Regional Competitiveness Index of Croatia

REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

United Nations Development Programme (UNDP) is the UN global development network National Competitiveness Council (NCC) is an independent advisory body comprised of promoting changes and connecting countries using knowledge, experience and potentials to 23 members bringing together four key interest groups – the business sector, government, help the citizens build better lives. We are active in 166 countries, working with them on iden- trade unions and the academic community – with the goal of enhancing dialogue, partner- tification of their own solutions to global and national development challenges. As they deve- ship and consensus on policies and programs critical to sustainable growth and develo- lop their local capacity, they draw on the experience of UNDP and our wide range of partners. pment of the country.

United Nations Development Programme The Council acts as catalyst of changes that result in improvement of national competitive- Radnička cesta 41/8, 10000 Zagreb ness. Council objectives in that are simple, focused and immediate: to act to increase the Phone: +385 1 2361 666 competitiveness of Croatian economy, and to rely on coalitions of stakeholders and social Fax: +385 1 2361 620 consensus to influence changes that result in realization of the vision of long-term sustai- www.undp.hr nable development of Croatia.

National Competitiveness Council Šoštarićeva 2, 10000 Zagreb Phone: +385 1 6304 855, 853 Fax: +385 1 6304 856 www.konkurentnost.hr

1 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

Zagreb, March 2011 Editors Slavica Singer, PhD, University Professor The scientific and research background for this publication has been developed by the group Mira Lenardić, PhD of researchers from the Faculty of Economics of the University of Josip Juraj Strossmayer in Osijek and the Institute for International Relations in Zagreb (IMO): Technical preparation

Authors (in alphabetic order): Martina Hatlak Mirela Alpeza, PhD, Faculty of Economics in Osijek Proofreading Anamarija Delić, MSc, Faculty of Economics in Osijek Krešimir Jurlin, PhD, Institute for International Relations, Zagreb Michele Doyle Julia Perić, PhD, Faculty of Economics in Osijek Sunčica Oberman Peterka, PhD, docent, Faculty of Economics in Osijek Design and Layout Slavica Singer, PhD, University professor, research coordinator Kudos studio LLC Valentina Vučković, Institute for International Relations, Zagreb Print External consultants Tiskara Zelina JSC Mira Lenardić, PhD, NCC Nenad Kocmur, UNDP Croatia Danijela Tepšić, UNDP Croatia Brief excerpts from this publication may be reproduced without the authors’ consent, provided they remain unchanged and the source is stated. Publisher National Competitiveness Council The views expressed in this paper are those of the authors and do not necessarily United Nations Development Programme (UNDP) Croatia represent the views of UNDP.

For the Publisher Mira Lenardić, PhD

ISSN 1846-9663

2 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

Dear Ladies and Gentlemen,

It is my great pleasure to present the second edition of the this publication is clear: the key to Croatia’s progress is in our publication The Regional Competitiveness Index of Croatia hands, and in our capacity to change faster what is bad and 2010, which the United Nations Development Programme create the new and the better to become more compatible and (UNDP) carried out in cooperation with the National Competi- more competitive in European and global markets. tiveness Council. This publication presents the results of a The value of regional competitiveness research in Croatia ranking of competitiveness of Croatian counties and regions lies in the fact that it can be used as a tool to monitor the im- based on the methodologies of the World Economic Forum plementation of the overall strategy for regional development (WEF) and the International Institute for Management Deve- of Croatia, its upgrading and development of complementary lopment (IMD), well-known research on and measurements policies and instruments focused on building of county and of national competitiveness in the world. regional competitive capacities with a final positive impact The Regional Competitiveness Index of Croatia 2010 is a con- on national competitiveness. tinuation of measurements of competitiveness of Croatian We therefore expect that the key stakeholders responsible for regions and counties that, after analysis of initial positions managing regional development will use the results of this re- in 2007, allows for monitoring of competitive improvements search for development of policies and measures that will cre- and overviews of comparative situations in the country’s re- ate the conditions for economic growth in coming years. gions and counties. We hope that the wealth of information included in this docu- Today, Croatia has almost completed its negotiations with the ment and the possibility of comparison with the previous European Union, and in that process it is important to cre- publication will help the economic, professional, social and ate and quickly implement economic policies that will result political communities in intensification of development and in sustainable and competitive improvements on all levels – implementation of reforms at region and county levels. national, regional and local. The results of this research con- firm that there we still lack sufficiently prompt changes, and Finally, I would like to thank the Council members, research- therefore there is no visible progress recorded in the competi- ers and their associates for their contribution to drafting of tiveness of counties and regions. Differences in county and this document. regional competitiveness that are the results of the quality of their business environment and business sectors are similar to those identified in 2007. Given that all regions and counties Sincerely, need to work together to improve national competitiveness in order to realize the right to a more even level of development and quality of life in all counties and regions, it is clear that this growth should be based on knowledge and innovations in the use of local advantages and resources, support to po- Ivica Mudrinić tential sources of growth and the elimination of obstacles to President 3 growth in each county/region. In this context, the message of National Competitiveness Council REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

4 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

Dear Reader,

I am pleased to present to you the Regional Competitiveness Some components of the business environment, such as de- Index – Croatia 2010, which the United Nations Development mographics and education levels, can change only gradually, Programme (UNDP) has helped to produce together with the but others can be improved more rapidly through wise and National Competitiveness Council. This is the second edition timely policy decisions and prudent allocation of resources. of the index, which calculates the competitiveness of Croatia’s The Regional Competitiveness Index is intended as a resource regions according to World Economic Forum methodology. Our to inform these decisions and shape planning priorities, with analysis looks at regions according to two definitions: the na- the ultimate aim of enabling Croatia to join the EU with a more tional system of counties, which divides the country into 21 cohesive regional landscape. smaller units, and the European Union (EU) nomenclature of territorial units for statistics (NUTS), which at the second level, Our gratitude goes to the authors, researchers, and members defined as regions numbering more than 800,000 people, di- of the business community who helped to shape the analysis vides Croatia into three larger regions. and recommendations. We are especially thankful to our partner, the National Competitiveness Council, for all the analyti- As in the first edition, in 2007, the picture presented is one cal and organizational work invested into this publication, and of significant regional disparities and very limited progress wish it every success in producing future editions. in leveling the gaps between better-off counties and those that lag behind. Together with Croatia’s ranking in the Glo- bal Competitiveness Index, which plunged from 57th among Yours sincerely, 131 countries in 2007 to 77th among 139 in 2010, this finding should serve as a call to action and a stimulus to policy de- bate on how to improve competitiveness, both at the national level and among Croatia’s regions, particularly on the eve of EU accession. Louisa Vinton Resident Representative The second edition of the Regional Competitiveness Index UNDP Croatia should also serve as a useful tool for decision makers and business executives at the regional level, as the data presented show not only how counties rank against their peers, but also whether counties have moved ahead or slipped back over time. Specific indicators, covering both objective measures such as gross national product per capita and subjective a- ssessments by the business community, point to weaknesses that can be addressed and strengths that can be leveraged.

Understanding the progress achieved by some counties can 5 serve as an incentive to others. Popis skraćenica REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

Abbreviations

EU European Union

Eurostat Eurostat Statistical Office of the European Union

GDP Gross Domestic Product

IMD Institute for Management Development

KAU Kind of Activity Unit

LR Land Registry

LRGU Local and Regional Government Unit

NCC National Competitiveness Council

NUTS Nomenclature of territorial units for statistics

NUTS 1 The first level statistical territorial unit according to Eurostat (population 3,000,000 -7,000,000). NUTS 1 region: Republic of Croatia

NUTS 2 The second level statistical territorial unit according to Eurostat (population 800,000 to 3,000,000). NUTS2 regions in Croatia: Northwestern Croatia, Central and Eastern (Pannonian) Croatia and Adriatic Croatia

The third level statistical territorial unit according to Eurostat (population 150,000 to 800,000). NUTS 3 NUTS 3 regions in Croatia: 20 counties and the City of Zagreb

RC Republic of Croatia

RCI Regional Competitiveness Index

SME Small and Medium Size Enterprise

UNDP United Nations Development Programme

WEF World Economic Forum

6 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 Sadržaj

Contents

Introduction 11 HR03 ADRIATIC CROATIA 112 Comparison of counties, Adriatic Croatia 114 1. The Purpose and Role of the Regional Competitiveness Index of Croatia 15 HR031 Primorje-Gorski Kotar County 118 1.1 Regions and Counties in the Republic of Croatia 16 HR032 Lika-Senj County 122 1.2 How to read regions’ competitiveness profiles? 17 HR033 Zadar County 126 1.3 How to read counties’ competitiveness profiles? 18 HR034 Šibenik-Knin County 130 HR035 Split-Dalmatia County 134 2. Regional Competitiveness Index of Croatia 2010 – Counties and 21 HR036 Istria County 138 Measurement Results (summary) HR037 Dubrovnik-Neretva County 142

3. Priorities and recommendations 31 Research methodology 149 4. Profiles of competitiveness of Croatian regions and counties 37 Sources 155 HR01 NORTHWESTERN CROATIA 40 Comparison of counties, Northwestern Croatia 42 HR011 City of Zagreb 46 HR012 Zagreb County 50 HR013 Krapina-Zagorje County 54 HR014 Varaždin County 58 HR015 Koprivnica-Križevci County 62 HR016 Međimurje County 66

HR02 CENTRAL AND EASTERN (PANNONIAN) CROATIA 72 Comparison of counties, Central and Eastern (Pannonian) Croatia 74 HR021 Bjelovar-Bilogora County 78 HR022 Virovitica-Podravina County 82 HR023 Požega-Slavonia County 86 HR024 Brod-Posavina County 90 HR025 Osijek-Baranja County 94 HR026 Vukovar-Srijem County 98 HR027 Karlovac County 102 HR028 Sisak-Moslavina County 106 7 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

8 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

Introduction

9 HR01 SJEVEROZAPADNA HRVATSKA | Table 1. Indikatori Sjeverozapadne regije REGIONALNIREGIONAL INDEKS COMPETITIVENESS KONKURENTNOSTI INDEX HRVATSKE OF CROATIA 2007. 2010

10 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 Introduction

Introduction

Research on regional competitiveness is a key prerequisite need for a functional regional development policy that The European Union’s regional policy is an instrument for balanced development across Croatia. Competitiveness will contribute to sustainable long-term growth, restruc- that fosters financial solidarity and provides strong leve- research, which was first conducted in 2007, but continued ture the innovation and knowledge-based economy, and rage for the creation of cohesion and economic integra- in 2010, has contributed to the development and imple- contribute to sustainable national competitiveness and tion among its developed and less developed regions. mentation of national regional development and competi- increase people’s standard of living. The development Stimulating growth, employment and innovation are the tiveness policies. The importance of research in regional of mechanisms that would strengthen all parts of the key priorities of the EU’s regional policy, followed by de- competitiveness was confirmed by initial studies of this country will boost capacities for effective participation mographic consolidation, better physical planning, a more kind in the European Union,1 which were conducted in on the regional level, resulting in the bridging of social balanced use of and pressure on infrastructure, and be- 2010. The studies reasoned that “a quantitative score of and economic gaps. This document provides a frame- tter social cohesion. The importance of a regional policy competitiveness will facilitate Member States in identifying work for the adoption and implementation of a regional in the EU is confirmed by the fact that 36% of the total EU possible regional weaknesses together with factors mainly policy in Croatia that will not only boost the potential budget will be spent on bridging development gaps in di- driving these weaknesses. This in turn will assist regions in for competitive progress and increase the absorption of fferent parts of the EU from 2007 to 2013. Investments the catching up process“.2 It is important to point out that EU funds, but will also allow for the building of regional will primarily focus on initiating convergence, regional our research on regional competitiveness has been cited institutional and legal capacities that would allow the competitiveness and employment and territorial coopera- as an example of good methodological practice and was regions to implement their own proactive economic de- tion. Monitoring regional competitiveness in the European compared to methodologies used in the United Kingdom velopment policies. Union is expected to provide necessary insight into the and Finland3. Unlike the European research, which offered status of and changes in regional competitiveness. indicators only, our research has been enhanced by offe- Education, health services and business opportunities ring “guidelines”, i.e. recommendations for interventions must be available to everyone. The most effective policies Since 2007, Croatia has been receiving funding from the in government policies and/or programs, local government, of countries that approach their citizens and resources re- Instrument for Pre-Accession Assistance (IPA), which is and other institutions responsible for competitiveness de- sponsibly are regionally focused. These policies achieve a available to candidate countries and potential candidate velopment, ranging from academic institutions to business more balanced quality of life throughout a country; use the countries for alignment with the Acquis Communautaire associations and individual companies. human, natural, and tehnological resources of a country and to prepare for absorption of structural funds. The IPA more effectively; and allow regions to manage their own program consists of 5 components: Transition Assistance The Strategy of Regional Development in the Republic development based on the principles of cooperation and and Institution Building, Cross-Border Cooperation, Re- of Croatia between 2011 and 20134 emphasizes the competition. gional Development, Human Resources Development and

1 In 2010 a joint project was initiated by two Directorates-General at the EU. The DG Joint Research Centre and DG Regional Policy Centre commissioned a study to measure regional competitiveness in the European Union due to the need to establish background information before the EU, Member States, or allied regions could begin constructing regional development policies that would allow them to meet their development objectives. The study provided a methodological framework for the development of the EU Regional Competitiveness Index, which analyzed the United Kingdom, Finland and Croatia as examples of good methodological practice. Annoni, P., K. Kozovska, EU Regional Competitiveness Index 2010, EUR 24346-2010, European Commission, Joint Research Centre, Institute for the Protection and Security of Citizens, Luxembourg, 2010. 2 Ibid, p. iii. 3 IIbid, p. 23-25. 4 The Croatian Government adopted a draft Strategy for the Regional Development of the Republic of Croatia 2011-2013 during a meeting held on June 4, 2010. Croatia’s Regional Development Act was adopted on December 29, 2009 and was in line with the 11 Acquis Communautaire (OG 153/09). Introduction REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

Rural Development. The Regional Development compo- in unemployment are even higher – ranging from 6.1 % to achieve a high quality of life for everyone and improve nent is intended to finance larger infrastructural projects in the City of Zagreb and 7.1% in Istria County to more national competetiveness, regions should cooperate to in environmental protection and transport, as well as pro- than 27% in Sisak-Moslavina and Vukovar-Srijem Coun- share their knowledge of development, innovation and the grams that enhance national competitiveness and even ties (2009).7 Given this situation, the pre-accession, and use of natural resources; identify the engines of growth in regional development, thus preparing the country for use soon the cohesion funds of the EU, will offer consider- each individual region; and eliminate obstacles to com- of European Regional Development Funds after access- able possibilities for the enhancement of business sector petitive growth. Research conducted in 2007 provided an ion, which is very important for Croatia. Croatia’s par- quality and environment in the entire country, resulting in analysis of the initial state of regional competitiveness ticipation in that component is based on the Regional a reduction of development imbalances. To absorb these in Croatia, a first and crucial step toward establishing a Competitiveness Operational Programme, among others, funds, insight into the level of development of individual more effective regional development policy. which is focused on three priorities. Its first priority is the regions is necessary, which highlights the importance of development of business infrastructure in 10 counties the role of Regional Competitiveness Index. Since competitiveness monitoring began in Croatia in 2002, facing considerable development obstacles. The second the country’s national competitiveness ranking, as compared is the creation of a favorable business climate by enhan- The scope and intensity of progress in individual regions with other countries, has consistently fallen. From 2002 to cing administrative efficiency, providing consulting ser- or counties and their ability to “catch up” with the more 2006 Croatia’s average ranking was in the range of 60th, but vices to small and medium-sized enterprises, enhancing developed parts of Croatia, and the European Union, in 2009 it dropped to 72nd, and then to 77th in 20108. Low national capacities for commercialization and support of can best be understood through competitiveness analy- business sector productivity9 and the constant presence of innovation through the development of clusters and busi- sis. Competitiveness research conducted in Croatia has various obstacles in the business environment10, which are ness zones and the establishment of e-business centers been based on World Economic Forum 2002 methodolo- primarily caused by problems in the judicial system and pub- all over the country. Finally, the third is technical assis- gy, which provided a good background for tracking chan- lic institutions; corruption; and a lack of ability to absorb new tance in program management.5 ges and adjustments of national policies focused on the knowledge, technology, and innovation; and inefficiencies in removal of barriers to development and competitiveness the labor market, make it difficult or almost impossible to In Croatia, a proactive regional policy based on conver- enhancement. strengthen competitiveness. The fact that some processes of gence, competitiveness and cooperation is very impor- institutional change have not been completed (e.g. absence tant because of considerable, and long-term, internal de- National competitiveness is based on companies’ com- of a “guillotine” for unnecessary regulations – project HITRO- velopment gaps. Measured in gross domestic product, parative competitiveness, i.e. a good business environ- REZ)11 considerably slows down the development of a sim- these gaps range from EUR 5,500 (Brod-Posavina and ment and business sector in the whole country. Therefore pler and more transparent business environment regulatory Vukovar-Srijem Counties) to EUR 12,400 in Istria County there is no dilemma – to develop only the least developed framework and also makes it difficult to create positive en- and EUR 16,750 in the City of Zagreb (2007)6. Differences regions or to rely on the most developed ones. In order ergy for changes in the society.

5 For the programming period 2007-2011, 75.2 million EUR has been available for Croatia to spend on regional development (International Gazette 03/2011). The first agreements for business infrastructure projects in areas where development was lagging (projects of the local governments of Vukovar, Lovas, Ilok, Nova Gradiška, Vodice and Pleternica) were worth 5.08 million EUR. Five agreements for projects that connected science with industry through applied research were worth 2.6 million EUR. All of these agreements were signed by the end of 2010 - www.safu.hr (December 17, 2010). 6 www.dzs.hr/Hrv_Eng/publication/2010/12-01-02_01_2010.htm 7 Yearbook 2009, Croatian Employment Service, April 2009, p.9. 8 National Competitiveness Council, Annual Reports on Croatian Competitiveness in 2002, 2004, 2006 and 2008. 9 Labor productivity in Croatia is 59.2% of the EU 25 average (2006). However, Croatia’s labor productivity lags even more when compared to the EU 15 average, which is 106% of the EU 25 average. („Path to Faster Convergence: Challenges and Cooperation Overview“, World Bank, Zagreb, January 2008, p.18.) 10 The World Bank study on the ease of doing business ranked Croatia 103 of 183 countries. Doing Business, World Bank, 2010. 12 11 The project was implemented in 2006 and 2007; 1455 regulations relating to the economy have been reviewed, and 799 recalls/simplifications were proposed. Only 368 proposals were implemented. The HITROREZ project implementation summary (July 28, 2009) is available at www.hitrorez.hr REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

The Purpose and Role of the Regional Competitiveness Index of Croatia

13 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

14 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 1 The Purpose and Role of the Regional Competitiveness Index of Croatia

1 The Purpose and Role of the Regional Competitiveness Index of Croatia

Picture 1: Regional Competitiveness Index Model

The competitiveness of the Croatian economy on a national Competitiveness Pillars level is a reflection of local and regional level competitive ca- 1. Demographics, health and culture pacities, which only enhances the importance and the need for regional and local development in the country. Therefore, 2. Education Business Croatian national and regional development policies have to 3. Basic infrastructure and public sector Environment be complementary and aligned with the European Union’s re- Statistical 4. Business infrastructure gional policy. indicators 5. Investments and entrepreneurial trends (2/3) Competitiveness can be described as a group of elements, 6. Level of entrepreneurship development Business development policies and institutions which, by their interco- 7. Economic results – level Sector nnectedness, influence the general level of productivity and 8. Economic results – trends the quality of the business sector and business environment. Regional Competitiveness consists of three groups of elements. The 1. Location Advantages Competitiveness first one consists of basic elements: institutions, infrastructure, Index 2. Local Government macroeconomic environment, health and basic education. The second one consists of elements defining efficiency, like high- 3. Infrastructure Business er education, the efficiency of markets for goods and labor, 4. Rule of Law Environment Perceptive financial market development and technological prepared- indicators 5. Education ness. The third includes business complexity and innovation12. (1/3) Thus, competitiveness is measured in this research through 6. Financial market and local competition a combination of statistical and perceptive indicators descri- 7. Technology and Innovations Business bing all three groups of elements. These elements were used 8. Clusters to review the relative competitiveness in key areas (pillars of Sector competitiveness) of Croatian counties and regions. Areas of 9. Marketing and management potential and possible limitations to competitiveness and their possible causes were also identified. All of the information can be used to monitor and implement a balanced, long-term sustainable regional development policy.

12 World Economic Forum definition: see The Global Competitiveness Report 2010-2011, Appendix A: Computation and structure of the Global Competitiveness Index 2010-2011, p. 43-45. 15 1 The Purpose and Role of the Regional Competitiveness Index of Croatia REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

The Regional Competitiveness Index 2010 (RCI 2010) monitors Competitiveness Index to make investment decisions and to Table 1. Statistical Division of Croatia and evaluates the competitiveness of three regions (NUTS2): evaluate potential locations for their new business ventures Northwestern; Central and Eastern (Pannonian); and Adriatic, and local politicians use it to compare their policies to those of HR01 Northwestern Croatia as well as the competitiveness of all Croatian counties and other counties and improve them. The public sector and state HR011 City of Zagreb the City of Zagreb (NUTS3 level), which were grouped into the administration also require continually updated information on three NUTS2 regions, as in the 2007 research. the regional/county level of development and competitiveness. HR012 Zagreb County The Regional Competitiveness Index of Croatia provides this HR013 Krapina-Zagorje County The analytical approach employed is based on a combination information as a background for the adoption of development HR014 Varaždin County of statistical and perceptive indicators that evaluate the qua- programs and the development and implementation of all rele- lity of the business environment and the business sector (Pic- vant policies (ranging from educational, innovation, social, and HR015 Koprivnica-Križevci County ture 1.) taxation to investment) focused on bridging the gaps in relative HR016 Međimurje County development across the country. The methodological approach used for data aggregation and HR02 Central and Eastern (Pannonian) Croatia analysis is based on the methods and research of the World Until now, the levels of development in different parts of HR021 Bjelovar-Bilogora County Economic Forum and the Institute for Management Develop- Croatia (counties, cities, municipalities) were usually assessed HR022 Virovitica-Podravina County ment13, taking into consideration the availability of information by using indicators like gross domestic product per capita or at the regional and county levels in Croatia. Since 2010, the HR023 Požega-Slavonia County the unemployment rate. The purpose of introducing the de- RCI calculation methodology has changed somewhat in com- HR024 Brod-Posavina County velopment index, which is based on five indicators (average parison to the 2007 competitiveness research and the com- income per capita, average original revenues per capita, av- HR025 Osijek-Baranja County parison of rankings between those two years are only indica- erage unemployment rate, population dynamics and percent- tive. A more detailed description and explanation of changes HR026 Vukovar-Srijem County age of educated population in the population aged 16-65),14 is to the methodological approach is provided in the Research HR027 Karlovac County to improve the identification of local and regional government Methodolgy chapter. units’ development profiles. The Regional Competitiveness In- HR028 Sisak-Moslavina County

dex of Croatia is based on 123 statistical indicators from diffe- The Regional Competitiveness Index of 2007 encouraged most HR03 Adriatic Croatia rent sources and 68 perceptive indicators that were recorded of the subject counties to discuss gaps in regional and coun- HR031 Primorje-Gorski Kotar County while the survey was conducted. This array of indicators ena- ty competitiveness. It created a strong interest in improving bled a more comprehensive comparison of regions and coun- HR032 Lika-Senj County and making better use of their own existing potential, which ties. The index includes a series of indicators of the quality of HR033 Zadar County is necessary for the improvement of development capacities, life at regional and county levels and provides a rich and qual- competitiveness and quality of life of all citizens. Implementa- HR034 Šibenik-Knin County ity background for continuous monitoring of Croatia’s regional tion of the Regional Competitiveness Index makes it easier to competitiveness. In that sense, the RCI should become a reg- HR035 Split-Dalmatia County monitor and analyze the impact of various environmental ele- ular, standardized study that will be conducted every two or HR036 Istria County ments and create a climate favorable to business and invest- three years to monitor the development of Croatian regions ments, as well as to monitor and analyze the business sector’s HR037 Dubrovnik-Neretva County and counties to provide quality background information for vitality. At the same time the business sector uses the Regional managing regional development at national and subnational levels15.

13 World Economic Forum (WEF) and Institute for Management Development (IMD) 16 14 The Decision on Classification of Local and Regional Government Units According to their Level of Development’ was adopted at a Croatian Government meeting on July 15, 2010 (OG 89/10). 15 See Note 1. REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 1 The Purpose and Role of the Regional Competitiveness Index of Croatia

1.1 Regions and Counties in the Republic How to read network diagrams? of Croatia Demographics, health and culture Regions’ competitiveness profile The Republic of Croatia is administratively divided into 20 Economic 1 Education – statistical indicators counties and the City of Zagreb. During Croatia’s negotia- results – trends 5 tions and preparations for full EU membership, Eurostat, the 9 A network diagram based on statistical competitiveness indi- Statistical Office of the European Union, adopted a model of 13 cators illustrates the average ranking of individual indicators dividing Croatia into the following spatial units for statisti- 17 Basic for all counties in the given region, ranging from 1 to 21 (20 Economic infrastructure 21 counties and the City of Zagreb). The closer the value of an in- cal purposes: NUTS1 level (Croatia as a whole) and NUTS3 results – level and public sector dividual indicator is to the outer circle, the better that indicator level (current counties), which reflect the current administra- is in the given region, while the closer the indicator is to the tive division of Croatia, and three NUTS2 level regions, i.e. center, the poorer, representing an obstacle to competitive- the following 3 non-administrative spatial units for statistical Level of Business ness development. For example, the value of most indicators entrepreneurship infrastructure purposes (Table 1): development in Central and Eastern Croatia ranges from 14 to 17, which Investments and illustrates the low ranking of these indicators, while in North- entrepreneurial trends 1. Northwestern region western Croatia there is only one indicator ranking as 15th. 2. Central and Eastern (Pannonia) region 3. Adriatic region Location Regions’ competitiveness profile Advantages This statistical and division model of Croatia aligns Croatian 5 – perceptive indicators Marketing and Local Government regional development planning with the EU cohesion policy. It management 4,5 also creates the possibility of applying for development funds This network diagram is based on perceptive competitive- 4,0 from the EU structural funds16. ness indicators and illustrates the average evaluations of in- 3,5 dividual indicators for all counties in the given region. Each Clusters Infrastructure indicator has been evaluated on the scale from 1 to 7, 1 3,0 being the poorest and 7 the best. The closer the value of an 1.2 How to read regions’ competitive- individual indicator is to the outer circle, the better that indi- Technology and cator is in the given region. The closer the indicator is to the ness profiles Innovations Rule of Law center, the poorer the indicator is in the given region, representing an obstacle to competitiveness development. For example, the indicator Financial market development and This document presents a comparative analysis of each of Financial market and Education the three NUTS2 regions (Northwestern Croatia, Central and local competition local competition was ranked as the worst among indicators Eastern Croatia and Adriatic Croatia) and the counties within in all three regions, only slightly higher than 3, with Adriatic Croatia being the least satisfied with the quality of that indi- each region in six pages. It also provides tables describing Northwestern Central and Eastern Adriatic cator. Because no indicator value was lower than 3 or higher the measured values of the statistical sub-indicators and the Croatia Croatia Croatia than 5, the network diagram has been created in that range. perceptive indicators.

16 The advantage of the solution adopted is that the whole country will be able to absorb funds from the EU structural and cohesion fund even after reaching a GDP per capita of 75% of the EU average, which is projected to occur in 2020. NUTS2 strategies would 17 be developed (for structural fund purposes) during the second financial perspective period from 2014-2020. The possibility of establishing development institutions to manage those strategies will also be considered in this period. 1 The Purpose and Role of the Regional Competitiveness Index of Croatia REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

1. The first page explains the location of each region (on the 1.3 How to read counties’ How to read the tables with business environment and map of Croatia) along with four indicators (size, population, business sector statistical and perceptive indicators? competitiveness profiles? unemployment and gross domestic product) and its competitiveness ranking. Every NUTS2 region and every county (NUTS3) has been de- Information on each county is presented on four pages: scribed with a range of indicators that the quality of individ- 2. The second page compares each region with the 2007 ual competitiveness pillars in the business sector and busi- 1. The first page explains the location of each county (on the research, with two network diagrams illustrating their re- ness environment depend on. Statistical competitiveness in- map of Croatia) along with four indicators (size, population, gional competitiveness profile based on the business en- dicators are described in real measurable values. Every data unemployment and gross domestic product and its com- vironment and business sector quality (through statistical item includes the year it refers to. Based on the values of petitiveness ranking. and perceptive values of competitiveness pillars). individual indicators, rankings have been calculated, rang- 2. The second page compares each county with the 2007 ing from 1 to 21 for counties, and 1 to 3 for NUTS2 regions. research, with two network diagrams illustrating county’s Perceptive competitiveness indicators have been evaluated 3. The third and the fourth page present a graphical overview competitiveness profile: from 1 to 7, with 1 being the poorest evaluation and 7 being of the counties rankings within regions, based on the val- the best. Based on evaluations, each indicator was ranked ues of the 8 statistical indicators and 9 perceptive indica- a. county’s competitiveness profile based on statistical indi- from 1 to 21 for counties and from 1 to 3 for NUTS2 re- tors of competitiveness. The tables present an overview of cators is compared to region’s competitiveness profile17 gions. Comparing previous research allows interested par- the strengths and weaknesses of the counties’ business b. county’s competitiveness profile based on perceptive ties to identify changes not only in an indicator’s absolute environments and business sectors within the region, for indicators is compared to Croatia’s competitiveness value (notwithstanding if the indicator is objectively meas- each statistical and perceptive indicator. Strengths have ureable or if it is the perceived value obtained by the survey) profile. been marked with + (if the county is among the seven best but in rankings, which adds additional value to the analysis ranked) and the weaknesses with – (counties ranked be- because it introduces relative comparisons to other coun- 3. The third and the fourth pages give an overview of tables tween 15th and 21 rank); while fields in which the county ties (e.g. Zagreb County can be satisfied that the percent- with selected indicators that the business environment is neutral (rankings 8 to 14) have been marked with 0. age of graduate students in the total population aged 20-24 and business sector statistical and perceptive analyses increased from 4.82% in 2005 to 7.52% in 2008, and their are based on, their values and county’s rankings for indi- 4. The fifth and the sixth pages provide an overview of tables satisfaction should be even higher as the County progressed vidual indicators. from 12th position in the previous research year (2007) to with indicators that are used as background for business 8th position in this study of regional competitiveness). Of environment and business statistical and perceptive anal- course, there are also situations where an indicator’s abso- yses. Their values and the region’s rank for each specific lute value increased, but its relative position worsened be- indicator are included. cause other counties were more successful.

