The paper examines a paradigmatic example of post-conflict economic development of Vukovar, Croatia. It represents a pertinent case study for localities encountering analogous challenges, most notably urban areas in Ukraine in the near future. The war that broke out in 1991 brought significant human casualties, population displacement, and extensive destruction of residential, social, and economic infrastructure. The completion of the peaceful reintegration of Vukovar into Croatia’s legal system in 1998 marked the beginning of the socio-economic revitalization process. The research scrutinizes the primary impediments and prospects for Vukovar’s economic growth, probing why substantial investments in reconstructing housing, transport, communal infrastructure, and fiscal incentives for businesses have not paralleled its economic performance. It concentrates on the local business climate and influential factors as potential explanations for this discrepancy. The topic was designed as a case study and was covered by document analysis, survey method, and semi-structured interviews. Utilizing a mixed-methods approach, the study collates perspectives from entrepreneurs and business support institutions. The results confirmed that reconstruction of housing and social infrastructure is necessary, but more conditions are needed for successful post-conflict economic development, and that the business climate in lagging local units highly depends on state- and locally designed business-support measures.

Type of the article: Research ArticleAbstractThis paper analyzes the determinants of municipal capital transfer allocation in North Macedonia using data for all 80 municipalities over 2018–2022. Capital transfers are a key investment instrument in fiscally decentralized systems, yet their fragmented and project-based delivery may weaken equalization. To test whether transfers follow developmental or fiscal-capacity criteria, the study combines baseline OLS estimates with a two-part (hurdle) model that separates access from transfer intensity, quantile regressions to capture distributional heterogeneity, and inequality measures. The results show no statistically significant association between municipal development level or fiscal capacity and the probability of receiving any capital transfer, indicating that entry into the system is not needs-based. Conditional on receipt, the development coefficient is negative but not robustly significant, indicating no systematic targeting of less-developed units among recipients. Inequality diagnostics reinforce this conclusion: the Gini coefficient for per-capita capital transfers (0.75) vastly exceeds that for municipal revenues (0.18), and Lorenz curves reveal a sharply more unequal transfer distribution. Overall, the evidence implies that unobserved institutional or political factors dominate the access margin and that capital transfers currently introduce an additional layer of territorial divergence rather than mitigating existing disparities.AcknowledgmentsThe author gratefully acknowledges the United Nations Development Programme (UNDP) for providing access to data used in this research. The views expressed in this article are solely those of the author and do not reflect the views of UNDP.

In order to improve the management of cohesion policy funds of the European Union (EU) in Croatia, an obligation has been introduced to carry out an independent evaluation procedure for the preparation and implementation of planning documents of this policy. The intention is to monitor its implementation and improve its quality, thus ensuring the greatest possible positive effects of investments in each member state and the EU as a whole. The research focused on the quality of implementation of cohesion policy in Croatia by choosing a very important segment of the management process - the evaluation of the project selection system within the Operational Programme Competitiveness and Cohesion 2014-2020 as the financially most important EU programme in Croatia. The development and application of project selection criteria falls within the competence of each EU member state, but with the obligation to respect the key principles set out in the EU legislation. The analysis of the selection system has shown that the national authorities have created a fairly standardised project selection system with a number of rules that should ensure a high level of transparency and reduce any procedural errors of conduct. In that respect, Croatia can be placed among the new member states characterised by demanding tender documentation and a complex methodology for evaluating project proposals. Further analysis has shown that the project selection system is quite lengthy and inefficient. The administrative complexity is burdensome for all participants in the project selection process, thus making the project selection system a typical example of gold-plating in which national authorities ensure that the relevant provisions of EU law are respected in a fairly inefficient way. In such circumstances, the overall positive effects of the selection system related to transparency and reduction of procedural errors are diminished.