The Capacity of Local Governments to Improve Business Environment: Evidence from Serbia

Abstract

The aim of this paper is to draw attention on the need to strengthen institutional cooperation between local self-governments and the business community. The paper analyses the ability of socio-economic councils in Serbia, as a part of local governments, to improve the business environment and indicators of social status at the local level. In addition to socio-economic councils, this analysis includes the departments, divisions and offices for local economic development and their responsibilities. The results in the paper has been generated using descriptive statistics, Chi-Square test, t-test and regression analysis, based on the analysis of primary data collected in empirical research on 55 municipalities in Serbia. The fundamental results obtained using the stated analysis is that socio-economic councils have positive impact on the social and economic development in the survived municipalities. Finally, the basic conclusion from the executed research is that size of the municipality is not a limiting factor for the establishment of the socio-economic councils and their functionality.

Keywords: business environment, socio-economic council functionality, local self-government institutions, indicators of a social and economic status

JEL Classification: H11, H83, C12, C14