18 17 UtA comparison with the average values for Croatia would make no sense because that statistical indicator’s value was measured on a range of 1 to 21 (20 counties and the City of Zagreb), so Croatia’s average would always be 10.5. REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

Regional Competitiveness Index of Croatia 2010 – Counties and Measurement Results (summary)

19 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

20 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 2 Regional Competitiveness Index of Croatia 2010 – Counties and Measurement Results (summary)

2 Regional Competitiveness Index of Croatia 2010 – Counties and Measurement Results (summary)18

In 2010, the competitiveness profile at the regional level Table 2: Regions and counties ranked according to their competitiveness in 2010 has not changed much in comparison with 2007, but there Overall Competitiveness have been some changes in some RCI elements. According Statistical Rank Perceptive Rank Rank Business Business to the perceptive values of the competitiveness index, the Counties Environment Sector Business Business Business Business business community in Adriatic Croatia was more critical of 2010 2007 Rank Rank Overall Environment Sector Overall Environment Sector the quality of the business environment in 2010, while the Rank Rank Rank Rank business community in Central and Eastern (Pannonian) NUTS 2 – regions Croatia was more optimistic than the statistical indicators 1 1 HR01 Northwestern Croatia 1 1 1 1 2 1 1 1 used to measure competitiveness would suggest. 2 2 HR03 Adriatic Croatia 2 2 2 2 1 3 3 2 3 3 HR02 Central and Eastern 3 3 3 3 3 2 2 3 (Pannonian) Croatia There have also been changes in the competitiveness pro- NUTS 3 – counties files of individual counties, but the least competitive counties have not improved their ranking, while the ranking of the 1 4 Varaždin 1 1 6 5 7 1 1 1 most competitive counties remained the same. All counties 2 1 City of Zagreb 2 4 2 1 3 7 9 7 (except for Lika-Senj County) increased their gross domes- 3 3 Istria 7 5 1 2 1 13 13 10 tic product per capita, but at different rates. However, the 4 2 Međimurje 6 2 3 7 2 6 6 6 gap between the poorest and the richest counties has not 5 5 Zagreb 3 6 7 4 9 5 5 3 been reduced. In 2007, the difference was 1 to 3.14 (GDP 6 9 Zadar 4 3 10 13 8 3 2 5 per capita in Vukovar-Srijem County and GDP per capita in 7 6 Primorje – Gorski Kotar 8 7 5 6 4 12 11 12 the city of Zagreb), while in 2010 the difference was 1 to 8 8 Split -Dalmatia 12 9 4 3 5 14 17 13 3.09 (GDP per capita in Brod-Posavina County and GDP per 9 10 Dubrovnik-Neretva 11 11 9 8 10 11 12 9 capita in the City of Zagreb). This only confirms the impor- 10 13 Šibenik-Knin 14 13 8 9 6 16 16 20 tance of regional competitiveness research, which gives an 11 15 Krapina - Zagorje 13 10 11 10 12 8 10 8 overview of the effectiveness of various policies focusing 12 7 Koprivnica-Križevci 9 8 13 14 14 4 4 4 on the reduction of such gaps as soon as possible. 13 14 Osijek - Baranja 5 12 14 12 20 2 3 2 14 12 Karlovac 10 14 12 11 11 10 7 11

18 The research provides insight into competitiveness profiles at the sub-national 15 11 Bjelovar - Bilogora 16 17 15 15 17 15 14 16 level, i.e. at the NUTS2 level and the future NUTS3 statistical territorial units of Croa- 16 18 Brod-Posavina 15 16 19 18 19 9 8 11 tia. An analysis of the results provides three levels of comparison: 17 17 Virovitica - Podravina 17 15 17 16 16 17 18 14 - Discrepancies in the competitiveness of the regions and the counties; - Differences between the statistical value of the competitiveness index (business 18 19 Lika - Senj 18 18 18 21 13 18 15 21 environment and business sector) and the perceptive value at the regional and 19 16 Sisak – Moslavina 19 19 16 17 15 20 20 18 county level; 20 21 Vukovar - Srijem 20 20 20 19 18 19 19 19 - Differences between the statistical value of competitiveness index components (business environment and business sector) at the regional and county level. 21 20 Požega - Slavonia 21 21 21 20 21 21 21 17 21 2 Regional Competitiveness Index of Croatia 2010 – Counties and Measurement Results (summary) REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

2.1 The most competitive regions and perceptive competitiveness indicators, especially those that Negative changes: describe the business environment (climbing from a ranking counties are also the most developed ones. of 18th to 10th), which can be directly linked to investments Koprivnica-Križevci County dropped from 7th to 12th position in business infrastructure improvement (from information on mostly due to a considerable worsening of competitiveness in According to the ranking results of three NUTS2 regions and Krapina-Zagorje County competitiveness, Chapter 5). the business sector and business environment according to 21 counties (Table 2), Northwestern Croatia is ranked first. It is statistical indicators. Despite that, the perception of business followed by Adriatic Croatia in second place, then Central and Varaždin County climbed from 4th to 1st position, mostly due sector and business environment quality has not changed, Eastern Croatia in third. The top 5 counties are Varaždin Coun- to investments in business infrastructure (entrepreneurial which increased the discrepancies between the statistical ty, the City of Zagreb, Istria County, Međimurje County and Zag- zones) and business sector investments (from information on and perceptive competitiveness indicators (from information reb County, which are also the top 5 in terms of the Regional Varaždin County competitiveness, Chapter 5). on Koprivnica-Križevci County competitiveness, Chapter 5). Competitiveness Index. The ranking of these counties was the same in 2007, only Varaždin and Međimurje Counties and the Šibenik-Knin County moved from 13th to 10th position, mostly Bjelovar-Bilogora County dropped from 11th to 15th position, City of Zagreb have switched places. due to investments in entrepreneurial zones, and an increase mostly due to much more critical evaluations of business sec- in the number of SMEs and investments in those companies tor and business environment quality. The counties ranked as least competitive are Požega-Slavonia (from information on Šibenik-Knin County competitiveness, County, Vukovar-Srijem County, Sisak-Moslavina County and Chapter 5). Lika-Senj County, i.e. counties that suffered most in the Homeland War. All ten counties with the lowest competitive- Picture 2: Counties ranked by competitiveness and GDP per capita ness rank also have the lowest development index (below

75% of the average of the Republic of Croatia). This correla- 1 3 5 7 9 11 13 15 17 19 21 tion suggests that the cause of their poor development is, for 1 Varaždin the most part, also the cause of their poor competitiveness. City of Zagreb 3 Istria Međimurje In 2010, several counties have climbed the competitiveness 5 rankings considerably since 2007 (a jump of 3 rankings or Zagreb Primorje-Gorski Kotar Zadar more), which can be explained by changes in the quality of the 7 business sector and business environment: Split -Dalmatia 9 Dubrovnik-Neretva Positive Changes: Šibenik-Knin 11 Krapina-Zagorje Koprivnica-Križevci Osijek-Baranja Competitiveness Krapina-Zagorje County climbed from the 15th to 11th posi- 13 tion, but it is still lagging considerably behind other counties in Karlovac Bjelovar-Bilogora Northwestern Croatia. The business sector in Krapina- Zagorje 15 County became more competitive. An analysis of the competi- Brod-Posavina 17 tiveness statistical indicators indicates that considerable im- Virovitica-Podravina Lika-Senj provements have been achieved in the number of SMEs, ex- 19 Vukovar-Srijem ports and the number of employees per capita. The business Sisak-Moslavina Požega-Slavonia environment quality has seen considerable improvements in 21 business infrastructure (entrepreneurial zones, public util- GDP per capita ity fees). These measurable indicators of change in competi- Rank GDP per capita Competitiveness rank 22 tiveness are accompanied by considerable changes in the REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 2 Regional Competitiveness Index of Croatia 2010 – Counties and Measurement Results (summary)

According to statistical competitiveness indicators, there 2.2 The difference between the 2.3 Indicators suggest similar rankings were almost no changes recorded in Bjelovar-Bilogora Coun- ty, but according to perceptive indicators the business envi- perceived and statistical rankings of the in business environment and business ronment quality dropped from 5th position in 2007, to 14th competitiveness of counties highlights the sector quality among counties and position in 2010, while the business sector quality dropped importance of strengthening the regional considerable discrepancies in statistical from 7th to 16th position (from information on Bjelovar-Bilo- gora County competitiveness, Chapter 5). and county-level institutional infrastructure and perceptive evaluations of business and social ‘atmosphere’ in the creation sector and business environment quality. Sisak-Moslavina County dropped from 16th to 19th posi- of a positive motivational climate and tion, mostly because of a worsening of all business environ- The rankings of business sector and business environment ment and business sector indicators (from information on leadership. quality in each region are often even (Table 2), which indi- Sisak-Moslavina County competitiveness, Chapter 5). cates their interconnectedness. There are two exceptions, The discrepancies in counties and regions’ competitive- Osijek- Baranja County, which is ranked 5th in business en- A comparison of the data on the counties’ competitiveness ness are expected, but the discrepancies in statistical and vironment quality, but only 12th in business sector efficien- (i.e. their growth potential) with data on GDP per capita (or perceptive ranks are not always in line (Table 2). Competi- cy, and Međimurje County, which is ranked 6th in business the current level of development of individual counties), in- tiveness rankings by statistical competitiveness indica- environment quality, and 2nd in business sector efficiency. dicates a high correlation (Picture 2). Low competitiveness tors have not changed in comparison to 2007 (the big- usually goes hand in hand with low GDP per capita. A less gest changes were recorded in Varaždin County). How- In 2010 Central and Eastern Croatia evaluated the quality of its favorable competitiveness level indicates that the sustaina- ever, there are considerable changes in competitiveness business environment more highly than it did in 2007, which bility of a higher GDP per capita is endangered in the long rankings by perceptive indicators. is confirmed by the statistical indicators of the pillars of com- run. When the gap between the GDP and competitiveness petitiveness. Optimism is welcome if accompanied by policies levels is large it usually indicates that GDP includes an in- Perceptive competitiveness rankings are much bet- and programs that would result in positive changes; otherwise flow of value from outside of the region/county (i.e. subsi- ter (a difference of 6 places or more when compared to it would be counterproductive. According to respondents’ per- dies or investments). the statistical rank) in Osijek-Baranja, Brod-Posavina, ceptions, Adriatic Croatia is less competitive than indicated by Koprivnica-Križevci and Zadar Counties. The business statistical indicators measuring the quality of business envi- The largest discrepancies between competitiveness and de- community in Istria, Split-Dalmatia, Šibenik-Knin and Pri- ronment. In Northwestern Croatia perceptions are in line with velopment have been identified in Lika-Senj County, which morje-Gorski Kotar Counties were more critical in their quantitative indicators because the competitiveness rankings, is at the bottom of the competitiveness list, but ranks 7th in evaluations of competitiveness (lower by 6 places or more according to statistical and according to perceptive indicators, GDP per capita. These discrepancies are not sustainable in compared to the statistical competitiveness rank). are balanced (except for the business sector perception, which the long run and indicate the need for a different approach is perceived better than indicated by statistical indicators of to development, which has been confirmed by changes that Discrepancies between perceptive and statistical compet- the pillars of competitiveness). took place between the regional competitiveness research itiveness rankings suggest that objective statistics alone conducted in 2007 and that conducted in 2010. Lika-Senj should not be used to determine the level of a county’s The business sector quality is better perceived by respon- County is the only county where GDP per capita was lower development, but that public perception should also be dents in Osijek-Baranja, Koprivnica-Križevci, Brod-Posavina in 2010 (HRK 60,432) than it was in 2007 (HRK 62,485)19. considered. This indicates a need for careful management and Varaždin Counties than it is depicted by statistical indi- Međimurje and Zagreb Counties are ranked higher in com- of development policies at both national and subnational cators. The perception of business sector quality is worse in petitiveness than they are in GDP per capita, which leads levels, as the ability to perceive development problems is comparison to statistical competitiveness ranks in respon- to the question of why this competitiveness capacity is not key for implementing subsidiarity and cooperation-based ses received in Šibenik-Knin, Istria, Primorje-Gorski Kotar, reflected in a growth of gross domestic product per capita. development. Split-Dalmatia and Lika-Senj Counties. 23 19 The regional competitiveness study conducted in 2007 used GDP per capita data from 2004, while the study conducted in 2010 used GDP data from 2007. 2 Regional Competitiveness Index of Croatia 2010 – Counties and Measurement Results (summary) REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

The situation is similar when comparing the perceptive and 2.4.1 Regions and counties competitive strengths and business infrastructure and entrepreneurship development. statistical rankings of business environment quality. The weaknesses In the region, Lika-Senj County still has very unfavorable counties most critical of their business environment are competitiveness components. Split-Dalmatia (17th in perceptive ranking, 3rd in statistical To establish regional development policies on national, re- ranking), Istria (13th in perceptive ranking, 2nd in statistical gional and county levels, it is important to supplement the Central and Eastern (Pannonian) Croatia is the least com- ranking) and the City of Zagreb (9th in perceptive ranking information on county/regional business sector and environ- petitive, and will require the most investment to catch up and 1st in statistical ranking). The perception of the qual- ment rank with information on the quality of the elements with the competitiveness level of other regions. This applies ity of the business environment is much better than its ac- that define the business environment and business sector. to all of the competitiveness pillars. Although, we need to tual statistical ranking in Zadar (2nd in perceptive ranking Picture 1 illustrates the structure of the pillars of competi- point out that in a situation like this, when there is so much and 13th in statistical ranking), Koprivnica-Križevci, Osijek- tiveness that are monitored through a chosen selection of to gain, the dynamics of achievement in the business sec- Baranja and Brod-Posavina Counties. statistical and perceptive indicators, while their values are tor and tangible economic results are much better than they presented in Chapter 5. are in Northwestern Croatia, which is at the level of Adri- atic Croatia. All eight counties in the region are at the bot- 2.4 RCI – a basis for shaping regional Northwestern Croatia is more competitive than the other tom (ranking 13th to 21st) of the competitiveness list, both two regions in 2010, but has the weakest positive economic according to their competitiveness and their GDP per capita. development policy trends. The biggest advantage of this region is the level of entrepreneurial development, along with favorable indicators Considering the volume (pillars of competitiveness) and con- regarding demographics, health, cultural activities, educa- 2.4.2 Regions and counties development phases and tents (horizontal comparison with Croatian regions and coun- tion and basic infrastructure. There are still deeper develop- competitiveness ties and comparisons in time – since 2007) of the RCI, it is a ment problems in Krapina-Zagorje and Koprivnica-Križevci reliable tool for monitoring changes in development capaci- counties because they are still lagging behind the rest of the KBy using the theoretical framework of the three main devel- ties at the regional (NUTS2) and county (NUTS3) level. This is region according to a series of statistical indicators (espe- opment phases (1st: resources driven, 2nd: efficiency driven further confirmed by the recognition of Croatia’s methodo- cially investments and entrepreneurial trends, education, de- and the 3rd: innovations driven) and the two interim phases logical approach as a best practice case to be followed while mographics and business sector economic results). (transition from resources driven development to efficiency conducting the first study of regional competitiveness in all driven development and from efficiency driven development 27 Member States of the European Union20. Adriatic Croatia, ranking 2nd in the competitiveness list, to innovations driven development22) used by the World Eco- has a considerably different competitiveness profile than nomic Forum in identifying a country’s level of competitive- The RCI can be used to advance regional development poli- Northwestern Croatia, with a GDP per capita which is around ness23 and with the information on individual counties’ com- cies in two ways: as a resource for analytical information 22% lower than that in Northwestern Croatia21. The reason petitiveness obtained during this research, we conducted an on the competitive strengths and weaknesses of regions for the second ranking is a very good business environment experimental classification of counties to provide an- over and counties and as a tool to measure the intensity of the (demographics and education) and the presence of good view of the development phases counties are currently ex- presence of individual competitiveness pillars according to a business sector indicators (investments and entrepreneurial periencing. In the development phases model the level of a county’s/region’s development phase. trends and trends in business economic results). However, county’s development is measured by gross domestic pro- the region still faces problems with the quality of basic and duct (GDP) per capita.

20 See Note 1. 21 GDP per capita in Adriatic Croatia is HRK 69,194 (EUR 9,479 – 1 EUR= HRK 7.3), while in Northwestern Croatia it amounts to HRK 87,899 (EUR 12,041). Central and Eastern Croatia has even more significant difference, with a GDP of HRK 50,921 (EUR 6,975), which is 42% lower than the GDP per capita in Northwestern Croatia. 22 Porter, M., The Competitive Advantage of Nations, New York: Free Press, 1990. 23 The Global Competitiveness Report 2010-2011 (http://www.weforum.org/reports) 24 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 2 Regional Competitiveness Index of Croatia 2010 – Counties and Measurement Results (summary)

Table 3: GDP and Development Phase of Croatian Counties The GDP in the middle group, which includes 10 counties Development Phase GDP per capita (% of (Koprivnica-Križevci, Varaždin, Lika-Senj, Split-Dalmatia, Croatian average) Karlovac, Zadar, Osijek-Baranja, Šibenik-Knin, Međimurje and Sisak-Moslavina), is between 75% of the average Poorly Developed (resources driven < 75% Croatian GDP (EUR 7,335) and the average Croatian GDP development) (EUR 9,781). These counties all are developing many com- Developed (efficiency driven develop- ≥ 75% and <100% petitiveness components, especially the basic ones, which ment) are ranked among the best seven or in the middle of the list Highly Developed (innovations driven ≥ 100% of all the counties. Lika-Senj, Šibenik-Knin and Sisak-Mo- development) slavina Counties have the poorest components of competitiveness needed for innovation driven development (com- Based on the indicators of GDP per capita in 2007 (which plexity of business management, technology and innovations, clusters). measured EUR 9,781 on average for Croatia as a whole)24 counties have been classified in three groups: poorly deve- In the most developed counties, which have a GDP per cap- loped regions, developed regions and highly developed re- ita above the Croatian average (City of Zagreb, Istria, Pri- gions25 (Table 3). morje-Gorski Kotar and Dubrovnik-Neretva), the competitiveness components of education, level of entrepreneur- Classifying competitiveness indicators (statistical and per- ship development and economic results are strongest. ceptive) according to these three development phases provided an opportunity to group the counties according to This information should serve as an illustration only, but their development capacity. It is to be noted that this is a similar to the research on regional competitiveness in the simplified approach, which doesn’t include the weighted EU, the importance of particular competitiveness compo- values of the competitiveness components in each phase. nents, especially education and entrepreneurship development, has been confirmed. Further methodological im- The GDP in seven counties (Zagreb, Krapina-Zagorje, Virovit- provement needs to be made in order to link competitive- ica-Podravina, Bjelovar-Bilogora, Požega-Slavonia, Vukovar- ness components and development phases. This would Srijem and Brod-Posavina) is less than 75% of the average contribute to the creation of excellent background informa- Croatian GDP (less than EUR 7,335). In each of those counties tion that could be used to develop the instruments of eco- (except in Zagreb County, which is at the border of transitio- nomic, social, educational and research policies that en- ning into the group of developed counties) there are conside- hance the quality of the particular competitiveness compo- rable problems with almost all of the competitiveness components that are limiting the overall level of competitiveness nents, with the worst results recorded in quality of education, of a region, as well as strengthen overall competitiveness. entrepreneurship and the level of economic results.

24 Data on 2007 GDP was used because it is final. Data from 2009 and 2010 are still provisional. 25 The regional categorisation approach was used in the EU Competitiveness Index 2010, p. 46.

25 2 Regional Competitiveness Index of Croatia 2010 – Counties and Measurement Results (summary) REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

Table 4: Counties According to Their Development Phases and Quality of Competitiveness Components

RESOURCES’ DRIVEN DEVELOPMENT EFFICIENCY DRIVEN DEVELOPMENT EFFICIENCY DRIVEN DEVELOPMENT INNOVATIONS’ DRIVEN DEVELOPMENT

Investments and Level of Basic infrastructure Demographics, Education Education Business Financial market Economic Economic Marketing and Technology and GDP per capita Counties Rule of Law Location Advantages Infrastructure entrepreneurial entrepreneurship Local Government Clusters and public sector health and culture (statistically) (perceptive) infrastructure and local competition results – trends results – level management Innovations in EUR trends development

City of Zagreb 16.754 1

Istria County 12.403 1

Primorje-Gorski Kotar County 11.251 1

Dubrovnik-Neretva County 9.972 1

Koprivnica-Križevci County 9.268 2

Varaždin County 8.309 2

Lika-Senj County 8.278 2

Split-Dalmatia County 8.012 2

Karlovac County 8.001 2

Zadar County 7.895 2

Osijek-Baranja County 7.990 2

Šibenik-Knin County 7.855 2

Međimurje County 7.660 2

Sisak-Moslavina County 7.413 2

Zagreb County 7.327 3

Krapina-Zagorje County 7.251 3

Virovitica-Podravina County 7.067 3

Bjelovar-Bilogora County 6.832 3

Požega-Slavonia County 6.634 3

Vukovar-Srijem County 5.822 3

Brod-Posavina County 5.415 3

The marks , and in the tables mark the quality of individual competitiveness indicators: the county is ranked among the seven best per quality of competitiveness components 26 the county is ranked among the seven worst per quality of competitiveness components the country is ranked in the middle of the ranking list per quality of competitiveness components REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 2 Regional Competitiveness Index of Croatia 2010 – Counties and Measurement Results (summary)

RESOURCES’ DRIVEN DEVELOPMENT EFFICIENCY DRIVEN DEVELOPMENT EFFICIENCY DRIVEN DEVELOPMENT INNOVATIONS’ DRIVEN DEVELOPMENT

City of Zagreb 16.754 1

Istria County 12.403 1

Primorje-Gorski Kotar County 11.251 1

Dubrovnik-Neretva County 9.972 1

Koprivnica-Križevci County 9.268 2

Varaždin County 8.309 2

Lika-Senj County 8.278 2

Split-Dalmatia County 8.012 2

Karlovac County 8.001 2

Zadar County 7.895 2

Osijek-Baranja County 7.990 2

Šibenik-Knin County 7.855 2

Međimurje County 7.660 2

Sisak-Moslavina County 7.413 2

Zagreb County 7.327 3

Krapina-Zagorje County 7.251 3

Virovitica-Podravina County 7.067 3

Bjelovar-Bilogora County 6.832 3

Požega-Slavonia County 6.634 3

Vukovar-Srijem County 5.822 3

Brod-Posavina County 5.415 3

27 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

28 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

Priorities and recommendations

29 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

30 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 3 Priorities and recommendations

3 Priorities and recommendations

Research on the competitiveness of regions and counties The 2010 study echoes the recommendations of 2007, 1. Develop monitoring tools (such as the balanced in 2010 confirmed that differences in competitiveness are which have been quoted in this document as a reminder. An scorecard model) based on biannual/triennial stu- a direct result of differences in the quality of the business analysis of the operative programs of the Ministry of Region- dies of regional competitiveness that strengthen environment and business sector. Furthermore, comparing al Development and the Ministry of the Economy, Labor and local capacities for participation in development this study to the study conducted in 2007 indicates that a Entrepreneurship from 2007-2010 confirms that many rec- management. The balanced scorecard29 approach con- long-term regional development strategy, consistent pro- ommendations are being implemented: verts a strategic plan from a passive document to an ac- grams and policies, implementation timeliness and cooperation plan by identifying what needs to be done and how to tion and the continuous monitoring of results are required to - A basic strategic, regulatory and operative infrastructure measure it. An important aspect of this approach is that strengthen county and regional competitiveness. Research for regional development management has been set up achieved objectives are analyzed from four perspectives on regional competitiveness can be used as a tool to moni- (i.e. strategic documents and the Act on Rural Develop- (learning and growth, business process, customer satis- tor the implementation of the overall regional development ment have been adopted, the Agency for Rural Develop- faction and financial impact). These four perspectives are strategy and upgrade and develop complementary policies ment has been set up, and county development agencies very important when attempting to build regional com- and instruments focused on building the capacity of counties are being set up to encourage cooperation between and petitiveness because it is impossible to reduce regional and regions to be competitive. within regions). development imbalances without building the capacity of local governments, companies, the academic community It is very important that the three main strategic objectives - Operational programs of the Ministry of the Economy, La- and civil society. of the Croatian Regional Development Strategy for 2011- bor and Entrepreneurship support the development of a 201326 , which are to develop counties and statistical re- network of development agencies. Instruments: gions, develop less favored areas and develop border areas, are compatible with the current European Union guidelines - Programs of the Ministry of the Economy, Labor and En- - Provide expert assistance in the selection and develop- on achieving regional policy objectives: (a) convergence, (b) trepreneurship support the strengthening of entrepreneu- ment of an approach to monitoring the implementation regional competitiveness and employment and (c) European rial infrastructure (entrepreneurial centers, entrepreneurial of the Croatian Regional Development Strategy for 2011- territorial cooperation27. An analysis of the implementation of zones) 2013, and strategic development plans on the county the recommendations of 2007 indicates that the recommen- level. dation to cooperate when addressing development problems - A regional component was included in the planning of in- was achieved through the adoption of the Croatian Regional vestment activities. - The Agency for Regional Development and city and coun- Development Act (2009), the establishment of the Agency for ty development agencies should be trained in the use of Croatian Regional Development (2008)28, the drafting of the Additionally, to correct the development imbalance more appropriate monitoring tools. Operational Program for Regional Competitiveness and other quickly--i.e. its reduction and competitiveness building on Operational Programs and the activation of all components in the regional level, which overall Croatian competitiveness support of regional development in the IPA instrument. depends on--to the following is recommended:

26 Croatian Regional Development Strategy for 2011– 2013, May 2010, version 1.0. 27 Documents: Working for the Regions: EU Regional Policy 2007-2013, 2008; Regions for Economic Change: Fostering Competitiveness through Innovative Technologies, Products and Healthy Communities, March 2007; European Regions and Cities – Partners for the Jobs and Growth Strategy, Committee of the Regions, 2007. 28 OG 155/08 29 The Balanced scorecard is one of the most common appoaches used to monitor the achievement of strategic objectives implemented in the business sector, Government institutions and non-profit orgaizations. This approach links activities with vision and 31 objectives with strategies, improves internal and external communication and monitors the perforance of the managed system in relation to its strategic objectives. 3 Priorities and recommendations REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

2. Strengthen leadership capacity for the development Instruments: 5. Intensify the use of open coordination at the mini- of a “Triple Helix” model of cooperation among uni- sterial level to build consistency in government versities, the business sector and regions/counties - Intensify training on the options available under IPA policies aimed at eliminating development gaps be- in dealing with regional development problems and Regional Development instruments, measures and tween regions (NUTS2) and counties (NUTS3). building regional competitiveness funds through business associations, support institutions (entrepreneurship centers, development Instruments: agencies) and local government institutions. Instruments: - Intensify training programs for writing project pro- - Organize an intersectoral round table at the ministe- - Develop a mechanism of cooperation among the posals and preparing technical documentation in or- rial level on regional development in Croatia and set regions and in the regions as a foundation for the der to build institutional capacity and provide practi- up a task force authorized to implement open co- more efficient use of existing resources and the cal experience in investment management. ordination in the initiation of policies and programs strengthening of innovation. focused on balancing regional development. - Organize consultations with interested parties to 4. Analyze the efficiency of the territorial organiza- solve local community development problems. tion of Croatia and work on optimizing that system - Identify regional locations for different government to build management and financial capacities for agencies or parts of government agencies. cooperation on all organizational levels and with all responsible stakeholders in the regional development process. The research on regional competi- 3. Build operative capacities for the absorption of tiveness conducted in 2010 confirmed the reliability of IPA funds and future EU programs in support of estimates of the development capacities of individual regional development. Operational programs that su- counties, and the reasons why such a small number of pport regional development offer considerable financial counties were able to improve their development level support to local government units and companies, a since 2007, when regional competitiveness was meas- key contribution to building local competitiveness. The ured for the first time. insufficient absorption of these instruments, measures and funds due to the lack of good projects and poor Instruments: technical capacities for program management require attention and action. - Analyze the financial state and leadership and professional capacity of Croatian territorial organiza- tions to efficiently manage development. - Develop a territorial organization concept for Croatia that is based on sustainable development criteria

32 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 3 Priorities and recommendations

Overview of priorities and recommendation from the “Regional Competitiveness Index of Croatia 2007“

1. Cooperation in solving development problems. The te- - Start mechanisms of development of the “Triple Helix” Instruments: rritorial division of Croatia into counties and regions requires model of cooperation among universities, the business - Strengthen the capacities of local government units for decentralization and adequate institutional capacity to enable sector and regions/counties. public-private partnerships. cooperation at all organizational levels and with all responsible stakeholders fully participating in the regional development - Promote national and international investments in regional process. Regional development planning should be based on industry. 3. Use both financial and non-financial instruments to restruc- the principles of a partnership for sustainable regional devel- - Strengthen the export capacities of businesses throughout ture the business sector in counties and regions. To restruc- opment. Croatia. ture the business sector in counties and regions, the private sector must receive adequate market incentives. Instruments: 6. Strengthen regional infrastructure. The key parameter for - Establish a regional development agency with the capacity Instruments: increasing the competitiveness of a county/region and their to assess the sustainability of the regional development capacity for global co-operation is the increased availability - Support the development of new industries and clusteriza- strategies. and quality of the infrastructure that affects the quality and tion in the counties and regions. - Identify regional locations for different Government agen- diversity of operations and attractiveness of the location for - Support innovative activities which add value to traditional cies or parts of Government agencies. business and investment. industries (including, amongst others, the food production, - Develop mechanisms of cooperation among the regions wood processing, metal-processing and textile industries). Instruments: and within the regions, as a foundation for the more e- fficient use of existing resources and strengthening of i- 4. Strengthen county and regional entrepreneurial capacity. - Provide broadband Internet throughout Croatia. Improve nnovative capacities. Entrepreneurship and innovative businesses have to become the ICT connections between regions and counties. - Develop mechanisms for stakeholder consultations as a primary agents of economic growth, especially through promot- - Ensure flight connections among the three regions. tool for solving local development problems ing SME competitiveness and enabling their access to interna- - Improve the quality of physical infrastructure. tional markets. 2. Develop knowledge-based regions. Knowledge should be

the focus of regional activity, as well as a carefully managed Instruments: 7. Improve the quality of life in regions and counties. Improving the quality and availability of education, health resource. Knowledge transformed into new value-added pro- - Support programs that contribute to the integration of services, housing and possibilities for leisure and recreation, ducts and services should become the core of the sustainable small and medium enterprises into the EU common mar- should increase the quality of life for Croatian citizens. competitive progress of counties that are part of individual re- ket (for example: quality certification and development of gions. absorption capacity for innovations). Instruments: - Strengthen the network of support institutions (entrepre- Instruments: - Polycentric development policy in Croatia should always neurial centers, incubators, technological centers) and the be linked to policies ensuring a higher quality of life (for - Strengthen leadership capacity for managing regional development of business services focused on the transfer example, through the availability of educational programs, competitiveness development at regional and local levels. of know-how to SMEs. health services and elderly care services). - Provide training in the key skills necessary for managing - Endorse the development of financial instruments focused - Ensure housing opportunities that are attractive and a- local economic development. on small innovative businesses (e.g. development of the ffordable for young people of all professions, especially Business Angels Association). - Strengthen inter-county cooperation in providing the edu- those that are in demand in individual counties/ regions. cational programs (from secondary to the tertiary level) - Identify and support the development of the cultural iden- necessary for local development. 5. Strengthen investments in regions and counties. Improving the level of investments in general, and especially of foreign tity of counties within each region. - Establish innovation centers in the regions, to make direct investments, should be supported by the establishment innovations more accessible to the market. of venture capital funds and public-private partnership models.

