Influence of Municipalities on LAG's Effectiveness in Attracting Project Subsidies in Croatia

Abstract

Local Action Groups LAGs are tri-sectoral bodies in which the economic and civil sectors in partnership with the public sector use EU policy funds for rural development. In such a decentralized approach to community led local development there is a risk of excessive municipal interference and principles of bottom-up development can be compromised. The basic assumption by which the leading public sector is trying to justify itself as having a better administrative capacity that can help LAGs to attract and absorb subsidies is statistically tested in this paper. Example of Croatia has shown that “municipalisation” of local partnerships have no justifications, as increasing the share of public partners in the membership structure reduces LAG effectiveness in attracting project subsidies, and in the same time municipalities that prove stronger absorptive capacity through larger share of EU funds in their budget, show no positive influence transferred to LAGs in which they are members.