Fund of Montenegro).
Kane, M. & Sand, P. (1998) Economic Development: What Works at the Local Level (Washington, DC: National League of Cities).
Kmezić, S., Kaluđerović, J., Jocović, M. & Đulić, K. Fiscal Decentralisation and Local Government Financing in Montenegro from 2002 to 2015, Lex localis - Journal of Local Self-Government, 14(3), https://doi.org/10.4335/14.3.431-450(2016).
Kmezić, S., Kaluđerović, J., Jocović, M. & Đulić, K. (2016) Fiscal Decentralisation and Local Government Financing in Serbia and Montenegro (Maribor: Institute for Local Self-Government and Public Procurement Maribor).
Montenegrin Foreign Investors Council (2013) White Book 2013: A View Ahead. Report (Podgorica: Montenegrin Foreign Investors Council).
Rodriguez-Pose, A. & Ezcurra, R. (2010) Is fiscal decentralisation harmful for economic growth? Evidence from the OECD countries, Journal of Economic Geography, 11(4), pp. 619-643, https://doi.org/10.1093/jeg/lbq025.
Sagbas, I., Sen, H. & Kar, M. (2005) Fiscal Decentralisation, the Size of the Public Sector, and Economic Growth in Turkey, Environment and Planning C: Government and Policy, 23(1), pp. 3-19, https://doi.org/10.1068/c0421.
Stansel, D. (2005) Local decentralization and local economic growth: A cross-sectional examination of US metropolitan areas, Journal of Urban Economics, 57(1), pp. 55-72, https://doi.org/10.1016/j.jue.2004.08.002.
Swinburn, G., Soraya, G. & Fergus, M. (2006) Local Economic Developemnt: A Primer Developing and Implementing Local Economic Development Strategies and Action Plans. Report (Washington, D.C.: The World Bank and Bertelsmann Foundation).
Thornton, J. (2007) Fiscal decentralization and economic growth reconsidered, Journal of Urban Economics, 61(1), pp. 64-70, https://doi.org/10.1016/j.jue.2006.06.001.
Government of Montenegro (2002) Administration Reform Strategy in Montenegro 2002-2009 (Podgorica: Government of Montenegro).
Government of Montenegro (2009) Analysis of Corruption and Business Hindrances in Relations Between the Public and Private Sectors in Montenegro. Anti-Corruption Initiative Administration (Podrogorica: Government of Montenegro).
Government of Montenegro (2011) Business Zone Development Plan in Montenegro (Podrogorica: Government of Montenegro).
Government of Montenegro (2011a) Public Administration Reform Strategy for 2011-2016(Podrogorica: Government of Montenegro).
Government of Montenegro (2014) Cluster Development Programme in Montenegro(Podrogorica: Government of Montenegro).
Government of Montenegro (2014a) Information on Financial Situation and Number of Employees in Local Governments. Report (Podgorica: government of Montenegro).
Union of Municipalities of Montenegro (2013) Local Government Finance Analysis (Podgorica: Union of Municipalities of Montenegro).
Union of Municipalities of Montenegro (2014) Comments on Draft Law on Amendments and Addenda to the Law on Property Tax. Report (podgorica: Union of Municipalities of Montenegro).
Zečević, M. (2015) Measures to Stimulate SME and Entrepreneurship in Montenegro (Podgorica: IPER).
Published
2017-06-28
Section
Articles