33 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

34 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

Profiles of competitiveness of Croatian regions and counties

35 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

36 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 4 Profiles of competitiveness of Croatian regions and counties

4 Profiles of competitiveness of Croatian regions and counties

Regions’ competitiveness profiles – statistical indicators Competitiveness Statistical rank Perceptive rank rank Demographic, health North Western Croatia 1 1 1 and culture Economic results - 1 Education Adriatic Croatia 2 2 2 trends 5 9 Central and Eastern (Pannonian) Croatia 3 3 3 13 17 Basic infrastructure Economic results 21 The ranking of regions by competitiveness has not changed in 2010, in comparison to the research conducted in - level and public sector 2007, but the rank resulting from statistical and the one resulting from perceptive indicators have been harmonized. According to statistical indicators, competitiveness of Central and Eastern Croatia is considerably weaker than the competitiveness of the other two regions in 2010, but it is important to point out that this region with poor Level of Business entrepreneurship infrastructure environment and business sector elements has better trend of economic results than Northwestern Croatia, and development almost the same one as Adriatic Croatia. Investments and entrepreneurial trends Although, according to statistical competitiveness indicators Adriatic Croatia is closer to the best region, Northwestern Croatia, according to perceptive indicators there is almost no difference between the regions of Central and Eastern Croatia and Adriatic Croatia. Regions’ competitiveness profiles – perceptive indicators

Regional imbalances of competitiveness capacity (measured by statistical indicators) and similarities in perception Location of quality of particular elements in all the regions indicate that in drafting of the Strategy of Regional Development advantages 5 of the Republic of Croatia, communication with citizens, business community and representatives of local and Marketing and Local regional government units must not be overlooked, to achieve the energy necessary to boost changes and Management 4,5 government cooperation. It is important to point out that the persons who participated in the survey in all three regions said that 4,0 local government and low level of financial market development are considerable obstacles to competitiveness 3,5 development. Low evaluation of location advantages in all three regions is worrying, as it is one of the key elements Clusters Physical for investors. This competitiveness pillar has been described through five indicators, out of which three are the 3,0 infrastructure direct result of economic policy, and public and private sector efficiency (prices of business facilities and land, operating costs – public utility fees and construction costs, direct labor costs) and are rated by 3,5 or even less Technology, than 3 (in the evaluation scale where 1 is the poorest and 7 – the best), which is in line with many other research, innovations Rule of Law such as research of business environment quality (World Bank Doing Business or GEM – Global Entrepreneurship Monitor). Financial market and Education local competition

NORTHWESTERN CENTRAL AND EASTERN ADRIATIC CROATIA 37 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

38 Nedostaje podatak “Broj zaposlenih ukupno” (zadnji red) u tablici statistički indikatori u poslovnom sektoru ??

REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

NORTHWESTERN CROATIA

The City of Zagreb Zagreb County Krapina-Zagorje County Varaždin County Koprivnica-Križevci County Međimurje County

39 HRO1 NORTHWESTERN CROATIA REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

HR01 NORTHWESTERN CROATIA

Surface (km²) 2006 8.669

Population 2009 1.672.507

Unemployment rate (%) 2009 9,7

GDP (mil kn) 2007 147.012

Competitiveness rank 1

Rank of quality of business environment 1

Rank of business sector quality 1

The Region of Northwestern Croatia has the largest competitive capacity in Croatia, which was maintained in 2010 in comparison to research conducted in 2007. Although it is the smallest region, with the highest population density, lowest unemployment rate and highest gross national product per capita, it is also a region with considerable differences in the quality of competitiveness statistical indicators (although the differences in perception are considerably smaller). The City of Zagreb and Varaždin County hold the leading position for several statistical indicators of competitiveness. The County of Koprivnica-Križevci holds the position on the last third of a series of these indicators, while Krapina-Zagorje County is either in the middle or the last third among all counties in Croatia. Building competitive capacity in those parts of the region that are lagging behind is the largest challenge the regional development policy of that small and relatively rich region is going to face.

40 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HRO1 NORTHWESTERN CROATIA

Competitiveness profile of the region of Northwestern Croatia – RCI 2010 and RCI 2007 Comparison* statistical indicators

Demographics, health and culture Economic results - 1 NORTHWESTERN CROATIA Education trends 5 Indicator 2010 2007 Difference 9 13 STATISTICAL R 1 2 1 17 Basic infrastructure Economic results 21 Business Environment R 1 2 1 - level and public sector Business Sector R 2 1 -1

Level of Business entrepreneurship infrastructure development STATISTICAL R 1 1 0 Investments and entrepreneurial trends Business Environment R 1 1 0

Business Sector R 1 1 0 Competitiveness profile of the region of Northwestern Croatia – perceptive indicators FINAL R 1 1 0

Business Environment R 1 1 0 Location advantages Business Sector R 1 1 0 7,0 Marketing and Local management 6,0 government R = Rank 5,0 4,0 *comparison is indicative only, due to slight changes in 2010 calculation methodology 3,0 Clusters 2,0 Physical 1,0 infrastructure

Technology, innovations Rule of law

Financial market and Education local competition

41 HRO1 NORTHWESTERN CROATIA REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

Comparison of counties Northwestern Croatia - statistical index

Demographics, Investments Level of Demographics, Investments Level of Basic Business Economic results Economic results Basic Business Economic results Economic results health and Education and entrepreneurship health and Education and entrepreneurship infrastructure infrastructure - level - trends infrastructure infrastructure - level - trends culture and public entrepreneurial development culture and public entrepreneurial development sector trends sector trends

City of Zagreb Međimurje County 0 1 1 1 1 0 1 1 1 2 2 2 2 3 3 3 3 3 3 4 3 4 4 5 4 5 6 5 6 6

Koprivnica-Križevci County Varaždin County 0 0 1 1 1 1 2 2 2 3 3 3 4 4 4 3 4 4 4 4 6 6 6 6 6 4 5 5 6 6

Krapina-Zagorje County Zagreb County 0 0 1 2 1 2 2 2 2 2 3 2 3 3 3 4 4 5 5 5 5 5 5 5 5 5 6 6 6 6

Zagreb County

Krapina-Zagorje County

Varaždin County

Koprivnica-Križevci County

Međimurje County

42 first 7 counties last 7 counties middle range REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HRO1 NORTHWESTERN CROATIA

Comparison of counties Northwestern Croatia - perceptive index

Financial market Financial market Location Local Physical Technology, Marketing and Location Local Physical Technology, Marketing and Rule of law Education and local Clusters Rule of law Education and local Clusters advantages government infrastructure innovations management advantages government infrastructure innovations management competition competition

City of Zagreb Međimurje County 0 0 1 2 1 2 3 3 2 3 3 3 3 3 3 4 4 4 4 5 5 4 5 6 5 6 6 6 5 6 6 6

Koprivnica-Križevci County Varaždin County 0 1 0 1 1 1 1 1 1 1 2 2 2 2 1 2 2 2 3 2 3 4 4 4 3 4 4 5 5 5 6 6

Krapina-Zagorje County Zagreb County 0 0 1 1 1 2 1 2 2 2 3 3 3 4 4 3 4 4 5 5 4 5 5 5 5 6 6 6 6 5 6 6

Zagreb County

Krapina-Zagorje County

Varaždin County

Koprivnica-Križevci County

Međimurje County

first 7 counties last 7 counties middle range 43 HRO1 NORTHWESTERN CROATIA REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

BUSINESS ENVIRONMENT

A. STATISTICAL INDICATORS 2010 2007 B. PERCEPTIVE INDICATORS 2010 2007

RANK VALUE RANK VALUE RANK VALUE RANK VALUE

Demographics, health and culture Location advantages Population estimate (2009, 2006) 1 1.672.507 1 1.670.423 Favorable geographical position 1 5,41 Share of population aged 25-64 in total population (2009, 2001) 1 55,8 1 54,4 Favorable climate conditions 3 5,26 Net migration rate in the total population ((2007 - 2009) / 2009; (2002- Price of business facilities/offices and land 3 2,83 2 7,3 2 13,8 2006)/2006) Overheads (public utility fees and construction prices) 3 2,36 Vital index (birth/death ratio) (sum 2007 - 2009; (2002-2006)/2006) 1 89,2 1 87,2 Direct labor cots 3 3,29 Number of physicians per capita (2008, 2006) 1 317,2 1 296,8 Local government Education Public confidence in politicians' financial honesty 3 2,65 Percentage of persons with 2-year college education in population aged 2 5,4 2 5,4 Behavior of public officials in the decision making process 3 2,86 3 3.3 25-64(2001) Influence of illegal payments to business operations 3 3,46 3 3.9 Percentage of persons with university education in population aged 25-64 1 13,5 1 13,5 (2001) Quality of services provided to entrepreneurs by local governnment units 2 3,45 Pre-school education attendance / population aged 0-4 (2008/2009; Quality of communication and cooperation of local government institutions 1 68,3 1 44,5 3 3,50 2005/2006) and the business sector Enrolled students/ population aged 20-24 (2008/2009; 2005/2006) 1 48,4 1 45,5 Physical infrastructure Graduated students / population aged 20-24 (2008; 2005.) 1 9,6 1 6,4 General infrastructure 1 4,78 1 4.7 Basic infrastructure and public sector Quality of railways 1 4,25 1 4.0 Quality of available port facilities and waterways 3 2,31 2 3.6 Recovered waste / total waste (2006; 2004) 1 12,6 3 3,2 Airline connections to other countries 1 4,68 1 5.2 Share of aid in LGUs total revenues (2009; 2006) 1 3,0 1 3,4 Quality of power supply 1 5.6 Number of solved cases per judge (2009; 2006) 1 317,1 0 323,0 1 5,83 Number of unsolved cases in Land Register per capita (2009; 2007) 2 1.198,2 2 3.892,1 Rule of law Average surtax rate in the county (2010; 2007) 3 11,2 3 11,1 Share of gray economy in business activities 2 3,53 1 3.5

Business infrastructure Quality of legal framework for dispute settlement 2 3,54 2 3.4 Protection of ownership rights (financial assets included) 1 4,22 1 3.8 Surface of entrepreneurial zones per capita (2007; 2006) 2 18,3 1 13,9 Costs that companies suffer due to organized crime 3 3,98 Number of employees in entrepreneurial zones (2007) 1 1.759,4 Independence of judiciary from political influences 1 3.2 Business facility public utility fees, 1st zone (highest rate; kn/m3) (2010) 2 104,0 3 3,71 Housing prices in the county center, per m2 2 11.759,0 Education Distance to airports (km), Dubrovnik, Split +50, Pula, Zadar +100 1 45,4 Quality of public schools 1 5,73 1 4.8 Quality of math and science classes in schools 1 5,66 1 5.2 Quality of management and business schools 1 4,87 1 3.7 Availability of scientists and engineers 1 4,88 1 4.6 Investment in education and employee development 1 3,94 1 3.7 Financial market and local competition Availability of sources of finance for businesses 2 3,08 1 3.9 Level of difficulty in obtaining a loan based on sound business plan and 2 2,36 2 3.2 without collaterals Access to finance of businesses with innovative, but risky, projects 1 2,53 2 2.4 44 Competition strength 1 5,33 1 5.4 Customers and purchasing decisions 1 3,13 1 3.5 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HRO1 NORTHWESTERN CROATIA

BUSINESS SECTOR

A. STATISTICAL INDICATORS 2010 2007 B. PERCEPTIVE INDICATORS 2010 2007

RANK VALUE RANK VALUE RANK VALUE RANK VALUE

Investments and entrepreneurial trends Technology and innovations Active legal entities - trends (2008/2006; 2005/2003) 2 118.2 2 104.6 Technological development results 1 3.93 3 3.7 Total investments per facility location1 1 98,209.5 1 40,791.7 Implementation of technology in production processes 1 4.08 1 3.8 Share of investments in equipment in total investments per facility location2 1 50.9 1 49.3 Businesses' competitiveness elements 1 3.99 1 3.9 SME investments in new long-term assets /total SME revenues (2009; 2006) 2 5.3 2 8.2 Sectors of export oriented companies 1 4.34 Direct foreign investments (000 EUR) per capita (2005-2009; 2000-2007) 1 6,814.3 1 4,692.4 Investment in research and development 1 4.02 1 3.8 Number of SMEs per capita - trends (2009/2004; 2006/2004) 1 127.5 2 108.5 Clusters Level of entrepreneurship development Number of clusters in different sectors 1 3.44 Trades, crafts and freelance professions per capita (2008; 2005) 2 21.5 2 22.5 Number of local suppliers 1 4.46 1 4.9 Number of employed in SMEs per capita (2009; 2006) 1 16.8 1 16.2 Quality of local suppliers 1 4.26 1 4.7 SMEs (period profit - period loss) /total SME revenues (2009; 2006) 1 1.3 1 3.5 Availability of specialized R&D services 1 4.21 1 4.9 Total SMEs revenues / total SMEs assets (2009; 2006) 2 63.3 1 87.2 Cooperation of businesses with universities and institutes in R&D 1 3.92 1 3.4

Gross value added per industry employee (2008; 2004) 1 227.3 1 202.5 Marketing and management

Economic results - level Quality of marketing in businesses 1 4.75 1 4.6 GDP per capita (1000kn/inhabitant) (2007; 2004) 1 88.1 1 61.1 Placement of county product and services in Croatian markets and exports 1 4.42 1 4.8 Unemployed persons/total population aged 25-64 (2009; 2006) 1 7.2 1 8.8 Readiness to delegate authority to other colleagues in the company 2 3.73 1 3.8 Unemployed for 12 or more months / total unemployment (2009; 2006) 2 47.8 2 56.8 Senior management positions (relatives vs. professional managers) 1 3.68 1 4.3 Gross salaries per employee (2008; 2006) 1 79,994.9 1 57,068.5 Employer - employee relationship 1 4.45 1 4.6 Number of employed per capita (2008; 2006) 1 41.9 1 39.3

Economic results - trends GDP Index (2007/2004; 2004/2001) 1 129.7 2 130.0 Employment in SMEs (2009/2007) 1 102.5 3 95.5 Exports (2008/2006, 2005/2003) 2 113.6 1 134.3 Unemployed (2009/2007; 2006/2004) 2 99.3 2 95.0 Profit before tax in SMEs (2009./2007.) 2 80.3 2 164.3 Total employment (2008/2006; 2006/2004) 3 106.7 1 104.7

1 - for 2010: sum of 2006., 2007 and 2008 per capita; for 2007: sum of 2003, 2004 and 2005 per capita 45 2 - for 2010: sum of 2006, 2007 and 2008 / sum of 2006, 2007 and 2008; for 2007: sum of 2003, 2004 and 2005 / sum of 2003, 2004 and 2005. HR011 THE CITY OF ZAGREB REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

HR011 THE CITY OF ZAGREB

Surface (km²) 2006 641

Population 2009 790.298

Unemployment rate (%) 2009 6,1

GDP (mil kn) 2007 96.658

Competitiveness rank 2

Rank of quality of business environment 2

Rank of business sector quality 4

46 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HR011 THE CITY OF ZAGREB

City of Zagreb Competitiveness Profile – Statistical Indicators RCI 2010 and RCI 2007 Comparison*

Demographics, health and culture City of Zagreb Economic results - 1 NORTHWESTERN City of Zagreb Education trends CROATIA Indicator 2010 2007 Difference

STATISTICAL R 2 2 0 Basic Economic results infrastructure Business Environment R 1 2 1 - level 21 and public sector Business Sector R 3 1 -2

Level of Business entrepreneurship infrastructure development PERCEPTIVE R 7 2 -5 Investments and entrepreneurial trends Business Environment R 9 2 -7

Business Sector R 7 2 -5 City of Zagreb Competitiveness Profile– Perceptive Indicators FINAL R 2 1 -1

Business Environment R 2 1 -1 Location advantages City of Zagreb Business Sector R 4 1 -3 7 Croatian average Marketing and Local management R = rank government

*comparison is indicative only, due to slight changes in 2010 calculation methodology Clusters Physical 1 infrastructure

Technology, innovations Rule of law

Financial market and Education local competition

47 HR011 THE CITY OF ZAGREB REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

BUSINESS ENVIRONMENT

A. STATISTICAL INDICATORS 2010 2007 B. PERCEPTIVE INDICATORS 2010 2007

RANK VALUE RANK VALUE RANK VALUE RANK VALUE

Demographics, health and culture Location advantages Population estimate (2009, 2006) 1 790.298 1 783.518 Favorable geographical position 10 5,17 Share of population aged 25-64 in total population (2009, 2001) 3 56,37 2 55,57 Favorable climate conditions 16 4,90 Net migration rate in the total population ((2007 - 2009) / 2009; (2002- Price of business facilities/offices and land 20 1,97 5 8,87 7 11,49 2006)/2006) Overheads (public utility fees and construction prices) 21 1,41 Vital index (birth/death ratio) (sum 2007 - 2009; (2002-2006)/2006) 4 98,49 6 88,74 Direct labor cots 20 2,66 Number of physicians per capita (2008, 2006) 1 491,57 1 458,45 Local government Education Public confidence in politicians' financial honesty 19 2,14 Percentage of persons with 2-year college education in population aged 2 7,02 2 7,02 Behavior of public officials in the decision making process 21 2,31 20 2,95 25-64(2001) Influence of illegal payments to business operations 18 3,14 12 4,02 Percentage of persons with university education in population aged 25-64 1 21,52 1 21,52 (2001) Quality of services provided to entrepreneurs by local governnment units 20 2,76 Pre-school education attendance / population aged 0-4 (2008/2009; Quality of communication and cooperation of local government institutions 1 85,82 1 57,83 21 2,72 2005/2006) and the business sector Enrolled students/ population aged 20-24 (2008/2009; 2005/2006) 1 61,51 1 58,35 Physical infrastructure Graduated students / population aged 20-24 (2008; 2005.) 1 12,72 1 8,54 General infrastructure 5 4,76 3 5,00 Basic infrastructure and public sector Quality of railways 6 4,52 3 4,33 Quality of available port facilities and waterways 12 2,72 7 3,86 Recovered waste / total waste (2006; 2004) 4 19,18 4 6,71 Airline connections to other countries 6 5,14 4 5,49 Share of aid in LGUs total revenues (2009; 2006) 1 0,58 1 0,11 Quality of power supply 7 5,86 1 6,19 Number of solved cases per judge (2009; 2006) 1 361,00 7 335,00 Number of unsolved cases in Land Register per capita (2009; 2007) 18 1.889,92 20 6.727,35 Rule of law Average surtax rate in the county (2010; 2007) 21 18,00 21 18,00 Share of gray economy in business activities 12 3,34 8 3,49 Quality of legal framework for dispute settlement 18 3,00 16 3,33 Business infrastructure Protection of ownership rights (financial assets included) 17 3,83 3 3,93 Surface of entrepreneurial zones per capita (2007; 2006) 21 21 Costs that companies suffer due to organized crime 16 3,59 Number of employees in entrepreneurial zones (2007) 21 Independence of judiciary from political influences 21 3,10 12 2,95 Business facility public utility fees, 1st zone (highest rate; kn/m3) (2010) 17 138,00 Education Housing prices in the county center, per m2 5 15.225,00 Distance to airports (km), Dubrovnik, Split +50, Pula, Zadar +100 1 15,00 Quality of public schools 6 5,69 2 4,91 Quality of math and science classes in schools 4 5,76 3 5,49 Quality of management and business schools 1 5,69 1 4,47 Availability of scientists and engineers 2 5,34 1 5,33 Investment in education and employee development 3 3,90 3 3,91 Financial market and local competition Availability of sources of finance for businesses 8 2,97 2 4,02 Level of difficulty in obtaining a loan based on sound business plan and 9 2,31 8 3,33 without collaterals Access to finance of businesses with innovative, but risky, projects 11 2,31 9 2,49 48 Competition strength 5 5,24 3 5,67 Customers and purchasing decisions 11 2,79 4 3,56 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HR011 THE CITY OF ZAGREB

BUSINESS SECTOR

A. STATISTICAL INDICATORS 2010 2007 B. PERCEPTIVE INDICATORS 2010 2007

RANK VALUE RANK VALUE RANK VALUE RANK VALUE

Investments and entrepreneurial trends Technology and innovations Active legal entities - trends (2008/2006; 2005/2003) 14 118,06 9 106,36 Technological development results 4 3,97 16 3,60 Total investments per facility location1 1 182.513,02 2 62.438,29 Implementation of technology in production processes 7 3,86 8 3,86 Share of investments in equipment in total investments per facility location2 1 56,93 1 54,89 Businesses' competitiveness elements 10 3,79 6 3,86 SME investments in new long-term assets /total SME revenues (2009; 2006) 14 5,34 9 8,44 Sectors of export oriented companies 11 4,07 Direct foreign investments (000 EUR) per capita (2005-2009; 2000-2007) 1 13.736,94 1 9.400,57 Investment in research and development 10 3,59 3 3,84 Number of SMEs per capita - trends (2009/2004; 2006/2004) 17 125,15 9 109,64 Clusters Level of entrepreneurship development Number of clusters in different sectors 8 3,21 Trades, crafts and freelance professions per capita (2008; 2005) 6 24,87 4 26,27 Number of local suppliers 5 4,34 1 5,19 Number of employed in SMEs per capita (2009; 2006) 1 21,70 1 20,93 Quality of local suppliers 11 3,93 4 4,74 SMEs (period profit - period loss) /total SME revenues (2009; 2006) 5 1,31 3 3,79 Availability of specialized R&D services 4 4,31 1 5,42 Total SMEs revenues / total SMEs assets (2009; 2006) 15 57,54 10 82,30 Cooperation of businesses with universities and institutes in R&D 6 3,97 2 3,53

Gross value added per industry employee (2008; 2004) 2 286,67 1 258,73 Marketing and management

Economic results - level Quality of marketing in businesses 2 4,83 2 4,79 GDP per capita (1000kn/inhabitant) (2007; 2004) 1 123,00 1 87,39 Placement of county product and services in Croatian markets and exports 12 4,24 2 4,84 Unemployed persons/total population aged 25-64 (2009; 2006) 7 6,78 4 8,63 Readiness to delegate authority to other colleagues in the company 9 3,72 4 4,00 Unemployed for 12 or more months / total unemployment (2009; 2006) 13 50,08 13 57,34 Senior management positions (relatives vs. professionala managers) 13 3,38 1 4,77 Gross salaries per employee (2008; 2006) 1 96.027,73 1 68.274,12 Employer - employee relationship 14 4,10 6 4,74 Number of employed per capita (2008; 2006) 4 43,96 3 41,83

Economic results - trends GDP Index (2007/2004; 2004/2001) 9 129,90 8 133,21 Employment in SMEs (2009/2007) 6 103,69 Exports (2008/2006, 2005/2003) 14 109,36 6 143,14 Unemployed (2009/2007; 2006/2004) 7 96,26 12 96,19 Profit before tax in SMEs (2009./2007.) 8 82,33 Total employment (2008/2006; 2006/2004) 20 106,00 14 103,77

1 - for 2010: sum of 2006., 2007 and 2008 per capita; for 2007: sum of 2003, 2004 and 2005 per capita 49 2 - for 2010: sum of 2006, 2007 and 2008 / sum of 2006, 2007 and 2008; for 2007: sum of 2003, 2004 and 2005 / sum of 2003, 2004 and 2005. HR011 ZAGREB COUNTY REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

HR012 ZAGREB COUNTY

Surface (km²) 2006 3.060

Population 2009 328.123

Unemployment rate (%) 2009 13,7

GDP (mil kn) 2007 17.550

Competitiveness rank 5

Rank of quality of business environment 3

Rank of business sector quality 6

50 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HR011 ZAGREB COUNTY

Zagreb County Competitiveness Profile – Statistical Indicators RCI 2010 and RCI 2007 Comparison*

Demographics, health and culture Zagreb County Economic results - 1 NORTHWESTERN Zagreb County Education trends CROATIA Indicator 2010 2007 Difference

STATISTICAL R 7 5 -2 Basic Economic results infrastructure Business Environment R 4 5 1 - level 21 and public sector Business Sector R 9 4 -5

Level of Business entrepreneurship infrastructure development PERCEPTIVE R 5 7 2 Investments and entrepreneurial trends Business Environment R 5 6 1

Business Sector R 3 8 5 Zagreb County Competitiveness Profile– Perceptive Indicators FINAL R 5 5 0

Business Environment R 3 5 2 Location advantages Zagreb County Business Sector R 6 7 1 7 Croatian average Marketing and Local management R = rank government

*comparison is indicative only, due to slight changes in 2010 calculation methodology Clusters Physical 1 infrastructure

Technology, innovations Rule of law

Financial market and Education local competition

51 HR011 ZAGREB COUNTY REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

BUSINESS ENVIRONMENT

A. STATISTICAL INDICATORS 2010 2007 B. PERCEPTIVE INDICATORS 2010 2007

RANK VALUE RANK VALUE RANK VALUE RANK VALUE

Demographics, health and culture Location advantages Population estimate (2009, 2006) 3 328.123 4 321.605 Favorable geographical position 9 5,19 Share of population aged 25-64 in total population (2009, 2001) 4 56,03 4 54,07 Favorable climate conditions 19 4,65 Net migration rate in the total population ((2007 - 2009) / 2009; (2002- Price of business facilities/offices and land 19 2,58 4 15,97 2 43,69 2006)/2006) Overheads (public utility fees and construction prices) 19 2,08 Vital index (birth/death ratio) (sum 2007 - 2009; (2002-2006)/2006) 6 95,78 7 87,74 Direct labor cots 19 3,04 Number of physicians per capita (2008, 2006) 21 87,49 21 83,02 Local government Education Public confidence in politicians' financial honesty 18 2,38 Percentage of persons with 2-year college education in population aged 11 3,96 11 3,96 Behavior of public officials in the decision making process 19 2,69 8 3,51 25-64(2001) Influence of illegal payments to business operations 16 3,38 20 3,70 Percentage of persons with university education in population aged 25-64 11 6,76 11 6,76 (2001) Quality of services provided to entrepreneurs by local governnment units 12 3,65 Pre-school education attendance / population aged 0-4 (2008/2009; Quality of communication and cooperation of local government institutions 6 55,41 6 36,68 11 3,88 2005/2006) and the business sector Enrolled students/ population aged 20-24 (2008/2009; 2005/2006) 10 39,86 9 37,15 Physical infrastructure Graduated students / population aged 20-24 (2008; 2005.) 8 7,52 12 4,82 General infrastructure 4 5,12 6 4,02 Basic infrastructure and public sector Quality of railways 4 4,54 6 3,42 Quality of available port facilities and waterways 13 2,38 14 3,21 Recovered waste / total waste (2006; 2004) 5 15,70 8 2,34 Airline connections to other countries 5 5,15 3 5,51 Share of aid in LGUs total revenues (2009; 2006) 4 5,94 9 10,02 Quality of power supply 6 5,88 14 4,79 Number of solved cases per judge (2009; 2006) 18 213,00 5 348,00 Number of unsolved cases in Land Register per capita (2009; 2007) 11 643,66 18 2.587,65 Rule of law Average surtax rate in the county (2010; 2007) 8 7,65 16 7,29 Share of gray economy in business activities 14 3,23 11 3,40 Quality of legal framework for dispute settlement 11 3,46 17 3,16 Business infrastructure Protection of ownership rights (financial assets included) 4 4,54 7 3,77 Surface of entrepreneurial zones per capita (2007; 2006) 6 29,53 2 47,67 Costs that companies suffer due to organized crime 15 3,69 Number of employees in entrepreneurial zones (2007) 3 3.329,00 Independence of judiciary from political influences 20 4,92 7 3,33 Business facility public utility fees, 1st zone (highest rate; kn/m3) (2010) 13 100,00 Education Housing prices in the county center, per m2 8 10.875,00 Distance to airports (km), Dubrovnik, Split +50, Pula, Zadar +100 2 25,00 Quality of public schools 2 6,00 6 4,72 Quality of math and science classes in schools 3 5,81 10 4,88 Quality of management and business schools 2 5,46 3 3,79 Availability of scientists and engineers 1 5,38 2 4,53 Investment in education and employee development 4 3,85 10 3,23 Financial market and local competition Availability of sources of finance for businesses 7 3,04 3 3,86 Level of difficulty in obtaining a loan based on sound business plan and 5 2,73 17 2,88 without collaterals Access to finance of businesses with innovative, but risky, projects 5 2,77 15 2,26 52 Competition strength 7 4,88 10 4,88 Customers and purchasing decisions 6 3,38 2 3,74 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HR011 ZAGREB COUNTY

BUSINESS SECTOR

A. STATISTICAL INDICATORS 2010 2007 B. PERCEPTIVE INDICATORS 2010 2007

RANK VALUE RANK VALUE RANK VALUE RANK VALUE

Investments and entrepreneurial trends Technology and innovations Active legal entities - trends (2008/2006; 2005/2003) 12 119,17 19 98,78 Technological development results 10 3,73 10 3,81 Total investments per facility location1 9 5.522,81 18 16.584,04 Implementation of technology in production processes 6 4,23 14 3,47 Share of investments in equipment in total investments per facility location2 11 33,92 3 43,28 Businesses' competitiveness elements 4 3,92 2 4,09 SME investments in new long-term assets /total SME revenues (2009; 2006) 18 4,50 21 5,26 Sectors of export oriented companies 6 4,38 Direct foreign investments (000 EUR) per capita (2005-2009; 2000-2007) 8 751,73 7 943,09 Investment in research and development 2 4,62 4 3,70 Number of SMEs per capita - trends (2009/2004; 2006/2004) 14 127,78 16 104,90 Clusters Level of entrepreneurship development Number of clusters in different sectors 3 4,12 Trades, crafts and freelance professions per capita (2008; 2005) 10 20,12 9 20,91 Number of local suppliers 4 4,35 4 4,95 Number of employed in SMEs per capita (2009; 2006) 9 11,11 10 10,75 Quality of local suppliers 5 4,19 2 4,95 SMEs (period profit - period loss) /total SME revenues (2009; 2006) 3 1,80 4 3,28 Availability of specialized R&D services 1 4,81 3 4,93 Total SMEs revenues / total SMEs assets (2009; 2006) 2 632,85 1 113,20 Cooperation of businesses with universities and institutes in R&D 4 4,35 6 3,26

Gross value added per industry employee (2008; 2004) 3 206,57 5 158,96 Marketing and management

Economic results - level Quality of marketing in businesses 1 4,88 4 4,58 GDP per capita (1000kn/inhabitant) (2007; 2004) 14 53,99 12 36,34 Placement of county product and services in Croatian markets and exports 9 4,42 3 4,81 Unemployed persons/total population aged 25-64 (2009; 2006) 2 6,47 3 7,79 Readiness to delegate authority to other colleagues in the company 3 4,08 14 3,44 Unemployed for 12 or more months / total unemployment (2009; 2006) 7 45,51 10 55,32 Senior management positions (relatives vs. professionala managers) 12 3,38 7 3,77 Gross salaries per employee (2008; 2006) 4 70.222,16 2 51.137,86 Employer - employee relationship 12 4,38 20 4,09 Number of employed per capita (2008; 2006) 4 41,21 4 39,06

