Effects of investments on local government budget revenues: A case of rural municipalities in Serbia and Croatia

Abstract

Emphasizing the development capabilities of the units of local self-government (ULSG) and the effects they can have on the market became increasingly visible in the last couple of years. The public sector to which ULSG belong represents a complex system with the objective to satisfy the needs of public interest. The contemporary local government gains a new dimension in a sense that it creates favorable conditions for local development. These tendencies point to the importance of strengthening local capacities aimed at creation of stimulating investment environment. The investments are considered an important source of new capital; but to attract them, a series of actions in local institutions need to be performed to meet the requirements of investors. In order to gain a large volume of investment, ULSG must not disregard social responsibility towards the local community. This work should draw attention to the importance of adequate management of municipal revenues and effects that investments may have on them. In this work, by comparative analysis, is examined the relationship of income and investments in ULSG in rural areas of the Republic of Serbia and the Republic of Croatia.