Economic results - trends GDP Index (2007/2004; 2004/2001) 11 128,30 3 146,66 Employment in SMEs (2009/2007) 11 101,25 Exports (2008/2006, 2005/2003) 3 138,28 10 119,45 Unemployed (2009/2007; 2006/2004) 19 104,62 14 96,97 Profit before tax in SMEs (2009./2007.) 17 71,21 Total employment (2008/2006; 2006/2004) 10 107,63 2 107,00

1 - for 2010: sum of 2006., 2007 and 2008 per capita; for 2007: sum of 2003, 2004 and 2005 per capita 53 2 - for 2010: sum of 2006, 2007 and 2008 / sum of 2006, 2007 and 2008; for 2007: sum of 2003, 2004 and 2005 / sum of 2003, 2004 and 2005. HR013 KRAPINA-ZAGORJE COUNTY REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

HR013 KRAPINA-ZAGORJE COUNTY

Surface (km²) 2006 1.229

Population 2009 136.357

Unemployment rate (%) 2009 12,8

GDP (mil kn) 2007 7.218

Competitiveness rank 11

Rank of quality of business environment 13

Rank of business sector quality 10

54 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HR013 KRAPINA-ZAGORJE COUNTY

Krapina-Zagorje County Competitiveness Profile – Statistical RCI 2010 and RCI 2007 Comparison* Indicators

Demographics, health and culture Krapina-Zagorje County Economic results - 1 NORTHWESTERN CROATIA Krapina-Zagorje County Education trends Indicator 2010 2007 Difference

STATISTICAL R 11 11 0 Basic Economic results infrastructure Business Environment R 10 11 1 - level 21 and public sector Business Sector R 12 15 3

Level of Business entrepreneurship infrastructure development PERCEPTIVE R 8 18 10 Investments and entrepreneurial trends Business Environment R 10 18 8

Business Sector R 8 12 4 Krapina-Zagorje County Competitiveness Profile– Perceptive Indicators FINAL R 11 15 4

Business Environment R 13 14 1 Location advantages Krapina-Zagorje County Business Sector R 10 14 4 7 Croatian average Marketing and Local management R = rank government

*comparison is indicative only, due to slight changes in 2010 calculation methodology Clusters Physical 1 infrastructure

Technology, innovations Rule of law

Financial market and Education local competition

55 HR013 KRAPINA-ZAGORJE COUNTY REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

BUSINESS ENVIRONMENT

A. STATISTICAL INDICATORS 2010 2007 B. PERCEPTIVE INDICATORS 2010 2007

RANK VALUE RANK VALUE RANK VALUE RANK VALUE

Demographics, health and culture Location advantages Population estimate (2009, 2006) 12 136.357 12 139.398 Favorable geographical position 3 6,15 Share of population aged 25-64 in total population (2009, 2001) 8 54,67 8 53,11 Favorable climate conditions 3 6,42 Net migration rate in the total population ((2007 - 2009) / 2009; (2002- Price of business facilities/offices and land 16 3,73 9 0,34 9 5,43 2006)/2006) Overheads (public utility fees and construction prices) 14 3,35 Vital index (birth/death ratio) (sum 2007 - 2009; (2002-2006)/2006) 18 63,73 17 61,93 Direct labor cots 8 3,65 Number of physicians per capita (2008, 2006) 13 218,25 12 212,34 Local government Education Public confidence in politicians' financial honesty 15 2,73 Percentage of persons with 2-year college education in population aged 20 3,29 20 3,29 Behavior of public officials in the decision making process 1 4,00 7 3,52 25-64(2001) Influence of illegal payments to business operations 7 3,96 21 3,35 Percentage of persons with university education in population aged 25-64 21 4,55 21 4,55 (2001) Quality of services provided to entrepreneurs by local governnment units 2 4,23 Pre-school education attendance / population aged 0-4 (2008/2009; Quality of communication and cooperation of local government institutions 10 45,69 12 30,98 4 4,12 2005/2006) and the business sector Enrolled students/ population aged 20-24 (2008/2009; 2005/2006) 18 35,38 20 30,51 Physical infrastructure Graduated students / population aged 20-24 (2008; 2005.) 11 6,95 14 4,68 General infrastructure 19 2,96 15 2,96 Basic infrastructure and public sector Quality of railways 19 1,69 14 2,63 Quality of available port facilities and waterways 14 2,19 17 3,02 Recovered waste / total waste (2006; 2004) 10 5,01 5 3,88 Airline connections to other countries 4 5,23 9 4,75 Share of aid in LGUs total revenues (2009; 2006) 13 15,78 18 16,44 Quality of power supply 17 4,23 19 4,42 Number of solved cases per judge (2009; 2006) 15 257,00 3 375,00 Number of unsolved cases in Land Register per capita (2009; 2007) 8 433,42 11 1.154,25 Rule of law Average surtax rate in the county (2010; 2007) 2 1,75 2 1,48 Share of gray economy in business activities 18 2,85 2 3,77 Quality of legal framework for dispute settlement 3 4,58 13 3,46 Business infrastructure Protection of ownership rights (financial assets included) 7 4,46 18 3,19 Surface of entrepreneurial zones per capita (2007; 2006) 2 48,17 3 24,10 Costs that companies suffer due to organized crime 10 4,12 0 0,00 Number of employees in entrepreneurial zones (2007) 1 5.192,00 Independence of judiciary from political influences 5 4,88 18 2,73 Business facility public utility fees, 1st zone (highest rate; kn/m3) (2010) 1 30,00 Education Housing prices in the county center, per m2 11 8.700,00 Distance to airports (km), Dubrovnik, Split +50, Pula, Zadar +100 7 78,00 Quality of public schools 9 5,27 19 4,15 Quality of math and science classes in schools 13 4,65 18 4,46 Quality of management and business schools 14 2,96 18 2,00 Availability of scientists and engineers 15 2,96 20 2,54 Investment in education and employee development 10 3,38 17 2,73 Financial market and local competition Availability of sources of finance for businesses 17 2,62 16 2,75 Level of difficulty in obtaining a loan based on sound business plan and 19 1,88 19 2,83 without collaterals Access to finance of businesses with innovative, but risky, projects 17 1,88 19 2,17 56 Competition strength 4 5,42 9 4,90 Customers and purchasing decisions 13 2,73 13 3,10 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HR013 KRAPINA-ZAGORJE COUNTY

BUSINESS SECTOR

A. STATISTICAL INDICATORS 2010 2007 B. PERCEPTIVE INDICATORS 2010 2007

RANK VALUE RANK VALUE RANK VALUE RANK VALUE

Investments and entrepreneurial trends Technology and innovations Active legal entities - trends (2008/2006; 2005/2003) 8 119,60 17 99,33 Technological development results 21 2,81 15 3,63 Total investments per facility location1 8 25.306,18 6 30.012,30 Implementation of technology in production processes 17 3,19 12 3,54 Share of investments in equipment in total investments per facility location2 18 25,80 20 20,21 Businesses' competitiveness elements 6 3,85 10 3,40 SME investments in new long-term assets /total SME revenues (2009; 2006) 17 4,77 3 14,64 Sectors of export oriented companies 1 5,00 Direct foreign investments (000 EUR) per capita (2005-2009; 2000-2007) 17 36,13 8 657,78 Investment in research and development 11 3,27 14 2,69 Number of SMEs per capita - trends (2009/2004; 2006/2004) 4 142,90 12 106,09 Clusters Level of entrepreneurship development Number of clusters in different sectors 1 4,31 Trades, crafts and freelance professions per capita (2008; 2005) 9 21,42 8 11,62 Number of local suppliers 2 5,19 20 3,67 Number of employed in SMEs per capita (2009; 2006) 8 11,56 9 11,02 Quality of local suppliers 2 5,12 17 4,02 SMEs (period profit - period loss) /total SME revenues (2009; 2006) 8 0,75 6 2,73 Availability of specialized R&D services 16 2,85 21 3,15 Total SMEs revenues / total SMEs assets (2009; 2006) 10 71,68 14 77,92 Cooperation of businesses with universities and institutes in R&D 19 2,27 19 2,67

Gross value added per industry employee (2008; 2004) 7 171,21 9 136,58 Marketing and management

Economic results - level Quality of marketing in businesses 4 4,73 13 3,73 GDP per capita (1000kn/inhabitant) (2007; 2004) 16 52,40 19 33,14 Placement of county product and services in Croatian markets and exports 5 4,85 16 4,42 Unemployed persons/total population aged 25-64 (2009; 2006) 2 7,04 2 7,52 Readiness to delegate authority to other colleagues in the company 21 2,77 10 3,65 Unemployed for 12 or more months / total unemployment (2009; 2006) 6 45,32 9 55,09 Senior management positions (relatives vs. professionala managers) 6 4,12 11 3,58 Gross salaries per employee (2008; 2006) 13 62.506,56 14 43.590,35 Employer - employee relationship 13 4,12 15 4,27 Number of employed per capita (2008; 2006) 4 39,76 7 36,36

Economic results - trends GDP Index (2007/2004; 2004/2001) 5 133,52 19 110,61 Employment in SMEs (2009/2007) 7 102,96 Exports (2008/2006, 2005/2003) 10 122,85 19 102,90 Unemployed (2009/2007; 2006/2004) 20 109,42 15 97,32 Profit before tax in SMEs (2009./2007.) 7 83,82 Total employment (2008/2006; 2006/2004) 16 106,96 16 103,34

1 - for 2010: sum of 2006., 2007 and 2008 per capita; for 2007: sum of 2003, 2004 and 2005 per capita 57 2 - for 2010: sum of 2006, 2007 and 2008 / sum of 2006, 2007 and 2008; for 2007: sum of 2003, 2004 and 2005 / sum of 2003, 2004 and 2005. HR014 VARAŽDIN COUNTY REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

HR014 VARAŽDIN COUNTY

Surface (km²) 2006 1.262

Population 2009 180.252

Unemployment rate (%) 2009 11,1

GDP (mil kn) 2007 10.933

Competitiveness rank 1

Rank of quality of business environment 1

Rank of business sector quality 1

58 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HR014 VARAŽDIN COUNTY

Varaždin County Competitiveness Profile– Statistical Indicators RCI 2010 and RCI 2007 Comparison*

Demographics, health and culture Varaždin County Economic results - 1 NORTHWESTERN Varaždin County Education trends CROATIA Indicator 2010 2007 Difference

STATISTICAL R 6 12 6 Basic Economic results infrastructure Business Environment R 5 13 8 - level 21 and public sector Business Sector R 7 9 2

Level of Business entrepreneurship infrastructure development PERCEPTIVE R 1 1 0 Investments and entrepreneurial trends Business Environment R 1 1 0

Business Sector R 1 3 2 Varaždin County Competitiveness Profile– Perceptive Indicators FINAL R 1 4 3

Business Environment R 1 4 3 Location advantages Varaždin County Business Sector R 1 4 3 7 Croatian average Marketing and Local management R = rank government

*comparison is indicative only, due to slight changes in 2010 calculation methodology Clusters Physical 1 infrastructure

Technology, innovations Rule of law

Financial market and Education local competition

59 HR014 VARAŽDIN COUNTY REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

BUSINESS ENVIRONMENT

A. STATISTICAL INDICATORS 2010 2007 B. PERCEPTIVE INDICATORS 2010 2007

RANK VALUE RANK VALUE RANK VALUE RANK VALUE

Demographics, health and culture Location advantages Population estimate (2009, 2006) 8 180.252 8 186.693 Favorable geographical position 1 6,61 Share of population aged 25-64 in total population (2009, 2001) 6 54,98 6 53,25 Favorable climate conditions 2 6,61 Net migration rate in the total population ((2007 - 2009) / 2009; (2002- Price of business facilities/offices and land 1 4,93 10 0,31 11 -1,08 2006)/2006) Overheads (public utility fees and construction prices) 1 5,00 Vital index (birth/death ratio) (sum 2007 - 2009; (2002-2006)/2006) 11 75,22 1 132,35 Direct labor cots 2 5,36 Number of physicians per capita (2008, 2006) 9 227,35 13 206,76 Local government Education Public confidence in politicians' financial honesty 4 3,89 Percentage of persons with 2-year college education in population aged 10 4,37 10 4,37 Behavior of public officials in the decision making process 4 3,82 6 3,64 25-64(2001) Influence of illegal payments to business operations 4 4,04 17 3,91 Percentage of persons with university education in population aged 25-64 10 6,92 10 6,92 (2001) Quality of services provided to entrepreneurs by local governnment units 1 4,96 Pre-school education attendance / population aged 0-4 (2008/2009; Quality of communication and cooperation of local government institutions 8 55,07 9 34,82 1 5,07 2005/2006) and the business sector Enrolled students/ population aged 20-24 (2008/2009; 2005/2006) 13 37,06 13 32,85 Physical infrastructure Graduated students / population aged 20-24 (2008; 2005.) 12 6,62 19 3,80 General infrastructure 1 5,93 1 5,51 Basic infrastructure and public sector Quality of railways 2 4,89 4 4,07 Quality of available port facilities and waterways 16 1,93 9 3,62 Recovered waste / total waste (2006; 2004) 16 1,43 12 1,07 Airline connections to other countries 16 2,21 13 4,31 Share of aid in LGUs total revenues (2009; 2006) 5 8,59 7 8,74 Quality of power supply 5 6,00 2 5,98 Number of solved cases per judge (2009; 2006) 17 247,00 15 270,00 Number of unsolved cases in Land Register per capita (2009; 2007) 7 398,89 10 738,11 Rule of law Average surtax rate in the county (2010; 2007) 15 7,24 18 7,47 Share of gray economy in business activities 2 4,46 7 3,49 Quality of legal framework for dispute settlement 1 4,79 4 4,09 Business infrastructure Protection of ownership rights (financial assets included) 1 5,04 4 3,87 Surface of entrepreneurial zones per capita (2007; 2006) 3 46,19 16 4,55 Costs that companies suffer due to organized crime 3 5,46 Number of employees in entrepreneurial zones (2007) 4 2.509,00 Independence of judiciary from political influences 2 5,25 4 3,62 Business facility public utility fees, 1st zone (highest rate; kn/m3) (2010) 8 80,00 Education Housing prices in the county center, per m2 18 6.525,00 Distance to airports (km), Dubrovnik, Split +50, Pula, Zadar +100 9 95,00 Quality of public schools 1 6,14 1 5,20 Quality of math and science classes in schools 1 6,11 1 5,60 Quality of management and business schools 5 4,57 4 3,58 Availability of scientists and engineers 4 4,89 3 4,53 Investment in education and employee development 1 5,39 1 4,31 Financial market and local competition Availability of sources of finance for businesses 5 3,32 1 4,29 Level of difficulty in obtaining a loan based on sound business plan and 4 2,79 13 3,11 without collaterals Access to finance of businesses with innovative, but risky, projects 1 3,82 7 2,53 60 Competition strength 3 5,61 4 5,36 Customers and purchasing decisions 1 4,00 8 3,47 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HR014 VARAŽDIN COUNTY

BUSINESS SECTOR

A. STATISTICAL INDICATORS 2010 2007 B. PERCEPTIVE INDICATORS 2010 2007

RANK VALUE RANK VALUE RANK VALUE RANK VALUE

Investments and entrepreneurial trends Technology and innovations Active legal entities - trends (2008/2006; 2005/2003) 11 119,22 14 102,43 Technological development results 1 4,64 17 3,49 Total investments per facility location1 6 25.951,62 9 25.984,27 Implementation of technology in production processes 1 4,79 6 4,02 Share of investments in equipment in total investments per facility location2 8 36,13 13 35,41 Businesses' competitiveness elements 1 4,75 3 4,07 SME investments in new long-term assets /total SME revenues (2009; 2006) 8 6,09 14 7,66 Sectors of export oriented companies 4 4,64 Direct foreign investments (000 EUR) per capita (2005-2009; 2000-2007) 7 917,20 10 297,40 Investment in research and development 1 5,32 1 4,40 Number of SMEs per capita - trends (2009/2004; 2006/2004) 9 137,84 15 105,57 Clusters Level of entrepreneurship development Number of clusters in different sectors 5 3,75 Trades, crafts and freelance professions per capita (2008; 2005) 12 18,19 13 17,98 Number of local suppliers 10 4,07 3 5,02 Number of employed in SMEs per capita (2009; 2006) 6 14,09 6 13,73 Quality of local suppliers 7 4,18 1 5,04 SMEs (period profit - period loss) /total SME revenues (2009; 2006) 7 1,19 2 4,16 Availability of specialized R&D services 3 4,71 2 5,27 Total SMEs revenues / total SMEs assets (2009; 2006) 5 81,89 5 97,54 Cooperation of businesses with universities and institutes in R&D 1 5,00 1 4,02

Gross value added per industry employee (2008; 2004) 17 127,79 17 94,08 Marketing and management

Economic results - level Quality of marketing in businesses 3 4,82 8 4,22 GDP per capita (1000kn/inhabitant) (2007; 2004) 6 60,32 7 40,37 Placement of county product and services in Croatian markets and exports 6 4,64 5 4,73 Unemployed persons/total population aged 25-64 (2009; 2006) 16 8,21 5 9,37 Readiness to delegate authority to other colleagues in the company 4 4,07 12 3,53 Unemployed for 12 or more months / total unemployment (2009; 2006) 5 44,34 11 55,47 Senior management positions (relatives vs. professionala managers) 1 4,79 6 3,80 Gross salaries per employee (2008; 2006) 16 61.918,87 13 43.606,87 Employer - employee relationship 1 5,82 13 4,42 Number of employed per capita (2008; 2006) 4 41,19 5 37,21

Economic results - trends GDP Index (2007/2004; 2004/2001) 12 126,79 16 115,49 Employment in SMEs (2009/2007) 13 99,03 Exports (2008/2006, 2005/2003) 12 115,74 8 130,75 Unemployed (2009/2007; 2006/2004) 14 102,65 2 88,53 Profit before tax in SMEs (2009./2007.) 19 67,19 Total employment (2008/2006; 2006/2004) 17 106,89 13 104,22

1 - for 2010: sum of 2006., 2007 and 2008 per capita; for 2007: sum of 2003, 2004 and 2005 per capita 61 2 - for 2010: sum of 2006, 2007 and 2008 / sum of 2006, 2007 and 2008; for 2007: sum of 2003, 2004 and 2005 / sum of 2003, 2004 and 2005. HR015 KOPRIVNICA-KRIŽEVCI COUNTY REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

HR015 KOPRIVNICA-KRIŽEVCI COUNTY

Surface (km²) 2006 1.748

Population 2009 119.586

Unemployment rate (%) 2009 13,6

GDP (mil kn) 2007 8.091

Competitiveness rank 12

Rank of quality of business environment 9

Rank of business sector quality 8

62 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HR015 KOPRIVNICA-KRIŽEVCI COUNTY

Koprivnica-Križevci County Competitiveness Profile– Statistical RCI 2010 and RCI 2007 Comparison* Indicators

Demographics, health and culture Koprivnica-Križevci County Economic results - 1 NORTHWESTERN CROATIA Koprivnica-Križevci County Education trends Indicator 2010 2007 Difference

STATISTICAL R 13 10 -3 Basic Economic results infrastructure Business Environment R 14 10 -4 - level 21 and public sector Business Sector R 14 10 -4

Level of Business entrepreneurship infrastructure development PERCEPTIVE R 4 4 0 Investments and entrepreneurial trends Business Environment R 4 4 0

Business Sector R 4 4 0 Koprivnica - Križevci County Competitiveness Profile – Perceptive Indicators FINAL R 12 7 -5

Business Environment R 9 8 -1 Location advantages Koprivnica-Križevci County Business Sector R 8 6 -2 7 Croatian average Marketing and Local management R = rank government

*comparison is indicative only, due to slight changes in 2010 calculation methodology Clusters Physical 1 infrastructure

Technology, innovations Rule of law

Financial market and Education local competition

63 HR015 KOPRIVNICA-KRIŽEVCI COUNTY REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

BUSINESS ENVIRONMENT

A. STATISTICAL INDICATORS 2010 2007 B. PERCEPTIVE INDICATORS 2010 2007

RANK VALUE RANK VALUE RANK VALUE RANK VALUE

Demographics, health and culture Location advantages Population estimate (2009, 2006) 16 119.586 16 121.231 Favorable geographical position 11 4,79 Share of population aged 25-64 in total population (2009, 2001) 10 54,10 7 53,12 Favorable climate conditions 12 5,46 Net migration rate in the total population ((2007 - 2009) / 2009; (2002- Price of business facilities/offices and land 12 3,86 12 -0,80 13 -3,36 2006)/2006) Overheads (public utility fees and construction prices) 16 3,32 Vital index (birth/death ratio) (sum 2007 - 2009; (2002-2006)/2006) 14 69,08 14 66,97 Direct labor cots 6 4,07 Number of physicians per capita (2008, 2006) 18 179,84 19 163,32 Local government Education Public confidence in politicians' financial honesty 7 3,57 Percentage of persons with 2-year college education in population aged 13 3,78 13 3,78 Behavior of public officials in the decision making process 6 3,64 2 4,07 25-64(2001) Influence of illegal payments to business operations 9 3,82 18 3,87 Percentage of persons with university education in population aged 25-64 15 5,82 15 5,82 (2001) Quality of services provided to entrepreneurs by local governnment units 5 4,04 Pre-school education attendance / population aged 0-4 (2008/2009; Quality of communication and cooperation of local government institutions 16 43,10 15 27,48 7 3,96 2005/2006) and the business sector Enrolled students/ population aged 20-24 (2008/2009; 2005/2006) 14 36,82 11 34,95 Physical infrastructure Graduated students / population aged 20-24 (2008; 2005.) 13 6,60 13 4,80 General infrastructure 13 3,68 5 4,09 Basic infrastructure and public sector Quality of railways 5 4,54 5 4,00 Quality of available port facilities and waterways 20 1,14 12 3,37 Recovered waste / total waste (2006; 2004) 15 1,81 14 0,68 Airline connections to other countries 9 4,25 8 4,76 Share of aid in LGUs total revenues (2009; 2006) 8 10,76 16 13,09 Quality of power supply 1 6,46 10 5,28 Number of solved cases per judge (2009; 2006) 4 328,00 11 311,00 Number of unsolved cases in Land Register per capita (2009; 2007) 12 1.032,73 5 345,62 Rule of law Average surtax rate in the county (2010; 2007) 3 1,82 3 1,79 Share of gray economy in business activities 1 4,71 5 3,61 Quality of legal framework for dispute settlement 2 4,75 6 3,83 Business infrastructure Protection of ownership rights (financial assets included) 2 4,79 5 3,85 Surface of entrepreneurial zones per capita (2007; 2006) 11 21,54 5 15,43 Costs that companies suffer due to organized crime 17 3,57 0 0,00 Number of employees in entrepreneurial zones (2007) 5 2.260,00 Independence of judiciary from political influences 3 5,14 2 3,93 Business facility public utility fees, 1st zone (highest rate; kn/m3) (2010) 8 80,00 Education Housing prices in the county center, per m2 17 6.887,50 Distance to airports (km), Dubrovnik, Split +50, Pula, Zadar +100 14 125,00 Quality of public schools 7 5,50 9 4,54 Quality of math and science classes in schools 7 5,39 13 4,65 Quality of management and business schools 15 2,68 11 2,57 Availability of scientists and engineers 10 3,75 14 3,43 Investment in education and employee development 6 3,75 4 3,87 Financial market and local competition Availability of sources of finance for businesses 1 4,04 7 3,57 Level of difficulty in obtaining a loan based on sound business plan and 15 2,00 4 3,54 without collaterals Access to finance of businesses with innovative, but risky, projects 4 2,82 5 2,74 64 Competition strength 1 6,21 1 5,78 Customers and purchasing decisions 4 3,54 7 3,48 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HR015 KOPRIVNICA-KRIŽEVCI COUNTY

BUSINESS SECTOR

A. STATISTICAL INDICATORS 2010 2007 B. PERCEPTIVE INDICATORS 2010 2007

RANK VALUE RANK VALUE RANK VALUE RANK VALUE

Investments and entrepreneurial trends Technology and innovations Active legal entities - trends (2008/2006; 2005/2003) 20 115,30 10 105,08 Technological development results 7 3,82 6 4,00 Total investments per facility location1 13 20.598,89 13 21.462,14 Implementation of technology in production processes 2 4,71 3 4,20 Share of investments in equipment in total investments per facility location2 9 35,08 8 38,44 Businesses' competitiveness elements 2 4,68 4 3,89 SME investments in new long-term assets /total SME revenues (2009; 2006) 19 4,42 13 7,67 Sectors of export oriented companies 3 4,89 Direct foreign investments (000 EUR) per capita (2005-2009; 2000-2007) 10 457,33 20 -28,01 Investment in research and development 3 4,18 2 3,98 Number of SMEs per capita - trends (2009/2004; 2006/2004) 19 123,76 14 105,81 Clusters Level of entrepreneurship development Number of clusters in different sectors 21 1,54 Trades, crafts and freelance professions per capita (2008; 2005) 21 14,35 16 15,49 Number of local suppliers 1 5,57 19 3,83 Number of employed in SMEs per capita (2009; 2006) 16 8,84 14 8,69 Quality of local suppliers 1 5,39 20 3,76 SMEs (period profit - period loss) /total SME revenues (2009; 2006) 15 -0,67 19 0,07 Availability of specialized R&D services 6 3,79 12 3,89 Total SMEs revenues / total SMEs assets (2009; 2006) 1 87,98 2 99,39 Cooperation of businesses with universities and institutes in R&D 13 3,21 3 3,48

Gross value added per industry employee (2008; 2004) 5 188,85 4 165,48 Marketing and management

Economic results - level Quality of marketing in businesses 6 4,46 3 4,65 GDP per capita (1000kn/inhabitant) (2007; 2004) 5 67,06 6 43,86 Placement of county product and services in Croatian markets and exports 10 4,39 11 4,63 Unemployed persons/total population aged 25-64 (2009; 2006) 5 9,65 8 11,39 Readiness to delegate authority to other colleagues in the company 17 3,36 2 4,17 Unemployed for 12 or more months / total unemployment (2009; 2006) 9 47,81 18 59,53 Senior management positions (relatives vs. professionala managers) 5 4,36 3 4,20 Gross salaries per employee (2008; 2006) 15 62.044,90 11 43.928,49 Employer - employee relationship 3 5,14 2 5,13 Number of employed per capita (2008; 2006) 4 35,82 12 33,13

Economic results - trends GDP Index (2007/2004; 2004/2001) 6 133,19 18 111,91 Employment in SMEs (2009/2007) 14 98,97 Exports (2008/2006, 2005/2003) 15 108,82 18 105,81 Unemployed (2009/2007; 2006/2004) 2 92,08 11 95,48 Profit before tax in SMEs (2009./2007.) 14 75,23 Total employment (2008/2006; 2006/2004) 19 106,64 6 105,93

1 - for 2010: sum of 2006., 2007 and 2008 per capita; for 2007: sum of 2003, 2004 and 2005 per capita 65 2 - for 2010: sum of 2006, 2007 and 2008 / sum of 2006, 2007 and 2008; for 2007: sum of 2003, 2004 and 2005 / sum of 2003, 2004 and 2005. HR016 MEĐIMURJE COUNTY REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

HR016 MEĐIMURJE COUNTY

Surface (km²) 2006 729

Population 2009 117.891

Unemployment rate (%) 2009 12,6

GDP (mil kn) 2007 6.562

Competitiveness rank 4

Rank of quality of business environment 6

Rank of business sector quality 2

66 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HR016 MEĐIMURJE COUNTY

Međimurje County Competitiveness Profile – Statistical RCI 2010 and RCI 2007 Comparison* Indicators

Demographics, health and culture Međimurje County Economic results - 1 NORTHWESTERN Međimurje County Education trends CROATIA Indicator 2010 2007 Difference

STATISTICAL R 3 6 3 Basic Economic results infrastructure Business Environment R 7 6 -1 - level 21 and public sector Business Sector R 2 6 4

Level of Business entrepreneurship infrastructure development PERCEPTIVE R 6 3 -3 Investments and entrepreneurial trends Business Environment R 6 3 -3

Business Sector R 6 1 -5 Međimurje County Competitiveness Profile– Perceptive Indicators FINAL R 4 2 -2

Business Environment R 6 2 -4 Location advantages Međimurje County Business Sector R 2 2 0 7 Croatian average Marketing and Local management R = rank government

*comparison is indicative only, due to slight changes in 2010 calculation methodology Clusters Physical 1 infrastructure

Technology, innovations Rule of law

Financial market and Education local competition

67 HR016 MEĐIMURJE COUNTY REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

BUSINESS ENVIRONMENT

A. STATISTICAL INDICATORS 2010 2007 B. PERCEPTIVE INDICATORS 2010 2007

RANK VALUE RANK VALUE RANK VALUE RANK VALUE

Demographics, health and culture Location advantages Population estimate (2009, 2006) 17 117.891 17 117.978 Favorable geographical position 7 5,48 Share of population aged 25-64 in total population (2009, 2001) 5 55,02 9 52,74 Favorable climate conditions 7 5,74 Net migration rate in the total population ((2007 - 2009) / 2009; (2002- Price of business facilities/offices and land 8 4,07 11 -0,09 12 -1,92 2006)/2006) Overheads (public utility fees and construction prices) 13 3,41 Vital index (birth/death ratio) (sum 2007 - 2009; (2002-2006)/2006) 3 101,16 5 96,50 Direct labor cots 7 3,93 Number of physicians per capita (2008, 2006) 16 181,47 15 185,63 Local government Education Public confidence in politicians' financial honesty 3 3,96 Percentage of persons with 2-year college education in population aged 16 3,64 16 3,64 Behavior of public officials in the decision making process 8 3,48 12 3,34 25-64(2001) Influence of illegal payments to business operations 5 4,00 19 3,75 Percentage of persons with university education in population aged 25-64 19 5,21 19 5,21 (2001) Quality of services provided to entrepreneurs by local governnment units 10 3,70 Pre-school education attendance / population aged 0-4 (2008/2009; Quality of communication and cooperation of local government institutions 4 57,23 10 32,38 6 4,07 2005/2006) and the business sector Enrolled students/ population aged 20-24 (2008/2009; 2005/2006) 16 36,02 19 30,73 Physical infrastructure Graduated students / population aged 20-24 (2008; 2005.) 14 6,55 16 4,44 General infrastructure 2 5,52 2 5,39 Basic infrastructure and public sector Quality of railways 9 3,37 1 4,68 Quality of available port facilities and waterways 19 1,19 15 3,18 Recovered waste / total waste (2006; 2004) 8 5,95 15 0,62 Airline connections to other countries 12 3,81 10 4,70 Share of aid in LGUs total revenues (2009; 2006) 7 10,25 10 10,42 Quality of power supply 3 6,41 3 5,66 Number of solved cases per judge (2009; 2006) 21 205,00 21 188,00 Number of unsolved cases in Land Register per capita (2009; 2007) 5 379,16 6 488,23 Rule of law Average surtax rate in the county (2010; 2007) 4 2,37 5 2,60 Share of gray economy in business activities 7 3,70 15 3,23 Quality of legal framework for dispute settlement 16 3,11 15 3,34 Business infrastructure Protection of ownership rights (financial assets included) 15 3,93 12 3,34 Surface of entrepreneurial zones per capita (2007; 2006) 8 28,47 6 15,21 Costs that companies suffer due to organized crime 4 5,44 Number of employees in entrepreneurial zones (2007) 2 3.483,00 Independence of judiciary from political influences 9 4,00 6 3,34 Business facility public utility fees, 1st zone (highest rate; kn/m3) (2010) 3 34,00 Education Housing prices in the county center, per m2 13 7.467,50 Distance to airports (km), Dubrovnik, Split +50, Pula, Zadar +100 13 112,00 Quality of public schools 8 5,41 4 4,82 Quality of math and science classes in schools 8 5,37 6 5,32 Quality of management and business schools 16 2,59 14 2,39 Availability of scientists and engineers 11 3,70 16 3,16 Investment in education and employee development 13 3,15 2 4,23 Financial market and local competition Availability of sources of finance for businesses 6 3,19 5 3,59 Level of difficulty in obtaining a loan based on sound business plan and 18 1,93 6 3,34 without collaterals Access to finance of businesses with innovative, but risky, projects 18 1,85 14 2,32 68 Competition strength 2 5,78 2 5,77 Customers and purchasing decisions 5 3,41 9 3,43 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HR016 MEĐIMURJE COUNTY

BUSINESS SECTOR

A. STATISTICAL INDICATORS 2010 2007 B. PERCEPTIVE INDICATORS 2010 2007

RANK VALUE RANK VALUE RANK VALUE RANK VALUE

Investments and entrepreneurial trends Technology and innovations Active legal entities - trends (2008/2006; 2005/2003) 15 117,92 13 102,46 Technological development results 2 4,59 1 4,11 Total investments per facility location1 10 21.891,49 16 19.198,94 Implementation of technology in production processes 4 4,37 2 4,20 Share of investments in equipment in total investments per facility location2 4 41,54 9 38,18 Businesses' competitiveness elements 9 3,81 5 3,86 SME investments in new long-term assets /total SME revenues (2009; 2006) 11 5,75 12 8,18 Sectors of export oriented companies 7 4,30 Direct foreign investments (000 EUR) per capita (2005-2009; 2000-2007) 9 586,17 11 218,12 Investment in research and development 7 3,93 5 3,57 Number of SMEs per capita - trends (2009/2004; 2006/2004) 15 127,77 10 106,81 Clusters Level of entrepreneurship development Number of clusters in different sectors 7 3,59 Trades, crafts and freelance professions per capita (2008; 2005) 14 15,72 14 16,54 Number of local suppliers 7 4,22 2 5,02 Number of employed in SMEs per capita (2009; 2006) 2 18,66 2 17,96 Quality of local suppliers 4 4,67 3 4,75 SMEs (period profit - period loss) /total SME revenues (2009; 2006) 4 1,56 9 2,31 Availability of specialized R&D services 15 3,07 14 3,75 Total SMEs revenues / total SMEs assets (2009; 2006) 4 82,18 4 97,68 Cooperation of businesses with universities and institutes in R&D 10 3,41 18 2,73

Gross value added per industry employee (2008; 2004) 14 141,48 15 107,08 Marketing and management

Economic results - level Quality of marketing in businesses 10 4,00 1 4,93 GDP per capita (1000kn/inhabitant) (2007; 2004) 13 55,61 10 37,68 Placement of county product and services in Croatian markets and exports 4 4,85 6 4,70 Unemployed persons/total population aged 25-64 (2009; 2006) 9 9,08 7 10,87 Readiness to delegate authority to other colleagues in the company 7 3,81 1 4,18 Unemployed for 12 or more months / total unemployment (2009; 2006) 10 48,20 12 57,19 Senior management positions (relatives vs. professionala managers) 8 3,70 2 4,20 Gross salaries per employee (2008; 2006) 21 54.244,13 19 38.784,56 Employer - employee relationship 8 4,56 1 5,30 Number of employed per capita (2008; 2006) 4 39,19 8 36,24

Economic results - trends GDP Index (2007/2004; 2004/2001) 13 126,31 14 121,34 Employment in SMEs (2009/2007) 9 101,45 Exports (2008/2006, 2005/2003) 2 138,73 11 118,34 Unemployed (2009/2007; 2006/2004) 12 100,51 8 92,36 Profit before tax in SMEs (2009./2007.) 6 87,78 Total employment (2008/2006; 2006/2004) 6 108,06 3 106,49

1 - for 2010: sum of 2006., 2007 and 2008 per capita; for 2007: sum of 2003, 2004 and 2005 per capita 69 2 - for 2010: sum of 2006, 2007 and 2008 / sum of 2006, 2007 and 2008; for 2007: sum of 2003, 2004 and 2005 / sum of 2003, 2004 and 2005. REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

70 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

CENTRAL AND EASTERN (PANNONIAN) CROATIA

Bjelovar - Bilogora County Virovitica – Podravina County Požega – Slavonia County Brod – Posavina County Osijek – Baranja County Vukovar – Srijem County Karlovac County Sisak - Moslavina County

71 HR02 CENTRAL AND EASTERN (PANNONIAN) CROATIA REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

HR02 CENTRAL AND EASTERN (PANNONIAN) CROATIA

Surface (km²) 2006 23.220

Population 2009 1.287.650

Unemployment rate (%) 2009 25,1

GDP (mil kn) 2007 65.569

Competitiveness rank 3

Rank of quality of business environment 3

Rank of quality of business sector 3

Central and Eastern (Pannonian) Croatia is the region with the weakest competitiveness capacity. All parts of that region (8 counties) are at the bottom of the list of competitiveness rankings, rankings of the quality of business environment (except for Osijek – Ba- ranja County, which is ranked 5th) and ranks of business sector quality. This is confirmed by their competitiveness rank according to competitiveness statistical indicators. Such a situation demands the analysis of current national regional development policy (especially because of the fact that most of the areas that have for years been benefiting from State programs for areas of special concern are located in this region) and initiation of projects focused on development of the quality of business environment, which will help the region to speed up its development in order not to lag behind other parts of Croatia.

72 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HR02 CENTRAL AND EASTERN (PANNONIAN) CROATIA

Competitiveness profile of the region of Central and Eastern RCI 2010 and RCI 2007 Comparison* (Pannonian) Croatia – statistical indicators

Demographics, health and culture Economic results - 1 CENTRAL AND EASTERN (PANNONIAN) CROATIA Education trends 5 Indicator 2010 2007 Difference 9 13 STATISTICAL R 3 3 0 17 Basic Economic results infrastructure 21 Business Environment R 3 3 0 - level and public sector Business Sector R 3 3 0

Level of Business entrepreneurship infrastructure development PERCEPTIVE R 2 3 1 Investments and entrepreneurial trends Business Environment R 2 3 1

Business Sector R 3 3 0 Competitiveness profile of the region of Central and Eastern (Pannonian) Croatia – perceptive indicators FINAL R 3 3 0

Business Environment R 3 3 0 Location advantages Business Sector R 3 3 0 Marketing and 7,0 6,0 Local management R = rank 5,0 government 4,0 *comparison is indicative only, due to slight changes in 2010 calculation methodology 3,0 Clusters 2,0 Physical 1,0 infrastructure

Technology, innovations Rule of law

Financial market and Education local competition

73 HR02 CENTRAL AND EASTERN (PANNONIAN) CROATIA REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

Comparison of counties Central and Eastern (Pannonian) Croatia - statistical index

Bjelovar - Bilogora County Osijek – Baranja County 0 1 2 0 2 1 1 2 2 4 1 4 2 3 3 3 3 4 4 3 4 5 5 6 6 8 8 6 7 7 8 6 8 8

Virovitica – Podravina County Vukovar – Srijem County 0 1 0 3 1 2 2 3 2 3 4 3 5 3 4 2 2 5 6 6 4 6 7 5 4 6 7 8 7 7 7 8 8 8

Požega – Slavonia County Karlovac County 0 0 1 1 1 1 1 2 2 2 1 3 4 3 4 5 5 6 6 4 4 6 6 7 7 7 5 8 6 7 7 5 8 8

Brod – Posavina County Sisak - Moslavina County 0 1 0 1 2 3 1 2 1 2 3 3 3 4 5 4 5 5 5 5 5 4 6 7 5 7 6 8 8 6 7 7 8 8

STATISTICAL INDEX business environment business sector Level of Demographics, health Basic infrastructure Investments Economic results - Economic results - Education Business infrastructure entrepreneurship and culture and public sector entrepreneurial climate level trends development Bjelovar-Bilogora County Virovitica-Podravina County Požega-Slavonia County Brod-Posavina County Osijek-Baranja County Vukovar-Srijem County Karlovac County 74 Sisak-Moslavina County

first 7 counties last 7 counties middle range REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HR02 CENTRAL AND EASTERN (PANNONIAN) CROATIA

Comparison of counties Central and Eastern (Pannonian) Croatia - perceptive index

Bjelovar - Bilogora County Osijek – Baranja County 0 0 1 2 1 2 3 3 1 1 1 1 1 1 1 1 3 4 2 4 5 5 3 3 6 6 4 5 6 5 6 6 7 7 8 8

Virovitica – Podravina County Vukovar – Srijem County 0 1 0 2 1 3 2 4 3 3 3 6 4 4 4 4 5 5 5 5 7 5 6 6 6 6 8 8 6 7 7 8 8 8 8 8

Požega – Slavonia County Karlovac County 0 1 0 2 1 4 2 1 3 3 3 3 4 2 2 4 2 4 5 5 5 4 5 6 6 7 7 7 5 8 8 6 7 7 8 8

Brod – Posavina County Sisak - Moslavina County 0 1 0 2 3 3 1 3 2 2 2 2 2 2 4 3 4 6 4 5 5 4 5 6 6 7 7 7 7 7 7 7 8 8 8 8

PERCEPTIVE INDEX business environment business sector Physical Financial market and Technology Marketing and Location advantages Local government Rule of law Education Clusters infrastructure local competition innovativeness management Bjelovar-Bilogora County Virovitica-Podravina County Požega-Slavonia County Brod-Posavina County Osijek-Baranja County Vukovar-Srijem County Karlovac County

Sisak-Moslavina County 75 first 7 counties last 7 counties middle range HR02 CENTRAL AND EASTERN (PANNONIAN) CROATIA REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

BUSINESS ENVIRONMENT

A. STATISTICAL INDICATORS 2010 2007 B. PERCEPTIVE INDICATORS 2010 2007

RANK VALUE RANK VALUE RANK VALUE RANK VALUE

Demographics, health and culture Location advantages Population estimate (2009, 2006) 3 1.287.650 3 1.315.131 Favorable geographical position 3 4,14 Share of population aged 25-64 in total population (2009, 2001) 3 53,43 3 52,1 Favorable climate conditions 2 5,34 Net migration rate in the total population ((2007 - 2009) / 2009; (2002- Price of business facilities/offices and land 1 4,12 3 -12,4 3 -7,7 2006)/2006) Overheads (public utility fees and construction prices) 1 3,65 Vital index (birth/death ratio) (sum 2007 - 2009; (2002-2006)/2006) 3 71,2 3 67,4 Direct labor cots 1 3,82 Number of physicians per capita (2008, 2006) 2 215 3 208 Local government Education Public confidence in politicians' financial honesty 2 3,05 Percentage of persons with 2-year college education in population aged 3 3,7 3 3,7 Behavior of public officials in the decision making process 1 3,32 1 3,43 25-64(2001) Influence of illegal payments to business operations 2 3,68 1 4,14 Percentage of persons with university education in population aged 25-64 3 6,8 3 6,8 (2001) Quality of services provided to entrepreneurs by local governnment units 3 3,44 Pre-school education attendance / population aged 0-4 (2008/2009; Quality of communication and cooperation of local government institutions 3 37,9 3 24,8 2 3,63 2005/2006) and the business sector Enrolled students/ population aged 20-24 (2008/2009; 2005/2006) 3 37,0 3 35,1 Physical infrastructure Graduated students / population aged 20-24 (2008; 2005.) 3 6,7 3 4,4 General infrastructure 3 3,74 3 3,13 Basic infrastructure and public sector Quality of railways 2 3,39 2 3,21 Quality of available port facilities and waterways 2 2,93 3 3,10 Recovered waste / total waste (2006; 2004) 3 9,6 2 3,2 Airline connections to other countries 3 3,32 3 3,38 Share of aid in LGUs total revenues (2009; 2006) 3 15,2 3 11,8 Quality of power supply 2 5,48 3 5,02 Number of solved cases per judge (2009; 2006) 3 272,9 3 284,0 Number of unsolved cases in Land Register per capita (2009; 2007) 1 578,0 1 661,6 Rule of law Average surtax rate in the county (2010; 2007) 2 6,4 2 6,0 Share of gray economy in business activities 3 3,36 3 3,23 Quality of legal framework for dispute settlement 1 3,56 1 3,66 Business infrastructure Protection of ownership rights (financial assets included) 2 4,09 2 3,53 Surface of entrepreneurial zones per capita (2007; 2006) 3 18,0 3 6,3 Costs that companies suffer due to organized crime 1 4,55 Number of employees in entrepreneurial zones (2007) 3 1.059,7 Independence of judiciary from political influences 1 4,04 2 3,02 Business facility public utility fees, 1st zone (highest rate; kn/m3) (2010) 1 77,7 Education Housing prices in the county center, per m2 3 7.300,5 Distance to airports (km), Dubrovnik, Split +50, Pula, Zadar +100 3 186,0 Quality of public schools 2 4,97 3 4,35 Quality of math and science classes in schools 2 4,90 3 4,62 Quality of management and business schools 3 3,38 3 2,27 Availability of scientists and engineers 2 3,70 3 3,33 Investment in education and employee development 2 3,42 2 3,09 Financial market and local competition Availability of sources of finance for businesses 3 2,84 3 2,89 Level of difficulty in obtaining a loan based on sound business plan and 1 2,44 1 3,20 without collaterals Access to finance of businesses with innovative, but risky, projects 2 2,37 3 2,40 76 Competition strength 2 4,30 3 4,79 Customers and purchasing decisions 3 2,79 3 2,94 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HR02 CENTRAL AND EASTERN (PANNONIAN) CROATIA

BUSINESS SECTOR

A. STATISTICAL INDICATORS 2010 2007 B. PERCEPTIVE INDICATORS 2010 2007

RANK VALUE RANK VALUE RANK VALUE RANK VALUE

Investments and entrepreneurial trends Technology and innovations Active legal entities - trends (2008/2006; 2005/2003) 3 117,8 3 103,6 Technological development results 2 3,68 1 3,75 Total investments per facility location1 3 14.368,9 3 18.380,7 Implementation of technology in production processes 3 3,53 3 3,50 Share of investments in equipment in total investments per facility location2 2 34,9 2 37,4 Businesses' competitiveness elements 2 3,52 3 3,11 SME investments in new long-term assets /total SME revenues (2009; 2006) 1 5,2 3 7,4 Sectors of export oriented companies 2 4,03 Direct foreign investments (000 EUR) per capita (2005-2009; 2000-2007) 3 -52,0 3 91,9 Investment in research and development 2 3,27 3 2,85 Number of SMEs per capita - trends (2009/2004; 2006/2004) 2 127,4 3 103,5 Clusters Level of entrepreneurship development Number of clusters in different sectors 3 2,76 Trades, crafts and freelance professions per capita (2008; 2005) 3 15,8 3 15,9 Number of local suppliers 3 3,77 3 4,05 Number of employed in SMEs per capita (2009; 2006) 3 9,0 3 9,0 Quality of local suppliers 2 3,82 3 4,01 SMEs (period profit - period loss) /total SME revenues (2009; 2006) 2 -0,3 3 1,4 Availability of specialized R&D services 2 3,54 3 3,83 Total SMEs revenues / total SMEs assets (2009; 2006) 1 73,1 2 84,9 Cooperation of businesses with universities and institutes in R&D 3 3,41 3 2,96

Gross value added per industry employee (2008; 2004) 3 141,4 3 117,2 Marketing and management

Economic results - level Quality of marketing in businesses 3 3,58 3 3,64 GDP per capita (1000kn/inhabitant) (2007; 2004) 3 50,3 3 33,9 Placement of county product and services in Croatian markets and exports 2 4,17 2 4,52 Unemployed persons/total population aged 25-64 (2009; 2006) 3 16,5 3 17,2 Readiness to delegate authority to other colleagues in the company 3 3,60 2 3,58 Unemployed for 12 or more months / total unemployment (2009; 2006) 3 54,2 3 60,1 Senior management positions (relatives vs. professionala managers) 3 3,55 3 3,19 Gross salaries per employee (2008; 2006) 3 63.680,6 3 41.757,3 Employer - employee relationship 2 4,31 3 4,39 Number of employed per capita (2008; 2006) 3 34,7 3 31,1

Economic results - trends GDP Index (2007/2004; 2004/2001) 3 124,7 3 119,7 Employment in SMEs (2009/2007) 3 98,5 2 98,8 Exports (2008/2006, 2005/2003) 3 111,6 2 119,8 Unemployed (2009/2007; 2006/2004) 3 100,7 3 95,5 Profit before tax in SMEs (2009./2007.) 1 80,9 3 154,0 Total employment (2008/2006; 2006/2004) 1 109,0 2 104,3

1 - for 2010: sum of 2006., 2007 and 2008 per capita; for 2007: sum of 2003, 2004 and 2005 per capita 77 2 - for 2010: sum of 2006, 2007 and 2008 / sum of 2006, 2007 and 2008; for 2007: sum of 2003, 2004 and 2005 / sum of 2003, 2004 and 2005. HR021 BJELOVAR - BILOGORA COUNTY REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

HR021 BJELOVAR - BILOGORA COUNTY

Surface (km²) 2006 2.640

Population 2009 124.646

Unemployment rate (%) 2009 24,2

GDP (mil kn) 2007 6.217

Competitiveness rank 15

Rank of quality of business environment 16

Rank of quality of business sector 17

78 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HR021 BJELOVAR - BILOGORA COUNTY

Competitiveness profile of Bjelovar - Bilogora County – RCI 2010 and RCI 2007 Comparison* statistical indicators

Demographics, health and culture Bjelovar - Bilogora County Economic results - 1 CENTRAL AND EASTERN Bjelovar - Bilogora County Education trends (PANNONIAN) CROATIA Indicator 2010 2007 Difference

STATISTICAL R 15 15 0 Basic infrastructure Economic results 6 Business Environment R 15 14 -1 - level 21 and public sector Business Sector R 17 18 1

Level of Business entrepreneurship infrastructure development PERCEPTIVE R 15 5 -10 Investments and entrepreneurial trends Business Environment R 14 5 -9

Business Sector R 16 7 -9 Bjelovar - Bilogora County Competitiveness Profile – Perceptive Indicators FINAL R 15 11 -4

Business Environment R 16 11 -5 Location advantages Bjelovar - Bilogora County Business Sector R 17 12 -5 7 Croatian average Marketing and Local management R = rank government

*comparison is indicative only, due to slight changes in 2010 calculation methodology Clusters Physical 1 infrastructure

Technology, innovations Rule of law

Financial market and Education local competition

79 HR021 BJELOVAR - BILOGORA COUNTY REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

BUSINESS ENVIRONMENT

A. STATISTICAL INDICATORS 2010 2007 B. PERCEPTIVE INDICATORS 2010 2007

RANK VALUE RANK VALUE RANK VALUE RANK VALUE

Demographics, health and culture Location advantages Population estimate (2009, 2006) 15 124.646 14 127.844 Favorable geographical position 14 4,11 Share of population aged 25-64 in total population (2009, 2001) 14 53,42 13 51,96 Favorable climate conditions 17 4,85 Net migration rate in the total population ((2007 - 2009) / 2009; (2002- Price of business facilities/offices and land 15 3,74 21 -23,30 18 -13,79 2006)/2006) Overheads (public utility fees and construction prices) 5 3,89 Vital index (birth/death ratio) (sum 2007 - 2009; (2002-2006)/2006) 17 64,24 16 62,77 Direct labor cots 10 3,59 Number of physicians per capita (2008, 2006) 15 186,23 16 180,69 Local government Education Public confidence in politicians' financial honesty 11 3,30 Percentage of persons with 2-year college education in population aged 19 3,43 19 3,43 Behavior of public officials in the decision making process 17 2,85 3 4,05 25-64(2001) Influence of illegal payments to business operations 21 2,89 2 4,39 Percentage of persons with university education in population aged 25-64 16 5,69 16 5,69 (2001) Quality of services provided to entrepreneurs by local governnment units 18 3,04 Pre-school education attendance / population aged 0-4 (2008/2009; Quality of communication and cooperation of local government institutions 17 41,83 14 28,36 17 3,33 2005/2006) and the business sector Enrolled students/ population aged 20-24 (2008/2009; 2005/2006) 15 36,19 21 30,02 Physical infrastructure Graduated students / population aged 20-24 (2008; 2005.) 20 5,65 18 4,21 General infrastructure 20 2,78 7 3,82 Basic infrastructure and public sector Quality of railways 18 2,19 16 2,59 Quality of available port facilities and waterways 8 3,44 21 2,48 Recovered waste / total waste (2006; 2004) 9 5,50 6 3,76 Airline connections to other countries 7 4,96 5 5,11 Share of aid in LGUs total revenues (2009; 2006) 15 16,14 15 12,92 Quality of power supply 14 4,81 6 5,48 Number of solved cases per judge (2009; 2006) 12 266,00 17 246,00 Number of unsolved cases in Land Register per capita (2009; 2007) 3 137,99 2 51,63 Rule of law Average surtax rate in the county (2010; 2007) 12 6,46 12 6,32 Share of gray economy in business activities 16 3,07 19 3,11 Quality of legal framework for dispute settlement 21 2,81 7 3,75 Business infrastructure Protection of ownership rights (financial assets included) 21 3,26 11 3,55 Surface of entrepreneurial zones per capita (2007; 2006) 17 10,04 17 4,44 Costs that companies suffer due to organized crime 14 3,93 Number of employees in entrepreneurial zones (2007) 15 652,00 Independence of judiciary from political influences 15 3,67 1 4,18 Business facility public utility fees, 1st zone (highest rate; kn/m3) (2010) 6 65,00 Education Housing prices in the county center, per m2 12 7.612,50 Distance to airports (km), Dubrovnik, Split +50, Pula, Zadar +100 8 94,00 Quality of public schools 14 4,67 7 4,70 Quality of math and science classes in schools 14 4,52 9 5,07 Quality of management and business schools 11 3,37 15 2,27 Availability of scientists and engineers 12 3,15 17 3,11 Investment in education and employee development 16 2,85 6 3,61 Financial market and local competition Availability of sources of finance for businesses 19 2,52 11 3,18 Level of difficulty in obtaining a loan based on sound business plan and 15 2,00 1 4,11 without collaterals Access to finance of businesses with innovative, but risky, projects 14 2,11 2 2,80 80 Competition strength 9 4,81 14 4,70 Customers and purchasing decisions 12 2,78 1 3,86 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HR021 BJELOVAR - BILOGORA COUNTY

BUSINESS SECTOR

A. STATISTICAL INDICATORS 2010 2007 B. PERCEPTIVE INDICATORS 2010 2007

RANK VALUE RANK VALUE RANK VALUE RANK VALUE

Investments and entrepreneurial trends Technology and innovations Active legal entities - trends (2008/2006; 2005/2003) 10 119,35 18 98,95 Technological development results 15 3,33 6 4,00 Total investments per facility location1 19 11.469,01 19 14.166,29 Implementation of technology in production processes 21 2,59 5 4,05 Share of investments in equipment in total investments per facility location2 7 38,16 2 45,48 Businesses' competitiveness elements 18 3,00 13 3,36 SME investments in new long-term assets /total SME revenues (2009; 2006) 12 5,74 20 5,64 Sectors of export oriented companies 7 4,30 Direct foreign investments (000 EUR) per capita (2005-2009; 2000-2007) 14 143,10 17 57,93 Investment in research and development 14 3,04 7 3,30 Number of SMEs per capita - trends (2009/2004; 2006/2004) 16 127,41 13 105,87 Clusters Level of entrepreneurship development Number of clusters in different sectors 6 3,74 Trades, crafts and freelance professions per capita (2008; 2005) 19 14,76 19 14,92 Number of local suppliers 9 4,15 11 4,25 Number of employed in SMEs per capita (2009; 2006) 10 11,07 8 11,42 Quality of local suppliers 8 4,15 13 4,18 SMEs (period profit - period loss) /total SME revenues (2009; 2006) 11 0,17 17 0,55 Availability of specialized R&D services 10 3,41 5 4,16 Total SMEs revenues / total SMEs assets (2009; 2006) 9 76,81 8 85,73 Cooperation of businesses with universities and institutes in R&D 16 2,85 12 2,93

Gross value added per industry employee (2008; 2004) 19 123,52 18 92,91 Marketing and management

Economic results - level Quality of marketing in businesses 15 3,52 9 4,20 GDP per capita (1000kn/inhabitant) (2007; 2004) 18 49,09 14 35,80 Placement of county product and services in Croatian markets and exports 2 5,00 10 4,64 Unemployed persons/total population aged 25-64 (2009; 2006) 8 17,18 15 17,11 Readiness to delegate authority to other colleagues in the company 19 3,19 17 3,32 Unemployed for 12 or more months / total unemployment (2009; 2006) 18 54,56 15 58,27 Senior management positions (relatives vs. professionala managers) 16 3,15 13 3,34 Gross salaries per employee (2008; 2006) 18 60.168,83 16 40.729,45 Employer - employee relationship 19 3,74 5 4,75 Number of employed per capita (2008; 2006) 4 35,00 15 31,74

Economic results - trends GDP Index (2007/2004; 2004/2001) 20 115,86 15 119,50 Employment in SMEs (2009/2007) 18 97,89 Exports (2008/2006, 2005/2003) 4 136,15 12 116,70 Unemployed (2009/2007; 2006/2004) 13 102,36 20 103,95 Profit before tax in SMEs (2009./2007.) 20 66,54 Total employment (2008/2006; 2006/2004) 11 107,50 9 105,21

1 - for 2010: sum of 2006., 2007 and 2008 per capita; for 2007: sum of 2003, 2004 and 2005 per capita 81 2 - for 2010: sum of 2006, 2007 and 2008 / sum of 2006, 2007 and 2008; for 2007: sum of 2003, 2004 and 2005 / sum of 2003, 2004 and 2005. HR022 VIROVITICA-PODRAVINA COUNTY REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

HR022 VIROVITICA-PODRAVINA COUNTY

Surface (km²) 2006 2.024

Population 2009 87.596

Unemployment rate (%) 2009 26,5

GDP (mil kn) 2007 4.519

Competitiveness rank 17

Rank of quality of business environment 17

Rank of quality of business sector 15

82 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HR022 VIROVITICA-PODRAVINA COUNTY

Virovitica - Podravina County Competitiveness Profile – RCI 2010 and RCI 2007 Comparison* Statistical Indicators

Demographics, health and culture Virovitica - Podravina County Economic results - 1 CENTRAL AND EASTERN Virovitica-Podravina County Education trends (PANNONIAN) CROATIA Indicator 2010 2007 Difference

STATISTICAL R 17 18 1 Basic Economic results infrastructure Business environment R 16 17 1 - level 21 and public sector Business sector R 16 19 3

Level of Business entrepreneurship infrastructure development PERCEPTIVE R 17 12 -5 Investments and entrepreneurial trends Business environment R 18 13 -5

Business sector R 14 9 -5 Virovitica - Podravina County Competitiveness Profile – Perceptive Indicators FINAL R 17 17 0

Business environment R 17 17 0 Location advantages Virovitica - Podravina County Business sector R 15 16 1 7 Croatian average Marketing and Local management R = rang government

*comparison is indicative only, due to slight changes in 2010 calculation methodology Clusters Physical 1 infrastructure

Technology, innovations Rule of law

Financial market and Education local competition

83 HR022 VIROVITICA-PODRAVINA COUNTY REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

BUSINESS ENVIRONMENT

A. STATISTICAL INDICATORS 2010 2007 B. PERCEPTIVE INDICATORS 2010 2007

RANK VALUE RANK VALUE RANK VALUE RANK VALUE

Demographics, health and culture Location advantages Population estimate (2009, 2006) 19 87.596 19 89.757 Favorable geographical position 21 2,77 Share of population aged 25-64 in total population (2009, 2001) 16 53,04 17 51,36 Favorable climate conditions 15 4,92 Net migration rate in the total population ((2007 - 2009) / 2009; (2002- Price of business facilities/offices and land 7 4,19 20 -21,22 20 -19,11 2006)/2006) Overheads (public utility fees and construction prices) 7 3,69 Vital index (birth/death ratio) (sum 2007 - 2009; (2002-2006)/2006) 15 68,10 12 69,08 Direct labor cots 17 3,19 Number of physicians per capita (2008, 2006) 17 180,07 17 173,80 Local government Education Public confidence in politicians' financial honesty 9 3,54 Percentage of persons with 2-year college education in population aged 21 2,98 21 2,98 Behavior of public officials in the decision making process 13 3,00 9 3,51 25-64(2001) Influence of illegal payments to business operations 10 3,81 6 4,24 Percentage of persons with university education in population aged 25-64 20 5,17 20 5,17 (2001) Quality of services provided to entrepreneurs by local governnment units 8 3,81 Pre-school education attendance / population aged 0-4 (2008/2009; Quality of communication and cooperation of local government institutions 19 33,10 18 23,95 2 4,50 2005/2006) and the business sector Enrolled students/ population aged 20-24 (2008/2009; 2005/2006) 20 33,77 18 31,14 Physical infrastructure Graduated students / population aged 20-24 (2008; 2005.) 15 6,53 21 2,81 General infrastructure 12 3,77 12 3,38 Basic infrastructure and public sector Quality of railways 12 3,27 8 3,31 Quality of available port facilities and waterways 17 1,46 20 2,62 Recovered waste / total waste (2006; 2004) 11 3,75 2 21,82 Airline connections to other countries 20 1,15 15 3,56 Share of aid in LGUs total revenues (2009; 2006) 20 23,88 20 21,86 Quality of power supply 10 5,35 4 5,51 Number of solved cases per judge (2009; 2006) 20 206,00 20 231,00 Number of unsolved cases in Land Register per capita (2009; 2007) 1 26,26 1 15,60 Rule of law Average surtax rate in the county (2010; 2007) 6 2,95 4 2,42 Share of gray economy in business activities 15 3,19 21 3,04 Quality of legal framework for dispute settlement 14 3,27 3 4,20 Business infrastructure Protection of ownership rights (financial assets included) 10 4,23 21 2,91 Surface of entrepreneurial zones per capita (2007; 2006) 4 37,48 10 9,47 Costs that companies suffer due to organized crime 7 4,77 Number of employees in entrepreneurial zones (2007) 13 687,00 Independence of judiciary from political influences 13 3,81 13 2,91 Business facility public utility fees, 1st zone (highest rate; kn/m3) (2010) 1 30,00 Education Housing prices in the county center, per m2 21 6.162,50 Distance to airports (km), Dubrovnik, Split +50, Pula, Zadar +100 15 164,00 Quality of public schools 18 4,27 10 4,47 Quality of math and science classes in schools 16 4,35 16 4,51 Quality of management and business schools 17 2,35 17 2,07 Availability of scientists and engineers 15 2,96 7 3,78 Investment in education and employee development 20 2,73 7 3,53 Financial market and local competition Availability of sources of finance for businesses 20 2,50 13 3,07 Level of difficulty in obtaining a loan based on sound business plan and 15 2,00 3 3,78 without collaterals Access to finance of businesses with innovative, but risky, projects 19 1,65 3 2,78 84 Competition strength 16 3,96 17 4,56 Customers and purchasing decisions 13 2,73 14 2,89 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HR022 VIROVITICA-PODRAVINA COUNTY

BUSINESS SECTOR

A. STATISTICAL INDICATORS 2010 2007 B. PERCEPTIVE INDICATORS 2010 2007

RANK VALUE RANK VALUE RANK VALUE RANK VALUE

Investments and entrepreneurial trends Technology and innovations Active legal entities - trends (2008/2006; 2005/2003) 18 116,52 12 103,39 Technological development results 8 3,81 4 4,09 Total investments per facility location1 16 14.655,90 21 11.319,10 Implementation of technology in production processes 15 3,35 9 3,84 Share of investments in equipment in total investments per facility location2 6 39,51 11 36,66 Businesses' competitiveness elements 4 3,92 9 3,49 SME investments in new long-term assets /total SME revenues (2009; 2006) 7 6,74 17 7,23 Sectors of export oriented companies 14 3,92 Direct foreign investments (000 EUR) per capita (2005-2009; 2000-2007) 18 13,95 19 8,87 Investment in research and development 18 2,73 12 2,96 Number of SMEs per capita - trends (2009/2004; 2006/2004) 10 137,72 7 110,72 Clusters Level of entrepreneurship development Number of clusters in different sectors 18 2,08 Trades, crafts and freelance professions per capita (2008; 2005) 20 14,68 15 15,53 Number of local suppliers 13 3,85 9 4,29 Number of employed in SMEs per capita (2009; 2006) 21 7,14 21 6,80 Quality of local suppliers 9 3,96 8 4,29 SMEs (period profit - period loss) /total SME revenues (2009; 2006) 13 0,03 21 -1,11 Availability of specialized R&D services 14 3,15 17 3,56 Total SMEs revenues / total SMEs assets (2009; 2006) 8 77,04 15 77,73 Cooperation of businesses with universities and institutes in R&D 9 3,62 20 2,47

Gross value added per industry employee (2008; 2004) 13 145,58 7 143,64 Marketing and management

Economic results - level Quality of marketing in businesses 19 3,19 14 3,67 GDP per capita (1000kn/inhabitant) (2007; 2004) 17 50,78 16 35,23 Placement of county product and services in Croatian markets and exports 17 3,81 1 4,84 Unemployed persons/total population aged 25-64 (2009; 2006) 12 17,96 21 19,77 Readiness to delegate authority to other colleagues in the company 6 3,92 3 4,07 Unemployed for 12 or more months / total unemployment (2009; 2006) 14 50,56 14 57,47 Senior management positions (relatives vs. professionala managers) 19 2,81 19 3,13 Gross salaries per employee (2008; 2006) 20 56.912,21 21 36.726,24 Employer - employee relationship 16 4,04 8 4,67 Number of employed per capita (2008; 2006) 4 33,98 18 30,94

Economic results - trends GDP Index (2007/2004; 2004/2001) 15 122,20 17 115,49 Employment in SMEs (2009/2007) 2 109,36 Exports (2008/2006, 2005/2003) 17 103,64 21 85,91 Unemployed (2009/2007; 2006/2004) 9 97,01 16 97,61 Profit before tax in SMEs (2009./2007.) 1 100,99 Total employment (2008/2006; 2006/2004) 14 107,17 11 104,85

1 - for 2010: sum of 2006., 2007 and 2008 per capita; for 2007: sum of 2003, 2004 and 2005 per capita 85 2 - for 2010: sum of 2006, 2007 and 2008 / sum of 2006, 2007 and 2008; for 2007: sum of 2003, 2004 and 2005 / sum of 2003, 2004 and 2005. HR023 POŽEGA -SLAVONIA COUNTY REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

HR023 POŽEGA -SLAVONIA COUNTY

Surface (km²) 2006 1.823

GDP (mil kn) 2009 3.966

Unemployment rate (%) 2009 21,1

Population 2007 81.891

Competitiveness rank 21

Rank of quality of business environment 21

Rank of quality of business sector 21

86 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HR023 POŽEGA -SLAVONIA COUNTY

Požega -Slavonia County Competitiveness Profile – Statistical RCI 2010 and RCI 2007 Comparison* Indicators

Demographics, health and culture Požega -Slavonia County Economic results - 1 CENTRAL AND EASTERN Požega -Slavonia County Education trends (pannonian) croatia Indicator 2010 2007 Difference

STATISTICAL R 21 19 -2 Basic Economic results infrastructure Business Environment R 20 19 -1 - level 21 and public sector Business Sector R 21 21 0

Level of Business entrepreneurship infrastructure development PERCEPTIVE R 21 19 -2 Investments and entrepreneurial trends Business Environment R 21 20 -1

Business Sector R 17 21 4 Požega -Slavonia County Competitiveness Profile – Perceptive Indicators FINAL R 21 20 -1

Business Environment R 21 19 -2 Location advantages Požega -Slavonia County Business Sector R 21 21 0 7 Croatian average Marketing and Local management R = rank government

*comparison is indicative only, due to slight changes in 2010 calculation methodology Clusters Physical 1 infrastructure

Technology, innovations Rule of law

Financial market and Education local competition

87 HR023 POŽEGA -SLAVONIA COUNTY REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

BUSINESS ENVIRONMENT

A. STATISTICAL INDICATORS 2010 2007 B. PERCEPTIVE INDICATORS 2010 2007

RANK VALUE RANK VALUE RANK VALUE RANK VALUE

Demographics, health and culture Location advantages Population estimate (2009, 2006) 20 81.891 20 83.412 Favorable geographical position 16 4,09 Share of population aged 25-64 in total population (2009, 2001) 20 51,46 20 50,32 Favorable climate conditions 9 5,59 Net migration rate in the total population ((2007 - 2009) / 2009; (2002- Price of business facilities/offices and land 3 4,68 15 -7,58 19 -17,46 2006)/2006) Overheads (public utility fees and construction prices) 6 3,79 Vital index (birth/death ratio) (sum 2007 - 2009; (2002-2006)/2006) 10 77,55 10 80,98 Direct labor cots 13 3,41 Number of physicians per capita (2008, 2006) 3 250,76 5 233,78 Local government Education Public confidence in politicians' financial honesty 20 2,03 Percentage of persons with 2-year college education in population aged 18 3,51 18 3,51 Behavior of public officials in the decision making process 15 2,97 16 3,20 25-64(2001) Influence of illegal payments to business operations 20 2,94 14 4,00 Percentage of persons with university education in population aged 25-64 14 5,84 14 5,84 (2001) Quality of services provided to entrepreneurs by local governnment units 19 2,82 Pre-school education attendance / population aged 0-4 (2008/2009; Quality of communication and cooperation of local government institutions 18 34,74 19 21,46 19 2,82 2005/2006) and the business sector Enrolled students/ population aged 20-24 (2008/2009; 2005/2006) 12 37,65 12 34,10 Physical infrastructure Graduated students / population aged 20-24 (2008; 2005.) 18 6,34 9 5,34 General infrastructure 21 2,50 21 2,26 Basic infrastructure and public sector Quality of railways 20 1,50 18 2,54 Quality of available port facilities and waterways 21 1,00 8 3,72 Recovered waste / total waste (2006; 2004) 12 3,53 10 1,80 Airline connections to other countries 21 1,09 19 3,11 Share of aid in LGUs total revenues (2009; 2006) 19 22,81 17 15,08 Quality of power supply 12 5,24 5 5,50 Number of solved cases per judge (2009; 2006) 19 207,00 16 247,00 Number of unsolved cases in Land Register per capita (2009; 2007) 4 260,10 8 624,61 Rule of law Average surtax rate in the county (2010; 2007) 10 5,99 10 5,95 Share of gray economy in business activities 13 3,24 14 3,24 Quality of legal framework for dispute settlement 9 3,65 19 3,02 Business infrastructure Protection of ownership rights (financial assets included) 13 4,03 17 3,20 Surface of entrepreneurial zones per capita (2007; 2006) 13 17,33 15 5,28 Costs that companies suffer due to organized crime 20 3,24 Number of employees in entrepreneurial zones (2007) 12 856,00 Independence of judiciary from political influences 18 3,32 9 3,09 Business facility public utility fees, 1st zone (highest rate; kn/m3) (2010) 5 60,00 Education Housing prices in the county center, per m2 20 6.380,00 Distance to airports (km), Dubrovnik, Split +50, Pula, Zadar +100 17 181,00 Quality of public schools 13 4,91 18 4,17 Quality of math and science classes in schools 12 4,74 11 4,76 Quality of management and business schools 18 2,24 20 1,72 Availability of scientists and engineers 20 2,44 21 2,33 Investment in education and employee development 21 2,50 20 2,41 Financial market and local competition Availability of sources of finance for businesses 21 2,29 18 2,52 Level of difficulty in obtaining a loan based on sound business plan and 8 2,41 16 3,04 without collaterals Access to finance of businesses with innovative, but risky, projects 9 2,35 20 2,15 88 Competition strength 8 4,85 16 4,63 Customers and purchasing decisions 21 1,85 21 2,54 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HR023 POŽEGA -SLAVONIA COUNTY

BUSINESS SECTOR

A. STATISTICAL INDICATORS 2010 2007 B. PERCEPTIVE INDICATORS 2010 2007

RANK VALUE RANK VALUE RANK VALUE RANK VALUE

Investments and entrepreneurial trends Technology and innovations Active legal entities - trends (2008/2006; 2005/2003) 21 114,11 20 97,03 Technological development results 3 3,97 5 4,09 Total investments per facility location1 20 11.049,50 17 18.293,37 Implementation of technology in production processes 13 3,50 20 3,00 Share of investments in equipment in total investments per facility location2 3 42,16 14 34,71 Businesses' competitiveness elements 19 2,82 18 2,89 SME investments in new long-term assets /total SME revenues (2009; 2006) 13 5,60 18 6,58 Sectors of export oriented companies 17 3,68 Direct foreign investments (000 EUR) per capita (2005-2009; 2000-2007) 19 5,77 14 109,72 Investment in research and development 19 2,65 20 2,41 Number of SMEs per capita - trends (2009/2004; 2006/2004) 21 108,30 21 93,61 Clusters Level of entrepreneurship development Number of clusters in different sectors 13 2,50 Trades, crafts and freelance professions per capita (2008; 2005) 18 14,84 21 14,22 Number of local suppliers 11 4,06 8 4,30 Number of employed in SMEs per capita (2009; 2006) 18 7,79 17 7,92 Quality of local suppliers 15 3,44 7 4,30 SMEs (period profit - period loss) /total SME revenues (2009; 2006) 6 1,22 20 -0,55 Availability of specialized R&D services 17 2,82 16 3,63 Total SMEs revenues / total SMEs assets (2009; 2006) 6 81,75 7 93,72 Cooperation of businesses with universities and institutes in R&D 21 2,21 17 2,76

Gross value added per industry employee (2008; 2004) 21 97,89 21 83,09 Marketing and management

Economic results - level Quality of marketing in businesses 20 2,85 17 3,48 GDP per capita (1000kn/inhabitant) (2007; 2004) 19 47,72 18 34,59 Placement of county product and services in Croatian markets and exports 19 3,68 12 4,59 Unemployed persons/total population aged 25-64 (2009; 2006) 20 12,60 10 12,35 Readiness to delegate authority to other colleagues in the company 16 3,53 15 3,39 Unemployed for 12 or more months / total unemployment (2009; 2006) 4 43,03 2 50,06 Senior management positions (relatives vs. professionala managers) 18 2,82 17 3,17 Gross salaries per employee (2008; 2006) 17 60.258,52 18 39.167,90 Employer - employee relationship 6 4,74 11 4,48 Number of employed per capita (2008; 2006) 4 33,79 19 30,92

Economic results - trends GDP Index (2007/2004; 2004/2001) 19 116,10 12 123,49 Employment in SMEs (2009/2007) 19 96,48 Exports (2008/2006, 2005/2003) 20 98,84 15 110,82 Unemployed (2009/2007; 2006/2004) 17 104,18 17 97,91 Profit before tax in SMEs (2009./2007.) 3 99,10 Total employment (2008/2006; 2006/2004) 12 107,32 20 99,73

1 - for 2010: sum of 2006., 2007 and 2008 per capita; for 2007: sum of 2003, 2004 and 2005 per capita 89 2 - for 2010: sum of 2006, 2007 and 2008 / sum of 2006, 2007 and 2008; for 2007: sum of 2003, 2004 and 2005 / sum of 2003, 2004 and 2005. HR023 BROD - POSAVINA COUNTY REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

HR024 BROD - POSAVINA COUNTY

Surface (km²) 2006 2.030

Population 2009 172.681

Unemployment rate (%) 2009 25,9

GDP (mil kn) 2007 6.827

Competitiveness rank 16

Rank of quality of business environment 15

Rank of quality of business sector 16

90 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HR023 BROD - POSAVINA COUNTY

Brod - Posavina County Competitiveness Profile - Statistical RCI 2010 and RCI 2007 Comparison* Indicators

Demographics, health and culture Brod - Posavina County Economic results - 1 CENTRAL AND EASTERN Brod - Posavina County Education trends (PANNONIAN) CROATIA Indicator 2010 2007 Difference

STATISTICAL R 19 20 1 Basic Economic results infrastructure Business Environment R 18 20 2 - level 21 and public sector Business Sector R 19 20 1

Level of Business entrepreneurship infrastructure development PERCEPTIVE R 9 17 8 Investments and entrepreneurial trends Business Environment R 8 17 9

Business Sector R 11 20 9 Brod - Posavina County Competitiveness Profile – Perceptive Indicators FINAL R 16 18 2

Business Environment R 15 18 3 Location advantages Brod - Posavina County Business Sector R 16 20 4 7 Croatian average Marketing and Local management R = rank government

*comparison is indicative only, due to slight changes in 2010 calculation methodology Clusters Physical 1 infrastructure

Technology, innovations Rule of law

Financial market and Education local competition

91 HR023 BROD - POSAVINA COUNTY REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

BUSINESS ENVIRONMENT

A. STATISTICAL INDICATORS 2010 2007 B. PERCEPTIVE INDICATORS 2010 2007

RANK VALUE RANK VALUE RANK VALUE RANK VALUE

Demographics, health and culture Location advantages Population estimate (2009, 2006) 10 172.681 10 173.905 Favorable geographical position 5 5,68 Share of population aged 25-64 in total population (2009, 2001) 19 51,96 19 50,46 Favorable climate conditions 8 5,71 Net migration rate in the total population ((2007 - 2009) / 2009; (2002- Price of business facilities/offices and land 4 4,61 16 -7,90 16 -7,18 2006)/2006) Overheads (public utility fees and construction prices) 10 3,52 Vital index (birth/death ratio) (sum 2007 - 2009; (2002-2006)/2006) 8 85,04 9 84,04 Direct labor cots 1 5,39 Number of physicians per capita (2008, 2006) 10 222,31 10 220,81 Local government Education Public confidence in politicians' financial honesty 6 3,81 Percentage of persons with 2-year college education in population aged 17 3,52 17 3,52 Behavior of public officials in the decision making process 10 3,42 15 3,31 25-64(2001) Influence of illegal payments to business operations 8 3,87 11 4,07 Percentage of persons with university education in population aged 25-64 13 6,10 13 6,10 (2001) Quality of services provided to entrepreneurs by local governnment units 9 3,81 Pre-school education attendance / population aged 0-4 (2008/2009; Quality of communication and cooperation of local government institutions 21 25,47 20 19,80 9 3,90 2005/2006) and the business sector Enrolled students/ population aged 20-24 (2008/2009; 2005/2006) 17 35,99 14 32,41 Physical infrastructure Graduated students / population aged 20-24 (2008; 2005.) 19 5,87 17 4,26 General infrastructure 6 4,61 19 2,58 Basic infrastructure and public sector Quality of railways 3 4,65 2 4,56 Quality of available port facilities and waterways 11 2,74 16 3,18 Recovered waste / total waste (2006; 2004) 13 2,61 16 0,59 Airline connections to other countries 19 1,32 16 3,47 Share of aid in LGUs total revenues (2009; 2006) 16 16,27 14 12,53 Quality of power supply 9 5,35 15 4,76 Number of solved cases per judge (2009; 2006) 10 281,00 12 308,00 Number of unsolved cases in Land Register per capita (2009; 2007) 10 510,77 9 630,23 Rule of law Average surtax rate in the county (2010; 2007) 13 7,03 13 6,90 Share of gray economy in business activities 6 3,81 18 3,16 Quality of legal framework for dispute settlement 10 3,61 10 3,62 Business infrastructure Protection of ownership rights (financial assets included) 9 4,26 14 3,31 Surface of entrepreneurial zones per capita (2007; 2006) 5 33,15 14 5,35 Costs that companies suffer due to organized crime 9 4,52 Number of employees in entrepreneurial zones (2007) 10 1.061,00 Independence of judiciary from political influences 8 4,26 14 2,89 Business facility public utility fees, 1st zone (highest rate; kn/m3) (2010) 4 35,60 Education Housing prices in the county center, per m2 9 9.787,50 Distance to airports (km), Dubrovnik, Split +50, Pula, Zadar +100 18 195,00 Quality of public schools 4 5,84 13 4,31 Quality of math and science classes in schools 6 5,58 19 4,44 Quality of management and business schools 8 3,94 12 2,51 Availability of scientists and engineers 5 4,35 15 3,24 Investment in education and employee development 7 3,74 15 2,80 Financial market and local competition Availability of sources of finance for businesses 11 2,84 17 2,69 Level of difficulty in obtaining a loan based on sound business plan and 14 2,13 13 3,11 without collaterals Access to finance of businesses with innovative, but risky, projects 8 2,42 10 2,44 92 Competition strength 13 4,29 18 4,47 Customers and purchasing decisions 18 2,58 16 2,82 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HR023 BROD - POSAVINA COUNTY

BUSINESS SECTOR

A. STATISTICAL INDICATORS 2010 2007 B. PERCEPTIVE INDICATORS 2010 2007

RANK VALUE RANK VALUE RANK VALUE RANK VALUE

Investments and entrepreneurial trends Technology and innovations Active legal entities - trends (2008/2006; 2005/2003) 7 119,94 16 99,64 Technological development results 12 3,65 20 3,31 Total investments per facility location1 21 9.017,97 20 12.957,74 Implementation of technology in production processes 12 3,52 19 3,04 Share of investments in equipment in total investments per facility location2 16 27,19 7 38,93 Businesses' competitiveness elements 11 3,68 17 3,13 SME investments in new long-term assets /total SME revenues (2009; 2006) 20 4,40 15 7,65 Sectors of export oriented companies 9 4,29 Direct foreign investments (000 EUR) per capita (2005-2009; 2000-2007) 12 336,30 12 146,89 Investment in research and development 9 3,74 19 2,44 Number of SMEs per capita - trends (2009/2004; 2006/2004) 18 125,05 20 99,95 Clusters Level of entrepreneurship development Number of clusters in different sectors 16 2,32 Trades, crafts and freelance professions per capita (2008; 2005) 13 17,79 12 18,35 Number of local suppliers 12 3,90 18 3,87 Number of employed in SMEs per capita (2009; 2006) 17 8,18 16 8,48 Quality of local suppliers 14 3,77 16 4,04 SMEs (period profit - period loss) /total SME revenues (2009; 2006) 12 0,12 10 1,53 Availability of specialized R&D services 8 3,61 13 3,78 Total SMEs revenues / total SMEs assets (2009; 2006) 3 83,46 3 97,73 Cooperation of businesses with universities and institutes in R&D 8 3,77 10 2,98

Gross value added per industry employee (2008; 2004) 16 136,01 14 110,64 Marketing and management

Economic results - level Quality of marketing in businesses 12 3,74 16 3,56 GDP per capita (1000kn/inhabitant) (2007; 2004) 21 39,21 20 28,26 Placement of county product and services in Croatian markets and exports 11 4,35 20 4,22 Unemployed persons/total population aged 25-64 (2009; 2006) 13 15,75 17 17,20 Readiness to delegate authority to other colleagues in the company 20 3,13 18 3,31 Unemployed for 12 or more months / total unemployment (2009; 2006) 17 53,55 19 60,23 Senior management positions (relatives vs. professionala managers) 14 3,26 16 3,18 Gross salaries per employee (2008; 2006) 19 59.012,26 20 38.476,81 Employer - employee relationship 11 4,39 16 4,27 Number of employed per capita (2008; 2006) 4 31,37 20 27,65

Economic results - trends GDP Index (2007/2004; 2004/2001) 18 116,48 13 122,75 Employment in SMEs (2009/2007) 4 106,25 Exports (2008/2006, 2005/2003) 1 194,17 5 144,78 Unemployed (2009/2007; 2006/2004) 11 99,38 13 96,62 Profit before tax in SMEs (2009./2007.) 11 77,33 Total employment (2008/2006; 2006/2004)

1 - for 2010: sum of 2006., 2007 and 2008 per capita; for 2007: sum of 2003, 2004 and 2005 per capita 93 2 - for 2010: sum of 2006, 2007 and 2008 / sum of 2006, 2007 and 2008; for 2007: sum of 2003, 2004 and 2005 / sum of 2003, 2004 and 2005. HR025 OSIJEK- BARANJA COUNTY REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

HR025 HR025 OSIJEK- BARANJA COUNTY

Surface (km²) 2006 4.155

Population 2009 319.239

Unemployment rate (%) 2009 23,3

GDP (mil kn) 2007 18.621

Competitiveness rank 13

Rank of quality of business environment 5

Rank of quality of business sector 12

94 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HR025 OSIJEK- BARANJA COUNTY

Osijek - Baranja County Competitiveness Profile– Statistical RCI 2010 and RCI 2007 Comparison* Indicators

Demographics, health and culture Osijek - Baranja County Economic results - 1 CENTRAL AND EASTERN Osijek - Baranja County Education trends (PANNONIAN) CROATIA Indicator 2010 2007 Difference

STATISTICAL R 14 13 -1 Basic Economic results infrastructure Business Environment R 12 12 0 - level 21 and public sector Business Sector R 20 12 -8

Level of Business entrepreneurship infrastructure development PERCEPTIVE R 2 16 14 Investments and entrepreneurial trends Business Environment R 3 16 13

Business Sector R 2 14 12 Osijek - Baranja County Competitiveness Profile – Perceptive Indicators FINAL R 13 14 1

Business Environment R 5 15 10 Location advantages Osijek - Baranja County Business Sector R 12 13 1 7 Croatian average Marketing and Local management R = rank government

*comparison is indicative only, due to slight changes in 2010 calculation methodology Clusters Physical 1 infrastructure

Technology, innovations Rule of law

Financial market and Education local competition

95 HR025 OSIJEK- BARANJA COUNTY REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

BUSINESS ENVIRONMENT

A. STATISTICAL INDICATORS 2010 2007 B. PERCEPTIVE INDICATORS 2010 2007

RANK VALUE RANK VALUE RANK VALUE RANK VALUE

Demographics, health and culture Location advantages Population estimate (2009, 2006) 4 319.239 3 327.040 Favorable geographical position 17 3,81 Share of population aged 25-64 in total population (2009, 2001) 7 54,69 5 53,34 Favorable climate conditions 6 6,00 Net migration rate in the total population ((2007 - 2009) / 2009; (2002- Price of business facilities/offices and land 13 3,85 13 -6,03 8 9,94 2006)/2006) Overheads (public utility fees and construction prices) 11 3,50 Vital index (birth/death ratio) (sum 2007 - 2009; (2002-2006)/2006) 12 74,18 19 56,69 Direct labor cots 9 3,62 Number of physicians per capita (2008, 2006) 6 238,91 6 230,55 Local government Education Public confidence in politicians' financial honesty 10 3,31 Percentage of persons with 2-year college education in population aged 14 3,76 14 3,76 Behavior of public officials in the decision making process 2 3,92 21 2,86 25-64(2001) Influence of illegal payments to business operations 1 4,35 8 4,14 Percentage of persons with university education in population aged 25-64 7 8,80 7 8,80 (2001) Quality of services provided to entrepreneurs by local governnment units 6 4,00 Pre-school education attendance / population aged 0-4 (2008/2009; Quality of communication and cooperation of local government institutions 15 43,34 13 29,41 8 3,96 2005/2006) and the business sector Enrolled students/ population aged 20-24 (2008/2009; 2005/2006) 11 38,81 8 41,10 Physical infrastructure Graduated students / population aged 20-24 (2008; 2005.) 7 7,88 15 4,57 General infrastructure 7 4,38 10 3,50 Basic infrastructure and public sector Quality of railways 7 4,04 10 3,11 Quality of available port facilities and waterways 7 3,73 13 3,23 Recovered waste / total waste (2006; 2004) 2 34,00 20 0,24 Airline connections to other countries 11 4,19 21 1,86 Share of aid in LGUs total revenues (2009; 2006) 9 11,04 4 7,06 Quality of power supply 2 6,46 7 5,43 Number of solved cases per judge (2009; 2006) 16 255,00 18 237,00 Number of unsolved cases in Land Register per capita (2009; 2007) 9 507,14 7 618,58 Rule of law Average surtax rate in the county (2010; 2007) 17 7,36 14 6,93 Share of gray economy in business activities 4 4,15 15 3,23 Quality of legal framework for dispute settlement 7 4,00 9 3,70 Business infrastructure Protection of ownership rights (financial assets included) 5 4,50 10 3,59 Surface of entrepreneurial zones per capita (2007; 2006) 18 9,64 11 6,92 Costs that companies suffer due to organized crime 6 5,23 Number of employees in entrepreneurial zones (2007) 6 2.214,00 Independence of judiciary from political influences 6 4,54 19 2,43 Business facility public utility fees, 1st zone (highest rate; kn/m3) (2010) 11 90,00 Education Housing prices in the county center, per m2 16 7.032,50 Distance to airports (km), Dubrovnik, Split +50, Pula, Zadar +100 20 282,00 Quality of public schools 9 5,27 16 4,25 Quality of math and science classes in schools 5 5,62 17 4,50 Quality of management and business schools 3 5,42 13 2,48 Availability of scientists and engineers 3 5,15 13 3,50 Investment in education and employee development 2 4,46 11 3,20 Financial market and local competition Availability of sources of finance for businesses 4 3,42 10 3,23 Level of difficulty in obtaining a loan based on sound business plan and 1 3,50 20 2,80 without collaterals Access to finance of businesses with innovative, but risky, projects 3 3,23 17 2,20 96 Competition strength 6 5,00 5 5,30 Customers and purchasing decisions 3 3,65 17 2,82 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HR025 OSIJEK- BARANJA COUNTY

BUSINESS SECTOR

A. STATISTICAL INDICATORS 2010 2007 B. PERCEPTIVE INDICATORS 2010 2007

RANK VALUE RANK VALUE RANK VALUE RANK VALUE

Investments and entrepreneurial trends Technology and innovations Active legal entities - trends (2008/2006; 2005/2003) 16 117,37 6 108,59 Technological development results 5 3,92 8 3,93 Total investments per facility location1 12 20.902,90 14 20.831,80 Implementation of technology in production processes 3 4,54 11 3,68 Share of investments in equipment in total investments per facility location2 15 29,14 5 40,60 Businesses' competitiveness elements 3 4,50 20 2,82 SME investments in new long-term assets /total SME revenues (2009; 2006) 10 5,76 10 8,25 Sectors of export oriented companies 5 4,46 Direct foreign investments (000 EUR) per capita (2005-2009; 2000-2007) 21 -533,80 9 460,48 Investment in research and development 5 4,08 8 3,20 Number of SMEs per capita - trends (2009/2004; 2006/2004) 20 122,03 19 102,42 Clusters Level of entrepreneurship development Number of clusters in different sectors 4 3,96 Trades, crafts and freelance professions per capita (2008; 2005) 16 15,11 18 15,11 Number of local suppliers 8 4,15 13 4,18 Number of employed in SMEs per capita (2009; 2006) 11 10,26 11 10,49 Quality of local suppliers 5 4,19 15 4,07 SMEs (period profit - period loss) /total SME revenues (2009; 2006) 18 -1,43 18 0,25 Availability of specialized R&D services 2 4,77 9 3,98 Total SMEs revenues / total SMEs assets (2009; 2006) 13 67,24 11 81,38 Cooperation of businesses with universities and institutes in R&D 2 4,54 8 3,02

Gross value added per industry employee (2008; 2004) 15 139,05 6 145,32 Marketing and management

Economic results - level Quality of marketing in businesses 10 4,00 19 3,20 GDP per capita (1000kn/inhabitant) (2007; 2004) 10 57,77 11 37,67 Placement of county product and services in Croatian markets and exports 7 4,50 15 4,45 Unemployed persons/total population aged 25-64 (2009; 2006) 10 16,36 16 17,12 Readiness to delegate authority to other colleagues in the company 8 3,73 5 3,91 Unemployed for 12 or more months / total unemployment (2009; 2006) 19 54,76 16 58,74 Senior management positions (relatives vs. professionala managers) 2 4,58 20 2,80 Gross salaries per employee (2008; 2006) 12 65.229,66 15 42.967,43 Employer - employee relationship 2 5,15 17 4,25 Number of employed per capita (2008; 2006) 4 36,26 14 32,70

Economic results - trends GDP Index (2007/2004; 2004/2001) 7 131,86 9 127,53 Employment in SMEs (2009/2007) 15 98,62 Exports (2008/2006, 2005/2003) 21 83,31 13 113,59 Unemployed (2009/2007; 2006/2004) 15 102,72 9 92,90 Profit before tax in SMEs (2009./2007.) 9 81,23 Total employment (2008/2006; 2006/2004) 5 108,26 15 103,52

1 - for 2010: sum of 2006., 2007 and 2008 per capita; for 2007: sum of 2003, 2004 and 2005 per capita 97 2 - for 2010: sum of 2006, 2007 and 2008 / sum of 2006, 2007 and 2008; for 2007: sum of 2003, 2004 and 2005 / sum of 2003, 2004 and 2005. HR026 VUKOVAR – SRIJEM COUNTY REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

HR026 VUKOVAR – SRIJEM COUNTY

Surface (km²) 2006 2.454

Population 2009 197.472

Unemployment rate (%) 2009 27,5

GDP (mil kn) 2007 8.393

Competitiveness rank 20

Rank of quality of business environment 20

Rank of quality of business sector 20

98 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HR026 VUKOVAR – SRIJEM COUNTY

Vukovar - Srijem County Competitiveness Profile – Statistical RCI 2010 and RCI 2007 Comparison* Indicators

Demographics, health and culture Vukovar - Srijem County Economic results - 1 CENTRAL AND EASTERN Vukovar - Srijem County Education trends (PANNONIAN) CROATIA Indicator 2010 2007 Difference

STATISTICAL R 20 21 1 Basic Economic results infrastructure Business Environment R 19 21 2 - level 21 and public sector Business Sector R 18 17 -1

Level of Business entrepreneurship infrastructure development PERCEPTIVE R 19 20 1 Investments and entrepreneurial trends Business Environment R 19 21 2

Business Sector R 19 18 -1 Vukovar - Srijem County Competitiveness Profile – Perceptive Indicators FINAL R 20 21 1

Business Environment R 20 21 1 Location advantages Vukovar - Srijem County Business Sector R 20 18 -2 7 Croatian average Marketing and Local management R = rank government

*comparison is indicative only, due to slight changes in 2010 calculation methodology Clusters Physical 1 infrastructure

Technology, innovations Rule of law

Financial market and Education local competition

99 HR026 VUKOVAR – SRIJEM COUNTY REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

BUSINESS ENVIRONMENT

A. STATISTICAL INDICATORS 2010 2007 B. PERCEPTIVE INDICATORS 2010 2007

RANK VALUE RANK VALUE RANK VALUE RANK VALUE

Demographics, health and culture Location advantages Population estimate (2009, 2006) 7 197.472 7 199.321 Favorable geographical position 20 3,37 Share of population aged 25-64 in total population (2009, 2001) 15 53,07 14 51,80 Favorable climate conditions 14 5,33 Net migration rate in the total population ((2007 - 2009) / 2009; (2002- Price of business facilities/offices and land 10 4,00 14 -7,33 21 -20,13 2006)/2006) Overheads (public utility fees and construction prices) 9 3,56 Vital index (birth/death ratio) (sum 2007 - 2009; (2002-2006)/2006) 9 84,26 8 87,26 Direct labor cots 16 3,37 Number of physicians per capita (2008, 2006) 19 178,02 18 168,57 Local government Education Public confidence in politicians' financial honesty 12 3,22 Percentage of persons with 2-year college education in population aged 15 3,65 15 3,65 Behavior of public officials in the decision making process 3 3,89 17 3,11 25-64(2001) Influence of illegal payments to business operations 12 3,67 7 4,16 Percentage of persons with university education in population aged 25-64 18 5,61 18 5,61 (2001) Quality of services provided to entrepreneurs by local governnment units 16 3,19 Pre-school education attendance / population aged 0-4 (2008/2009; Quality of communication and cooperation of local government institutions 20 31,80 21 16,52 18 3,30 2005/2006) and the business sector Enrolled students/ population aged 20-24 (2008/2009; 2005/2006) 21 32,58 17 31,36 Physical infrastructure Graduated students / population aged 20-24 (2008; 2005.) 21 5,62 20 3,07 General infrastructure 11 3,78 18 2,66 Basic infrastructure and public sector Quality of railways 8 3,52 13 2,89 Quality of available port facilities and waterways 5 4,11 10 3,52 Recovered waste / total waste (2006; 2004) 6 10,56 3 10,15 Airline connections to other countries 17 2,07 20 2,52 Share of aid in LGUs total revenues (2009; 2006) 18 20,70 19 19,62 Quality of power supply 13 5,19 16 4,70 Number of solved cases per judge (2009; 2006) 2 353,00 1 433,00 Number of unsolved cases in Land Register per capita (2009; 2007) 2 130,65 4 218,24 Rule of law Average surtax rate in the county (2010; 2007) 9 5,36 8 4,65 Share of gray economy in business activities 20 2,56 13 3,27 Quality of legal framework for dispute settlement 13 3,30 14 3,41 Business infrastructure Protection of ownership rights (financial assets included) 14 3,96 1 4,32 Surface of entrepreneurial zones per capita (2007; 2006) 14 15,74 20 0,85 Costs that companies suffer due to organized crime 11 4,11 Number of employees in entrepreneurial zones (2007) 19 233,00 Independence of judiciary from political influences 10 3,96 15 2,84 Business facility public utility fees, 1st zone (highest rate; kn/m3) (2010) 8 80,00 Education Housing prices in the county center, per m2 19 6.452,50 Distance to airports (km), Dubrovnik, Split +50, Pula, Zadar +100 21 300,00 Quality of public schools 19 4,07 15 4,27 Quality of math and science classes in schools 17 4,07 15 4,52 Quality of management and business schools 21 1,59 19 1,77 Availability of scientists and engineers 21 2,41 18 3,00 Investment in education and employee development 18 2,81 18 2,59 Financial market and local competition Availability of sources of finance for businesses 18 2,59 20 2,45 Level of difficulty in obtaining a loan based on sound business plan and 20 1,67 21 2,61 without collaterals Access to finance of businesses with innovative, but risky, projects 20 1,59 21 1,91 100 Competition strength 19 3,59 20 4,27 Customers and purchasing decisions 16 2,63 19 2,64 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HR026 VUKOVAR – SRIJEM COUNTY

BUSINESS SECTOR

A. STATISTICAL INDICATORS 2010 2007 B. PERCEPTIVE INDICATORS 2010 2007

RANK VALUE RANK VALUE RANK VALUE RANK VALUE

Investments and entrepreneurial trends Technology and innovations Active legal entities - trends (2008/2006; 2005/2003) 5 120,65 3 114,97 Technological development results 14 3,52 21 3,11 Total investments per facility location1 17 13.251,80 12 21.568,74 Implementation of technology in production processes 18 3,15 16 3,27 Share of investments in equipment in total investments per facility location2 17 27,12 18 24,93 Businesses' competitiveness elements 21 2,52 19 2,84 SME investments in new long-term assets /total SME revenues (2009; 2006) 16 4,87 16 7,65 Sectors of export oriented companies 18 3,48 Direct foreign investments (000 EUR) per capita (2005-2009; 2000-2007) 13 173,08 16 81,56 Investment in research and development 20 2,33 18 2,45 Number of SMEs per capita - trends (2009/2004; 2006/2004) 11 131,46 11 106,51 Clusters 0 0,00 Level of entrepreneurship development Number of clusters in different sectors 20 1,85 Trades, crafts and freelance professions per capita (2008; 2005) 15 15,44 17 15,33 Number of local suppliers 15 3,78 14 4,16 Number of employed in SMEs per capita (2009; 2006) 20 7,23 19 7,17 Quality of local suppliers 13 3,81 19 3,84 SMEs (period profit - period loss) /total SME revenues (2009; 2006) 16 -1,40 1 5,05 Availability of specialized R&D services 19 2,74 19 3,23 Total SMEs revenues / total SMEs assets (2009; 2006) 12 70,00 16 77,59 Cooperation of businesses with universities and institutes in R&D 20 2,26 15 2,82

Gross value added per industry employee (2008; 2004) 18 127,68 11 118,48 Marketing and management

Economic results - level Quality of marketing in businesses 16 3,41 5 4,27 GDP per capita (1000kn/inhabitant) (2007; 2004) 20 42,23 21 27,48 Placement of county product and services in Croatian markets and exports 16 3,89 7 4,68 Unemployed persons/total population aged 25-64 (2009; 2006) 11 16,48 18 17,42 Readiness to delegate authority to other colleagues in the company 5 3,93 16 3,36 Unemployed for 12 or more months / total unemployment (2009; 2006) 16 52,49 17 59,26 Senior management positions (relatives vs. professionala managers) 17 3,11 14 3,20 Gross salaries per employee (2008; 2006) 14 62.095,04 17 40.188,65 Employer - employee relationship 17 4,00 17 4,25 Number of employed per capita (2008; 2006) 4 30,65 21 26,84

Economic results - trends GDP Index (2007/2004; 2004/2001) 14 125,93 11 124,76 Employment in SMEs (2009/2007) 5 103,73 Exports (2008/2006, 2005/2003) 19 99,03 7 138,04 Unemployed (2009/2007; 2006/2004) 10 98,18 5 91,55 Profit before tax in SMEs (2009./2007.) 16 71,59 Total employment (2008/2006; 2006/2004) 1 113,15 8 105,34

1 - for 2010: sum of 2006., 2007 and 2008 per capita; for 2007: sum of 2003, 2004 and 2005 per capita 101 2 - for 2010: sum of 2006, 2007 and 2008 / sum of 2006, 2007 and 2008; for 2007: sum of 2003, 2004 and 2005 / sum of 2003, 2004 and 2005. HR027 KARLOVAC COUNTY REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

HR027 KARLOVAC COUNTY

Surface (km²) 2006 3.626

Population 2009 132.150

Unemployment rate (%) 2009 23,6

GDP (mil kn) 2007 7.719

Competitiveness rank 14

Rank of quality of business environment 10

Rank of quality of business sector 14

102 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HR027 KARLOVAC COUNTY

Karlovac County Competitiveness Profile – Statistical Indicators RCI 2010 and RCI 2007 Comparison*

Demographics, health and culture Karlovac County Economic results - 1 CENTRAL AND EASTERN Karlovac County Education trends (PANNONIAN) CROATIA Indicator 2010 2007 Difference

STATISTICAL R 12 16 4 Basic Economic results infrastructure Business Environment R 11 16 5 - level 21 and public sector Business Sector R 11 13 2

Level of Business entrepreneurship infrastructure development PERCEPTIVE R 10 6 -4 Investments and entrepreneurial trends Business Environment R 7 7 0

Business Sector R 11 5 -6 Karlovac County Competitiveness Profile – Perceptive Indicators FINAL R 14 12 -2

Business Environment R 10 12 2 Location advantages Karlovac County Business Sector R 14 9 -5 7 Croatian average Marketing and Local management R = rank government

*comparison is indicative only, due to slight changes in 2010 calculation methodology Clusters Physical 1 infrastructure

Technology, innovations Rule of law

Financial market and Education local competition

103 HR027 KARLOVAC COUNTY REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

BUSINESS ENVIRONMENT

A. STATISTICAL INDICATORS 2010 2007 B. PERCEPTIVE INDICATORS 2010 2007

RANK VALUE RANK VALUE RANK VALUE RANK VALUE

Demographics, health and culture Location advantages Population estimate (2009, 2006) 13 132.150 13 135.838 Favorable geographical position 6 5,57 Share of population aged 25-64 in total population (2009, 2001) 11 54,08 12 52,22 Favorable climate conditions 10 5,57 Net migration rate in the total population ((2007 - 2009) / 2009; (2002- Price of business facilities/offices and land 6 4,57 18 -16,35 15 -7,11 2006)/2006) Overheads (public utility fees and construction prices) 4 4,07 Vital index (birth/death ratio) (sum 2007 - 2009; (2002-2006)/2006) 20 55,77 20 51,93 Direct labor cots 4 4,37 Number of physicians per capita (2008, 2006) 4 244,37 3 240,73 Local government Education Public confidence in politicians' financial honesty 21 1,93 Percentage of persons with 2-year college education in population aged 8 4,75 8 4,75 Behavior of public officials in the decision making process 18 2,83 1 4,52 25-64(2001) Influence of illegal payments to business operations 11 3,73 4 4,26 Percentage of persons with university education in population aged 25-64 9 7,22 9 7,22 (2001) Quality of services provided to entrepreneurs by local governnment units 11 3,67 Pre-school education attendance / population aged 0-4 (2008/2009; Quality of communication and cooperation of local government institutions 14 44,61 17 25,97 3 4,27 2005/2006) and the business sector Enrolled students/ population aged 20-24 (2008/2009; 2005/2006) 5 46,67 7 41,24 Physical infrastructure Graduated students / population aged 20-24 (2008; 2005.) 6 8,70 6 5,67 General infrastructure 15 3,40 11 3,43 Basic infrastructure and public sector Quality of railways 14 3,00 7 3,35 Quality of available port facilities and waterways 18 1,30 18 2,93 Recovered waste / total waste (2006; 2004) 3 21,16 9 2,13 Airline connections to other countries 3 5,33 6 5,02 Share of aid in LGUs total revenues (2009; 2006) 12 13,15 8 9,86 Quality of power supply 8 5,60 13 5,07 Number of solved cases per judge (2009; 2006) 9 282,00 13 289,00 Number of unsolved cases in Land Register per capita (2009; 2007) 13 1.203,18 12 1.403,88 Rule of law Average surtax rate in the county (2010; 2007) 14 7,05 15 7,03 Share of gray economy in business activities 10 3,60 4 3,67 Quality of legal framework for dispute settlement 4 4,50 5 4,00 Business infrastructure Protection of ownership rights (financial assets included) 3 4,60 8 3,74 Surface of entrepreneurial zones per capita (2007; 2006) 7 28,65 13 5,59 Costs that companies suffer due to organized crime 1 5,60 Number of employees in entrepreneurial zones (2007) 11 992,00 Independence of judiciary from political influences 7 4,37 3 3,74 Business facility public utility fees, 1st zone (highest rate; kn/m3) (2010) 12 98,80 Education Housing prices in the county center, per m2 14 7.250,00 Distance to airports (km), Dubrovnik, Split +50, Pula, Zadar +100 4 59,00 Quality of public schools 5 5,83 5 4,78 Quality of math and science classes in schools 10 4,93 5 5,33 Quality of management and business schools 9 3,87 8 2,70 Availability of scientists and engineers 6 4,23 8 3,70 Investment in education and employee development 5 3,80 5 3,74 Financial market and local competition Availability of sources of finance for businesses 13 2,77 8 3,28 Level of difficulty in obtaining a loan based on sound business plan and 7 2,53 2 3,89 without collaterals Access to finance of businesses with innovative, but risky, projects 12 2,30 12 2,39 104 Competition strength 18 3,67 7 5,04 Customers and purchasing decisions 15 2,67 10 3,35 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HR027 KARLOVAC COUNTY

BUSINESS SECTOR

A. STATISTICAL INDICATORS 2010 2007 B. PERCEPTIVE INDICATORS 2010 2007

RANK VALUE RANK VALUE RANK VALUE RANK VALUE

Investments and entrepreneurial trends Technology and innovations Active legal entities - trends (2008/2006; 2005/2003) 17 117,08 15 101,62 Technological development results 11 3,67 3 4,11 Total investments per facility location1 15 15.540,41 11 21.705,28 Implementation of technology in production processes 14 3,43 4 4,13 Share of investments in equipment in total investments per facility location2 5 39,88 10 37,77 Businesses' competitiveness elements 12 3,60 8 3,70 SME investments in new long-term assets /total SME revenues (2009; 2006) 15 4,93 19 6,31 Sectors of export oriented companies 13 3,93 Direct foreign investments (000 EUR) per capita (2005-2009; 2000-2007) 16 114,62 21 -679,81 Investment in research and development 8 3,77 10 3,13 Number of SMEs per capita - trends (2009/2004; 2006/2004) 13 129,83 18 103,11 Clusters Level of entrepreneurship development Number of clusters in different sectors 19 1,87 Trades, crafts and freelance professions per capita (2008; 2005) 11 19,10 11 19,18 Number of local suppliers 21 2,57 10 4,26 Number of employed in SMEs per capita (2009; 2006) 13 9,85 12 10,49 Quality of local suppliers 16 3,43 11 4,24 SMEs (period profit - period loss) /total SME revenues (2009; 2006) 1 3,24 8 2,69 Availability of specialized R&D services 9 3,47 4 4,30 Total SMEs revenues / total SMEs assets (2009; 2006) 11 70,59 9 82,89 Cooperation of businesses with universities and institutes in R&D 5 4,20 5 3,26

Gross value added per industry employee (2008; 2004) 6 180,14 8 139,71 Marketing and management

Economic results - level Quality of marketing in businesses 13 3,63 11 4,17 GDP per capita (1000kn/inhabitant) (2007; 2004) 11 57,40 15 35,73 Placement of county product and services in Croatian markets and exports 20 3,63 18 4,39 Unemployed persons/total population aged 25-64 (2009; 2006) 21 16,04 19 17,51 Readiness to delegate authority to other colleagues in the company 15 3,53 6 3,87 Unemployed for 12 or more months / total unemployment (2009; 2006) 20 57,74 21 68,27 Senior management positions (relatives vs. professionala managers) 3 4,50 5 4,07 Gross salaries per employee (2008; 2006) 6 69.219,61 7 45.706,82 Employer - employee relationship 15 4,10 4 4,76 Number of employed per capita (2008; 2006) 4 37,65 9 34,22

Economic results - trends GDP Index (2007/2004; 2004/2001) 4 133,71 20 110,12 Employment in SMEs (2009/2007) 21 89,98 Exports (2008/2006, 2005/2003) 6 133,97 3 156,15 Unemployed (2009/2007; 2006/2004) 5 95,29 18 98,99 Profit before tax in SMEs (2009./2007.) 4 98,86 Total employment (2008/2006; 2006/2004) 15 107,01 18 102,39

1 - for 2010: sum of 2006., 2007 and 2008 per capita; for 2007: sum of 2003, 2004 and 2005 per capita 105 2 - for 2010: sum of 2006, 2007 and 2008 / sum of 2006, 2007 and 2008; for 2007: sum of 2003, 2004 and 2005 / sum of 2003, 2004 and 2005. HR028 SISAK - MOSLAVINA COUNTY REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

HR028 SISAK - MOSLAVINA COUNTY

Surface (km²) 2006 4.468

Population 2009 171.975

Unemployment rate (%) 2009 27,6

GDP (mil kn) 2007 9.307

Competitiveness rank 19

Rank of quality of business environment 19

Rank of quality of business sector 19

106 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HR028 SISAK - MOSLAVINA COUNTY

Sisak - Moslavina County Competitiveness Profile– Statistical RCI 2010 and RCI 2007 Comparison* Indicators

Demographics, health and culture Sisak - Moslavina County Economic results - 1 CENTRAL AND EASTERN Sisak - Moslavina County Education trends (PANNONIAN) CROATIA Indicator 2010 2007 Difference

STATISTICAL R 16 14 -2 Basic Economic results infrastructure Business Environment R 17 15 -2 - level 21 and public sector Business Sector R 15 14 -1

Level of Business entrepreneurship infrastructure development PERCEPTIVE R 20 15 -5 Investments and entrepreneurial trends Business Environment R 20 15 -5

Business Sector R 18 17 -1 Sisak - Moslavina County Competitiveness Profile – Perceptive Indicators FINAL R 19 16 -3

Business Environment R 19 16 -3 Location advantages Sisak - Moslavina County Business Sector R 19 17 -2 7 Croatian average Marketing and Local management R = rank government

*comparison is indicative only, due to slight changes in 2010 calculation methodology Clusters Physical 1 infrastructure

Technology, innovations Rule of law

Financial market and Education local competition

107 HR028 SISAK - MOSLAVINA COUNTY REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

BUSINESS ENVIRONMENT

A. STATISTICAL INDICATORS 2010 2007 B. PERCEPTIVE INDICATORS 2010 2007

RANK VALUE RANK VALUE RANK VALUE RANK VALUE

Demographics, health and culture Location advantages Population estimate (2009, 2006) 11 171.975 9 178.014 Favorable geographical position 18 3,74 Share of population aged 25-64 in total population (2009, 2001) 12 53,59 10 52,72 Favorable climate conditions 20 4,00 Net migration rate in the total population ((2007 - 2009) / 2009; (2002- Price of business facilities/offices and land 11 3,91 19 -21,13 17 -12,19 2006)/2006) Overheads (public utility fees and construction prices) 8 3,56 Vital index (birth/death ratio) (sum 2007 - 2009; (2002-2006)/2006) 19 59,94 18 59,81 Direct labor cots 13 3,41 Number of physicians per capita (2008, 2006) 14 206,54 14 199,42 Local government Education Public confidence in politicians' financial honesty 17 2,53 Percentage of persons with 2-year college education in population aged 12 3,93 12 3,93 Behavior of public officials in the decision making process 20 2,47 5 3,76 25-64(2001) Influence of illegal payments to business operations 19 3,06 15 3,96 Percentage of persons with university education in population aged 25-64 12 6,50 12 6,50 (2001) Quality of services provided to entrepreneurs by local governnment units 21 2,53 Pre-school education attendance / population aged 0-4 (2008/2009; Quality of communication and cooperation of local government institutions 11 45,50 11 31,50 20 2,79 2005/2006) and the business sector Enrolled students/ population aged 20-24 (2008/2009; 2005/2006) 19 34,72 15 32,32 Physical infrastructure Graduated students / population aged 20-24 (2008; 2005.) 16 6,44 10 5,34 General infrastructure 18 3,15 14 3,04 Basic infrastructure and public sector Quality of railways 15 2,91 12 3,00 Quality of available port facilities and waterways 10 2,79 19 2,83 Recovered waste / total waste (2006; 2004) 20 0,20 18 0,37 Airline connections to other countries 8 4,56 11 4,61 Share of aid in LGUs total revenues (2009; 2006) 10 12,07 13 10,94 Quality of power supply 15 4,68 20 4,07 Number of solved cases per judge (2009; 2006) 5 310,00 9 324,00 Number of unsolved cases in Land Register per capita (2009; 2007) 15 1.561,85 14 1.482,47 Rule of law Average surtax rate in the county (2010; 2007) 11 6,24 11 6,10 Share of gray economy in business activities 21 2,53 20 3,09 Quality of legal framework for dispute settlement 19 2,91 11 3,59 Business infrastructure Protection of ownership rights (financial assets included) 20 3,44 20 3,07 Surface of entrepreneurial zones per capita (2007; 2006) 19 9,18 7 13,20 Costs that companies suffer due to organized crime 12 3,97 Number of employees in entrepreneurial zones (2007) 16 508,00 Independence of judiciary from political influences 17 3,47 9 3,09 Business facility public utility fees, 1st zone (highest rate; kn/m3) (2010) 14 120,00 Education Housing prices in the county center, per m2 15 7.105,00 Distance to airports (km), Dubrovnik, Split +50, Pula, Zadar +100 3 46,00 Quality of public schools 15 4,50 21 4,09 Quality of math and science classes in schools 15 4,47 20 4,24 Quality of management and business schools 20 1,82 16 2,24 Availability of scientists and engineers 17 2,76 12 3,57 Investment in education and employee development 19 2,74 13 2,91 Financial market and local competition Availability of sources of finance for businesses 14 2,76 18 2,52 Level of difficulty in obtaining a loan based on sound business plan and 13 2,15 10 3,26 without collaterals Access to finance of businesses with innovative, but risky, projects 13 2,21 1 2,89 108 Competition strength 17 3,82 12 4,85 Customers and purchasing decisions 20 2,15 15 2,87 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HR028 SISAK - MOSLAVINA COUNTY

BUSINESS SECTOR

A. STATISTICAL INDICATORS 2010 2007 B. PERCEPTIVE INDICATORS 2010 2007

RANK VALUE RANK VALUE RANK VALUE RANK VALUE

Investments and entrepreneurial trends Technology and innovations Active legal entities - trends (2008/2006; 2005/2003) 19 116,50 21 96,90 Technological development results 13 3,53 13 3,74 Total investments per facility location1 18 11.574,75 15 19.785,17 Implementation of technology in production processes 20 2,97 18 3,09 Share of investments in equipment in total investments per facility location2 2 52,11 4 42,17 Businesses' competitiveness elements 16 3,12 15 3,22 SME investments in new long-term assets /total SME revenues (2009; 2006) 21 4,09 11 8,19 Sectors of export oriented companies 16 3,71 Direct foreign investments (000 EUR) per capita (2005-2009; 2000-2007) 20 -136,58 18 19,08 Investment in research and development 17 2,74 15 2,65 Number of SMEs per capita - trends (2009/2004; 2006/2004) 7 141,13 17 104,86 Clusters Level of entrepreneurship development Number of clusters in different sectors 14 2,47 Trades, crafts and freelance professions per capita (2008; 2005) 17 14,85 20 14,50 Number of local suppliers 18 3,35 21 3,30 Number of employed in SMEs per capita (2009; 2006) 15 8,97 18 7,86 Quality of local suppliers 18 3,35 21 3,50 SMEs (period profit - period loss) /total SME revenues (2009; 2006) 17 -1,42 16 0,93 Availability of specialized R&D services 17 2,82 11 3,91 Total SMEs revenues / total SMEs assets (2009; 2006) 7 78,37 6 95,10 Cooperation of businesses with universities and institutes in R&D 17 2,56 7 3,13

Gross value added per industry employee (2008; 2004) 11 151,47 19 88,08 Marketing and management

Economic results - level Quality of marketing in businesses 17 3,35 20 3,07 GDP per capita (1000kn/inhabitant) (2007; 2004) 15 52,82 13 36,07 Placement of county product and services in Croatian markets and exports 15 3,91 13 4,57 Unemployed persons/total population aged 25-64 (2009; 2006) 4 18,30 20 18,13 Readiness to delegate authority to other colleagues in the company 13 3,65 19 3,30 Unemployed for 12 or more months / total unemployment (2009; 2006) 21 58,16 20 62,52 Senior management positions (relatives vs. professionala managers) 20 2,74 15 3,20 Gross salaries per employee (2008; 2006) 8 68.967,75 9 44.693,42 Employer - employee relationship 21 3,56 19 4,17 Number of employed per capita (2008; 2006) 4 37,76 11 33,83

Economic results - trends GDP Index (2007/2004; 2004/2001) 17 121,03 21 109,12 Employment in SMEs (2009/2007) 20 92,60 Exports (2008/2006, 2005/2003) 11 121,03 9 120,00 Unemployed (2009/2007; 2006/2004) 18 104,56 10 94,27 Profit before tax in SMEs (2009./2007.) 13 76,17 Total employment (2008/2006; 2006/2004) 9 107,82 4 106,06

1 - for 2010: sum of 2006., 2007 and 2008 per capita; for 2007: sum of 2003, 2004 and 2005 per capita 109 2 - for 2010: sum of 2006, 2007 and 2008 / sum of 2006, 2007 and 2008; for 2007: sum of 2003, 2004 and 2005 / sum of 2003, 2004 and 2005. REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

110 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

ADRIATIC CROATIA

Primorje – Gorski Kotar County Lika – Senj County Zadar County Šibenik-Knin County Split-Dalmatia County Istria County Dubrovnik-Neretva County

111 HRO3 ADRIATIC CROATIA REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

HR03 ADRIATIC CROATIA

Surface (km²) 2006 24.705

Population 2009 1.468.921

Unemployment rate (%) 2009 14,3

GDP (mil kn) 2007 101.641

Competitiveness rank 2

Rank of quality of business environment 2

Rank of quality of business sector 2

In 2010, the Adriatic region’s statistical values of competitiveness indicators are better than the perceptive values of the same indicators. One of the key characteristics of this region is the considerable difference in competitiveness among individual regions – starting with Istria County which is ranked 3rd, to Lika- Senj County, which is ranked 18th, while the remaining 5 counties are ranked between 6th and 10th position. The key challenge for this region is how to identify common development goals that could achieve bridging of development gap between individual regions.

112 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HRO3 ADRIATIC CROATIA

Competitiveness profile of the region of Adriatic Croatia – RCI 2010 and RCI 2007 Comparison* statistical indicators

Demographics, health and culture Economic results - 1 ADRIATIC CROATIA Education trends 5 Indicator 2010 2007 Difference 9 13 STATISTICAL R 2 1 -1 17 Basic infrastructure Economic results 21 Business Environment R 2 1 -1 - level and public sector Business Sector R 1 2 1

Level of Business entrepreneurship infrastructure development PERCEPTIVE R 3 2 -1 Investments and entrepreneurial trends Business Environment R 3 2 -1

Business Sector R 2 2 0 Competitiveness profile of the region of Adriatic Croatia – perceptive indicators FINAL R 2 2 0

Business Environment R 2 2 0 Location advantages Business Sector R 2 2 0 Marketing and 7,0 6,0 Local management R = rank 5,0 government 4,0 *comparison is indicative only, due to slight changes in 2010 calculation methodology 3,0 Clusters 2,0 Physical 1,0 infrastructure

Technology, innovations Rule of law

Financial market and Education local competition

113 HRO3 ADRIATIC CROATIA REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

Comparison of counties Adriatic Croatia - statistical index

Primorje – Gorski Kotar County Split-Dalmatia County 0 0 1 2 2 2 2 1 2 2 2 3 2 3 3 3 3 4 3 4 4 5 7 5 6 6 5 5 5 7 6 7

Lika – Senj County Istria County 0 0 1 1 2 1 1 1 1 1 1 3 2 4 3 3 2 5 6 4 4 7 7 5 6 7 7 5 6 7 7 7

Zadar County Dubrovnik-Neretva County 0 0 1 1 2 2 3 3 3 2 4 4 4 3 3 5 6 4 4 6 4 5 5 5 7 5 6 6 5 6 7 7

Šibenik-Knin County 0 1 2 1 1 3 4 5 6 4 6 6 4 6 7 7

STATISTICAL INDEX business environment business sector Level of Demographics, health Basic infrastructure Investments Economic results - Economic results - Education Business infrastructure entrepreneurship and culture and public sector entrepreneurial climate level trends development Primorje -Gorski Kotar County Lika-Senj County Zadar County Sibenik - Knin County Split-Dalmatia County Istria County Dubrovnik-Neretva County 114 first 7 counties last 7 counties middle range REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HRO3 ADRIATIC CROATIA

Comparison of counties Adriatic Croatia - perceptive index

Primorje – Gorski Kotar County Split-Dalmatia County 0 1 0 3 3 3 3 3 1 2 2 3 3 3 4 4 4 3 4 2 4 5 4 5 5 5 5 5 5 6 6 7 7 7

Lika – Senj County Istria County 0 0 1 2 2 1 2 1 2 1 3 3 3 4 4 2 4 4 4 5 6 6 5 6 6 6 6 7 7 7 7 6 7 7

Zadar County Dubrovnik-Neretva County 0 1 0 2 1 1 1 1 1 1 1 1 2 2 3 3 2 3 2 4 4 2 4 6 4 5 5 5 5 6 6 7 7 7

Šibenik-Knin County 0 1 2 2 3 4 5 5 5 6 6 6 6 7 7 7 7

PERCEPTIVE INDEX business environment business sector Physical Financial market and Technology Marketing and Location advantages Local government Rule of law Education Clusters infrastructure local competition innovativeness management Primorje -Gorski Kotar County Lika-Senj County Zadar County Sibenik - Knin County Split-Dalmatia County Istria County Dubrovnik-Neretva County first 7 counties last 7 counties middle range 115 HRO3 ADRIATIC CROATIA REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

BUSINESS ENVIRONMENT

A. STATISTICAL INDICATORS 2010 2007 B. PERCEPTIVE INDICATORS 2010 2007

RANK VALUE RANK VALUE RANK VALUE RANK VALUE

Demographics, health and culture Location advantages Population estimate (2009, 2006) 2 1.468.921 2 1.448.279 Favorable geographical position 2 4,91 Share of population aged 25-64 in total population (2009, 2001) 2 55,0 2 53,2 Favorable climate conditions 1 5,46 Net migration rate in the total population ((2007 - 2009) / 2009; (2002- Price of business facilities/offices and land 2 3,34 1 9,1 1 21,8 2006)/2006) Overheads (public utility fees and construction prices) 2 3,34 Vital index (birth/death ratio) (sum 2007 - 2009; (2002-2006)/2006) 2 88,5 2 86,3 Direct labor cots 1 3,60 Number of physicians per capita (2008, 2006) 1 252,9 2 245,4 Local government Education Public confidence in politicians' financial honesty 1 3,47 Percentage of persons with 2-year college education in population aged 1 6,3 1 6,3 Behavior of public officials in the decision making process 2 3,28 2 3,30 25-64(2001) Influence of illegal payments to business operations 1 3,69 2 4,14 Percentage of persons with university education in population aged 25-64 2 10,9 2 10,9 (2001) Quality of services provided to entrepreneurs by local governnment units 1 3,59 Pre-school education attendance / population aged 0-4 (2008/2009; Quality of communication and cooperation of local government institutions 2 57,2 2 42,8 1 3,71 2005/2006) and the business sector Enrolled students/ population aged 20-24 (2008/2009; 2005/2006) 2 47,1 2 45,4 Physical infrastructure Graduated students / population aged 20-24 (2008; 2005.) 2 8,9 2 6,4 General infrastructure 2 3,87 2 3,30 Basic infrastructure and public sector Quality of railways 3 2,98 3 2,49 Quality of available port facilities and waterways 1 4,19 1 4,44 Recovered waste / total waste (2006; 2004) 2 11,8 1 10,3 Airline connections to other countries 2 3,86 2 4,72 Share of aid in LGUs total revenues (2009; 2006) 2 9,8 2 7,2 Quality of power supply 3 4,48 2 5,07 Number of solved cases per judge (2009; 2006) 2 299,5 1 342,0 Number of unsolved cases in Land Register per capita (2009; 2007) 3 3.719,8 3 4.256,6 Rule of law Average surtax rate in the county (2010; 2007) 1 5,7 1 5,5 Share of gray economy in business activities 1 3,58 2 3,47 Quality of legal framework for dispute settlement 3 3,35 3 3,27 Business infrastructure Protection of ownership rights (financial assets included) 3 3,99 3 3,46 Surface of entrepreneurial zones per capita (2007; 2006) 1 18,4 2 11,2 Costs that companies suffer due to organized crime 2 3,99 Number of employees in entrepreneurial zones (2007) 2 1.130,7 Independence of judiciary from political influences 2 3,82 3 2,81 Business facility public utility fees, 1st zone (highest rate; kn/m3) (2010) 3 135,2 Education Housing prices in the county center, per m2 1 16.208,1 Distance to airports (km), Dubrovnik, Split +50, Pula, Zadar +100 2 103,0 Quality of public schools 3 4,60 2 4,45 Quality of math and science classes in schools 3 4,26 2 5,14 Quality of management and business schools 2 3,62 2 3,01 Availability of scientists and engineers 2 3,59 2 3,81 Investment in education and employee development 3 3,16 3 3,01 Financial market and local competition Availability of sources of finance for businesses 1 3,17 2 3,21 Level of difficulty in obtaining a loan based on sound business plan and 3 2,29 3 3,19 without collaterals Access to finance of businesses with innovative, but risky, projects 3 2,23 1 2,47 116 Competition strength 3 4,13 2 4,87 Customers and purchasing decisions 2 3,11 2 3,31 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HRO3 ADRIATIC CROATIA

BUSINESS SECTOR

A. STATISTICAL INDICATORS 2010 2007 B. PERCEPTIVE INDICATORS 2010 2007

RANK VALUE RANK VALUE RANK VALUE RANK VALUE

Investments and entrepreneurial trends Technology and innovations Active legal entities - trends (2008/2006; 2005/2003) 1 120,7 1 110,8 Technological development results 3 3,42 2 3,74 Total investments per facility location1 2 34.454,5 2 38.990,3 Implementation of technology in production processes 2 3,73 2 3,57 Share of investments in equipment in total investments per facility location2 3 30,8 3 31,6 Businesses' competitiveness elements 3 3,46 2 3,53 SME investments in new long-term assets /total SME revenues (2009; 2006) 3 8,2 1 12,0 Sectors of export oriented companies 3 3,89 Direct foreign investments (000 EUR) per capita (2005-2009; 2000-2007) 2 1.955,7 2 1.204,1 Investment in research and development 3 3,24 2 2,87 Number of SMEs per capita - trends (2009/2004; 2006/2004) 3 142,2 1 114,2 Clusters Level of entrepreneurship development Number of clusters in different sectors 2 3,03 Trades, crafts and freelance professions per capita (2008; 2005) 1 29,8 1 27,0 Number of local suppliers 2 3,86 2 4,35 Number of employed in SMEs per capita (2009; 2006) 2 12,9 2 12,7 Quality of local suppliers 3 3,64 2 4,32 SMEs (period profit - period loss) /total SME revenues (2009; 2006) 3 -1,0 2 2,0 Availability of specialized R&D services 3 3,39 2 3,85 Total SMEs revenues / total SMEs assets (2009; 2006) 1 53,0 3 72,9 Cooperation of businesses with universities and institutes in R&D 2 3,51 2 2,97

Gross value added per industry employee (2008; 2004) 2 195,2 2 151,6 Marketing and management

Economic results - level Quality of marketing in businesses 2 3,85 2 3,86 GDP per capita (1000kn/inhabitant) (2007; 2004) 2 69,5 2 47,4 Placement of county product and services in Croatian markets and exports 3 4,09 3 4,47 Unemployed persons/total population aged 25-64 (2009; 2006) 2 10,2 2 11,9 Readiness to delegate authority to other colleagues in the company 1 3,77 3 3,46 Unemployed for 12 or more months / total unemployment (2009; 2006) 1 46,2 1 52,4 Senior management positions (relatives vs. professionala managers) 2 3,57 2 3,31 Gross salaries per employee (2008; 2006) 2 70.128,1 2 47.859,7 Employer - employee relationship 3 4,20 2 4,42 Number of employed per capita (2008; 2006) 2 39,0 2 36,8

Economic results - trends GDP Index (2007/2004; 2004/2001) 2 127,7 1 137,1 Employment in SMEs (2009/2007) 2 101,8 1 100,0 Exports (2008/2006, 2005/2003) 1 118,7 3 117,6 Unemployed (2009/2007; 2006/2004) 1 98,2 1 91,5 Profit before tax in SMEs (2009./2007.) 3 75,5 1 174,8 Total employment (2008/2006; 2006/2004) 2 107,5 3 103,7

1 - for 2010: sum of 2006., 2007 and 2008 per capita; for 2007: sum of 2003, 2004 and 2005 per capita 117 2 - for 2010: sum of 2006, 2007 and 2008 / sum of 2006, 2007 and 2008; for 2007: sum of 2003, 2004 and 2005 / sum of 2003, 2004 and 2005. HR031 PRIMORJE – GORSKI KOTAR COUNTY REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

HR031 PRIMORJE – GORSKI KOTAR COUNTY

Surface (km²) 2006 3.588

Population 2009 304.228

Unemployment rate (%) 2009 10,8

GDP (mil kn) 2007 24.987

Competitiveness rank 7

Rank of quality of business environment 8

Rank of quality of business sector 7

118 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HR031 PRIMORJE – GORSKI KOTAR COUNTY

Primorje – Gorski Kotar County Competitiveness Profile – RCI 2010 and RCI 2007 Comparison* Statistical Indicators

Demographics, health and culture Primorje – Gorski Kotar County Economic results - 1 ADRIATIC CROATIA Primorje – Gorski Kotar County Education trends Indicator 2010 2007 Difference

STATISTICAL R 5 3 -2 Basic Economic results infrastructure Business Environment R 6 4 -2 - level 21 and public sector Business Sector R 4 2 -2

Level of Business entrepreneurship infrastructure development PERCEPTIVE R 12 8 -4 Investments and entrepreneurial trends Business Environment R 11 8 -3

Business Sector R 12 11 -1 Primorje – Gorski Kotar County Competitiveness Profile – Perceptive Indicators FINAL R 7 6 -1

Business Environment R 8 6 -2 Location advantages Primorje – Gorski Kotar County Business Sector R 7 5 -2 7 Croatian average Marketing and Local management R = rank government

*comparison is indicative only, due to slight changes in 2010 calculation methodology Clusters Physical 1 infrastructure

Technology, innovations Rule of law

Financial market and Education local competition

119 HR031 PRIMORJE – GORSKI KOTAR COUNTY REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

BUSINESS ENVIRONMENT

A. STATISTICAL INDICATORS 2010 2007 B. PERCEPTIVE INDICATORS 2010 2007

RANK VALUE RANK VALUE RANK VALUE RANK VALUE

Demographics, health and culture Location advantages Population estimate (2009, 2006) 5 304.228 5 298.531 Favorable geographical position 8 5,38 Share of population aged 25-64 in total population (2009, 2001) 1 57,69 1 55,71 Favorable climate conditions 13 5,38 Net migration rate in the total population ((2007 - 2009) / 2009; (2002- Price of business facilities/offices and land 17 3,24 6 5,63 14 -5,52 2006)/2006) Overheads (public utility fees and construction prices) 18 2,83 Vital index (birth/death ratio) (sum 2007 - 2009; (2002-2006)/2006) 13 72,60 13 68,69 Direct labor cots 15 3,38 Number of physicians per capita (2008, 2006) 2 337,65 2 327,27 Local government Education Public confidence in politicians' financial honesty 8 3,55 Percentage of persons with 2-year college education in population aged 4 6,54 4 6,54 Behavior of public officials in the decision making process 7 3,55 10 3,49 25-64(2001) Influence of illegal payments to business operations 13 3,66 3 4,36 Percentage of persons with university education in population aged 25-64 2 13,30 2 13,30 (2001) Quality of services provided to entrepreneurs by local governnment units 13 3,59 Pre-school education attendance / population aged 0-4 (2008/2009; Quality of communication and cooperation of local government institutions 3 64,24 3 46,81 14 3,69 2005/2006) and the business sector Enrolled students/ population aged 20-24 (2008/2009; 2005/2006) 2 53,57 5 46,09 Physical infrastructure Graduated students / population aged 20-24 (2008; 2005.) 4 9,47 5 6,49 General infrastructure 8 4,24 8 3,80 Basic infrastructure and public sector Quality of railways 11 3,31 11 3,02 Quality of available port facilities and waterways 4 4,17 5 4,24 Recovered waste / total waste (2006; 2004) 7 9,96 7 3,23 Airline connections to other countries 15 2,55 17 3,42 Share of aid in LGUs total revenues (2009; 2006) 3 5,87 3 4,42 Quality of power supply 11 5,34 11 5,22 Number of solved cases per judge (2009; 2006) 11 272,00 2 382,00 Number of unsolved cases in Land Register per capita (2009; 2007) 20 4.162,34 17 2.430,90 Rule of law Average surtax rate in the county (2010; 2007) 7 3,92 7 3,93 Share of gray economy in business activities 11 3,59 3 3,69 Quality of legal framework for dispute settlement 12 3,38 12 3,56 Business infrastructure Protection of ownership rights (financial assets included) 18 3,76 16 3,22 Surface of entrepreneurial zones per capita (2007; 2006) 20 5,35 18 2,91 Costs that companies suffer due to organized crime 18 3,55 Number of employees in entrepreneurial zones (2007) 18 297,00 Independence of judiciary from political influences 11 3,90 5 3,53 Business facility public utility fees, 1st zone (highest rate; kn/m3) (2010) 20 138,29 Education Housing prices in the county center, per m2 3 15.950,00 Distance to airports (km), Dubrovnik, Split +50, Pula, Zadar +100 16 165,00 Quality of public schools 12 5,03 3 4,89 Quality of math and science classes in schools 9 5,00 2 5,51 Quality of management and business schools 7 3,97 5 3,40 Availability of scientists and engineers 7 4,07 5 3,98 Investment in education and employee development 14 3,14 8 3,47 Financial market and local competition Availability of sources of finance for businesses 3 3,90 9 3,24 Level of difficulty in obtaining a loan based on sound business plan and 10 2,24 18 2,84 without collaterals Access to finance of businesses with innovative, but risky, projects 15 2,07 7 2,53 120 Competition strength 14 4,07 8 5,02 Customers and purchasing decisions 17 2,59 6 3,49 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HR031 PRIMORJE – GORSKI KOTAR COUNTY

BUSINESS SECTOR

A. STATISTICAL INDICATORS 2010 2007 B. PERCEPTIVE INDICATORS 2010 2007

RANK VALUE RANK VALUE RANK VALUE RANK VALUE

Investments and entrepreneurial trends Technology and innovations Active legal entities - trends (2008/2006; 2005/2003) 13 118,21 7 107,56 Technological development results 16 3,28 11 3,78 Total investments per facility location1 3 40.159,10 3 44.921,16 Implementation of technology in production processes 10 3,69 13 3,49 Share of investments in equipment in total investments per facility location2 10 34,14 6 39,75 Businesses' competitiveness elements 15 3,14 7 3,73 SME investments in new long-term assets /total SME revenues (2009; 2006) 5 7,89 8 9,58 Sectors of export oriented companies 15 3,72 Direct foreign investments (000 EUR) per capita (2005-2009; 2000-2007) 4 2.654,91 4 1.331,54 Investment in research and development 13 3,10 11 3,07 Number of SMEs per capita - trends (2009/2004; 2006/2004) 12 130,35 6 111,53 Clusters Level of entrepreneurship development Number of clusters in different sectors 9 3,10 Trades, crafts and freelance professions per capita (2008; 2005) 2 34,81 2 31,19 Number of local suppliers 14 3,79 12 4,24 Number of employed in SMEs per capita (2009; 2006) 4 15,37 4 15,69 Quality of local suppliers 17 3,41 8 4,29 SMEs (period profit - period loss) /total SME revenues (2009; 2006) 9 0,53 5 2,87 Availability of specialized R&D services 7 3,69 7 4,07 Total SMEs revenues / total SMEs assets (2009; 2006) 14 61,90 12 80,60 Cooperation of businesses with universities and institutes in R&D 7 3,86 10 2,98

Gross value added per industry employee (2008; 2004) 10 159,20 12 114,07 Marketing and management

Economic results - level Quality of marketing in businesses 7 4,17 10 4,18 GDP per capita (1000kn/inhabitant) (2007; 2004) 3 82,00 4 56,28 Placement of county product and services in Croatian markets and exports 14 3,93 14 4,53 Unemployed persons/total population aged 25-64 (2009; 2006) 19 8,49 6 9,53 Readiness to delegate authority to other colleagues in the company 9 3,72 8 3,76 Unemployed for 12 or more months / total unemployment (2009; 2006) 8 47,31 3 50,72 Senior management positions (relatives vs. professionala managers) 10 3,41 8 3,76 Gross salaries per employee (2008; 2006) 2 74.560,74 3 50.916,11 Employer - employee relationship 7 4,66 10 4,62 Number of employed per capita (2008; 2006) 4 43,52 2 42,13

Economic results - trends GDP Index (2007/2004; 2004/2001) 10 128,93 10 125,44 Employment in SMEs (2009/2007) 10 101,33 Exports (2008/2006, 2005/2003) 7 130,32 4 152,77 Unemployed (2009/2007; 2006/2004) 16 103,10 6 91,63 Profit before tax in SMEs (2009./2007.) 12 76,67 Total employment (2008/2006; 2006/2004) 21 105,27 19 102,05

1 - for 2010: sum of 2006., 2007 and 2008 per capita; for 2007: sum of 2003, 2004 and 2005 per capita 121 2 - for 2010: sum of 2006, 2007 and 2008 / sum of 2006, 2007 and 2008; for 2007: sum of 2003, 2004 and 2005 / sum of 2003, 2004 and 2005. HR032 LIKA-SENJ COUNTY REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

HR032 LIKA-SENJ COUNTY

Surface (km²) 2006 5.353

Population 2009 49.924

Unemployment rate (%) 2009 17,7

GDP (mil kn) 2007 3.017

Competitiveness rank 18

Rank of quality of business environment 18

Rank of quality of business sector 18

122 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HR032 LIKA-SENJ COUNTY

Lika-Senj County Competitiveness Profile– Statistical Indicators RCI 2010 and RCI 2007 Comparison*

Demographics, health and culture Lika-Senj County Economic results - 1 ADRIATIC CROATIA Lika-Senj County Education trends Indicator 2010 2007 Difference

STATISTICAL R 18 17 -1 Basic Economic results infrastructure Business Environment R 21 18 -3 - level 21 and public sector Business Sector R 13 16 3

Level of Business entrepreneurship infrastructure development PERCEPTIVE R 18 21 3 Investments and entrepreneurial trends Business Environment R 15 20 5

Business Sector R 21 21 0 Lika-Senj County Competitiveness Profile– Perceptive Indicators FINAL R 18 19 1

Business Environment R 18 20 2 Location advantages Lika-Senj County Business Sector R 18 19 1 7 Croatian average Marketing and Local management R = rank government

*comparison is indicative only, due to slight changes in 2010 calculation methodology Clusters Physical 1 infrastructure

Technology, innovations Rule of law

Financial market and Education local competition

123 HR032 LIKA-SENJ COUNTY REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

BUSINESS ENVIRONMENT

A. STATISTICAL INDICATORS 2010 2007 B. PERCEPTIVE INDICATORS 2010 2007

RANK VALUE RANK VALUE RANK VALUE RANK VALUE

Demographics, health and culture Location advantages Population estimate (2009, 2006) 21 49.924 21 51.722 Favorable geographical position 14 4,11 Share of population aged 25-64 in total population (2009, 2001) 21 51,16 21 50,30 Favorable climate conditions 18 4,67 Net migration rate in the total population ((2007 - 2009) / 2009; (2002- Price of business facilities/offices and land 14 3,81 17 -10,22 10 2,67 2006)/2006) Overheads (public utility fees and construction prices) 17 3,22 Vital index (birth/death ratio) (sum 2007 - 2009; (2002-2006)/2006) 21 47,17 21 50,14 Direct labor cots 18 3,19 Number of physicians per capita (2008, 2006) 20 168,06 20 146,94 Local government Education Public confidence in politicians' financial honesty 5 3,85 Percentage of persons with 2-year college education in population aged 9 4,68 9 4,68 Behavior of public officials in the decision making process 9 3,44 4 3,95 25-64(2001) Influence of illegal payments to business operations 3 4,15 5 4,26 Percentage of persons with university education in population aged 25-64 17 5,64 17 5,64 (2001) Quality of services provided to entrepreneurs by local governnment units 14 3,56 Pre-school education attendance / population aged 0-4 (2008/2009; Quality of communication and cooperation of local government institutions 13 44,70 16 27,05 13 3,74 2005/2006) and the business sector Enrolled students/ population aged 20-24 (2008/2009; 2005/2006) 8 44,36 16 31,76 Physical infrastructure Graduated students / population aged 20-24 (2008; 2005.) 17 6,40 8 5,51 General infrastructure 10 3,85 13 3,12 Basic infrastructure and public sector Quality of railways 13 3,04 17 2,56 Quality of available port facilities and waterways 15 1,96 11 3,42 Recovered waste / total waste (2006; 2004) 19 0,41 21 0,01 Airline connections to other countries 18 1,67 18 3,37 Share of aid in LGUs total revenues (2009; 2006) 21 28,51 21 22,29 Quality of power supply 18 4,22 18 4,42 Number of solved cases per judge (2009; 2006) 14 261,00 18 237,00 Number of unsolved cases in Land Register per capita (2009; 2007) 17 1.746,65 16 2.364,56 Rule of law Average surtax rate in the county (2010; 2007) 5 2,62 6 2,68 Share of gray economy in business activities 5 4,04 6 3,51 Quality of legal framework for dispute settlement 6 4,22 2 4,21 Business infrastructure Protection of ownership rights (financial assets included) 8 4,41 19 3,19 Surface of entrepreneurial zones per capita (2007; 2006) 9 24,40 8 10,79 Costs that companies suffer due to organized crime 5 5,30 Number of employees in entrepreneurial zones (2007) 20 164,00 Independence of judiciary from political influences 1 5,41 8 3,23 Business facility public utility fees, 1st zone (highest rate; kn/m3) (2010) 7 70,00 Education Housing prices in the county center, per m2 10 9.425,00 Distance to airports (km), Dubrovnik, Split +50, Pula, Zadar +100 19 205,00 Quality of public schools 16 4,48 20 4,12 Quality of math and science classes in schools 19 3,96 21 4,21 Quality of management and business schools 19 2,19 21 1,67 Availability of scientists and engineers 19 2,59 19 2,88 Investment in education and employee development 16 2,85 21 2,37 Financial market and local competition Availability of sources of finance for businesses 9 2,96 21 2,05 Level of difficulty in obtaining a loan based on sound business plan and 3 2,96 9 3,28 without collaterals Access to finance of businesses with innovative, but risky, projects 6 2,67 13 2,35 124 Competition strength 19 3,59 21 4,19 Customers and purchasing decisions 19 2,48 20 2,56 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HR032 LIKA-SENJ COUNTY

BUSINESS SECTOR

A. STATISTICAL INDICATORS 2010 2007 B. PERCEPTIVE INDICATORS 2010 2007

RANK VALUE RANK VALUE RANK VALUE RANK VALUE

Investments and entrepreneurial trends Technology and innovations Active legal entities - trends (2008/2006; 2005/2003) 3 121,19 8 107,28 Technological development results 17 3,15 14 3,70 Total investments per facility location1 14 17.624,99 1 152.428,02 Implementation of technology in production processes 19 3,11 21 2,58 Share of investments in equipment in total investments per facility location2 21 17,96 21 17,61 Businesses' competitiveness elements 20 2,59 21 2,65 SME investments in new long-term assets /total SME revenues (2009; 2006) 1 13,23 2 15,37 Sectors of export oriented companies 19 3,37 Direct foreign investments (000 EUR) per capita (2005-2009; 2000-2007) 15 139,07 15 83,44 Investment in research and development 21 2,15 21 2,00 Number of SMEs per capita - trends (2009/2004; 2006/2004) 8 140,02 8 109,98 Clusters Level of entrepreneurship development Number of clusters in different sectors 15 2,33 Trades, crafts and freelance professions per capita (2008; 2005) 7 23,81 6 22,20 Number of local suppliers 20 2,96 17 3,88 Number of employed in SMEs per capita (2009; 2006) 19 7,40 20 7,00 Quality of local suppliers 21 2,85 18 3,86 SMEs (period profit - period loss) /total SME revenues (2009; 2006) 2 2,09 13 1,40 Availability of specialized R&D services 20 2,59 20 3,21 Total SMEs revenues / total SMEs assets (2009; 2006) 19 46,71 19 64,95 Cooperation of businesses with universities and institutes in R&D 18 2,52 21 2,33

Gross value added per industry employee (2008; 2004) 20 122,32 20 87,03 Marketing and management

Economic results - level Quality of marketing in businesses 18 3,26 21 2,81 GDP per capita (1000kn/inhabitant) (2007; 2004) 7 58,96 3 61,37 Placement of county product and services in Croatian markets and exports 8 4,48 8 4,67 Unemployed persons/total population aged 25-64 (2009; 2006) 6 12,09 12 13,47 Readiness to delegate authority to other colleagues in the company 11 3,70 11 3,63 Unemployed for 12 or more months / total unemployment (2009; 2006) 15 51,81 8 54,83 Senior management positions (relatives vs. professionala managers) 21 2,67 12 3,51 Gross salaries per employee (2008; 2006) 3 71.699,37 12 43.736,26 Employer - employee relationship 9 4,52 9 4,65 Number of employed per capita (2008; 2006) 4 34,45 16 31,17

Economic results - trends GDP Index (2007/2004; 2004/2001) 21 77,30 1 201,43 Employment in SMEs (2009/2007) 12 100,93 Exports (2008/2006, 2005/2003) 16 107,40 17 105,86 Unemployed (2009/2007; 2006/2004) 1 90,82 21 105,30 Profit before tax in SMEs (2009./2007.) 5 90,77 Total employment (2008/2006; 2006/2004) 18 106,70 21 94,00

1 - for 2010: sum of 2006., 2007 and 2008 per capita; for 2007: sum of 2003, 2004 and 2005 per capita 125 2 - for 2010: sum of 2006, 2007 and 2008 / sum of 2006, 2007 and 2008; for 2007: sum of 2003, 2004 and 2005 / sum of 2003, 2004 and 2005. HR033 ZADAR COUNTY REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

HR033 ZADAR COUNTY

Surface (km²) 2006 3.646

Population 2009 175.682

Unemployment rate (%) 2009 16,5

GDP (mil kn) 2007 10.126

Competitiveness rank 6

Rank of quality of business environment 4

Rank of quality of business sector 3

126 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HR033 ZADAR COUNTY

Zadar County Competitiveness Profile – Statistical Indicators RCI 2010 and RCI 2007 Comparison*

Demographics, health and culture Zadar County Economic results - 1 ADRIATIC CROATIA Zadar County Education trends Indicator 2010 2007 Difference

STATISTICAL R 10 8 -2 Basic Economic results infrastructure Business Environment R 13 8 -5 - level 21 and public sector Business Sector R 8 8 0

Level of Business entrepreneurship infrastructure development PERCEPTIVE R 3 10 7 Investments and entrepreneurial trends Business Environment R 2 10 8

Business Sector R 5 10 5 Zadar County Competitiveness Profile – Perceptive Indicators FINAL R 6 9 3

Business Environment R 4 10 6 Location advantages Zadar County Business Sector R 3 8 5 7 Croatian average Marketing and Local management R = rank government

*comparison is indicative only, due to slight changes in 2010 calculation methodology Clusters Physical 1 infrastructure

Technology, innovations Rule of law

Financial market and Education local competition

127 HR033 ZADAR COUNTY REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

BUSINESS ENVIRONMENT

A. STATISTICAL INDICATORS 2010 2007 B. PERCEPTIVE INDICATORS 2010 2007

RANK VALUE RANK VALUE RANK VALUE RANK VALUE

Demographics, health and culture Location advantages Population estimate (2009, 2006) 9 175.682 11 170.796 Favorable geographical position 2 6,55 Share of population aged 25-64 in total population (2009, 2001) 13 53,48 15 51,74 Favorable climate conditions 1 6,93 Net migration rate in the total population ((2007 - 2009) / 2009; (2002- Price of business facilities/offices and land 2 4,83 1 21,82 1 52,39 2006)/2006) Overheads (public utility fees and construction prices) 3 4,34 Vital index (birth/death ratio) (sum 2007 - 2009; (2002-2006)/2006) 5 97,12 4 97,62 Direct labor cots 3 4,66 Number of physicians per capita (2008, 2006) 12 220,51 11 220,73 Local government Education Public confidence in politicians' financial honesty 1 4,62 Percentage of persons with 2-year college education in population aged 6 5,13 6 5,13 Behavior of public officials in the decision making process 5 3,76 18 3,05 25-64(2001) Influence of illegal payments to business operations 5 4,00 13 4,02 Percentage of persons with university education in population aged 25-64 6 9,32 6 9,32 (2001) Quality of services provided to entrepreneurs by local governnment units 4 4,07 Pre-school education attendance / population aged 0-4 (2008/2009; Quality of communication and cooperation of local government institutions 12 45,25 8 35,43 5 4,10 2005/2006) and the business sector Enrolled students/ population aged 20-24 (2008/2009; 2005/2006) 7 45,20 6 41,96 Physical infrastructure Graduated students / population aged 20-24 (2008; 2005.) 10 7,19 7 5,57 General infrastructure 3 5,31 4 4,61 Basic infrastructure and public sector Quality of railways 1 5,14 19 2,30 Quality of available port facilities and waterways 1 5,62 1 4,86 Recovered waste / total waste (2006; 2004) 21 0,02 11 1,61 Airline connections to other countries 2 5,69 7 4,77 Share of aid in LGUs total revenues (2009; 2006) 14 15,79 11 10,44 Quality of power supply 4 6,28 12 5,11 Number of solved cases per judge (2009; 2006) 13 262,00 10 320,00 Number of unsolved cases in Land Register per capita (2009; 2007) 19 2.761,81 19 5.407,62 Rule of law Average surtax rate in the county (2010; 2007) 1 0,57 1 0,30 Share of gray economy in business activities 17 2,93 1 3,77 Quality of legal framework for dispute settlement 8 3,93 20 2,98 Business infrastructure Protection of ownership rights (financial assets included) 12 4,17 6 3,82 Surface of entrepreneurial zones per capita (2007; 2006) 10 23,87 4 21,25 Costs that companies suffer due to organized crime 2 5,59 Number of employees in entrepreneurial zones (2007) 17 350,00 Independence of judiciary from political influences 4 4,97 21 2,30 Business facility public utility fees, 1st zone (highest rate; kn/m3) (2010) 15 135,00 Education Housing prices in the county center, per m2 6 13.050,00 Distance to airports (km), Dubrovnik, Split +50, Pula, Zadar +100 12 110,00 Quality of public schools 3 5,90 11 4,39 Quality of math and science classes in schools 2 5,86 7 5,14 Quality of management and business schools 13 3,14 7 2,89 Availability of scientists and engineers 8 3,86 10 3,59 Investment in education and employee development 12 3,17 9 3,34 Financial market and local competition Availability of sources of finance for businesses 12 2,79 4 3,77 Level of difficulty in obtaining a loan based on sound business plan and 21 1,38 11 3,25 without collaterals Access to finance of businesses with innovative, but risky, projects 21 1,38 18 2,18 128 Competition strength 10 4,55 11 4,86 Customers and purchasing decisions 7 3,24 11 3,34 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HR033 ZADAR COUNTY

BUSINESS SECTOR

A. STATISTICAL INDICATORS 2010 2007 B. PERCEPTIVE INDICATORS 2010 2007

RANK VALUE RANK VALUE RANK VALUE RANK VALUE

Investments and entrepreneurial trends Technology and innovations Active legal entities - trends (2008/2006; 2005/2003) 1 127,83 4 111,05 Technological development results 6 3,83 18 3,34 Total investments per facility location1 7 25.934,77 5 39.414,76 Implementation of technology in production processes 5 4,24 1 4,25 Share of investments in equipment in total investments per facility location2 13 31,33 19 22,30 Businesses' competitiveness elements 8 3,83 11 3,39 SME investments in new long-term assets /total SME revenues (2009; 2006) 3 12,43 5 12,53 Sectors of export oriented companies 2 4,93 Direct foreign investments (000 EUR) per capita (2005-2009; 2000-2007) 2 2.831,96 2 2.131,28 Investment in research and development 6 4,07 8 3,20 Number of SMEs per capita - trends (2009/2004; 2006/2004) 2 152,77 2 116,11 Clusters Level of entrepreneurship development Number of clusters in different sectors 11 2,93 Trades, crafts and freelance professions per capita (2008; 2005) 3 30,00 3 26,79 Number of local suppliers 3 5,07 15 4,09 Number of employed in SMEs per capita (2009; 2006) 12 9,98 13 9,55 Quality of local suppliers 3 4,69 12 4,20 SMEs (period profit - period loss) /total SME revenues (2009; 2006) 19 -2,75 11 1,49 Availability of specialized R&D services 11 3,38 9 3,98 Total SMEs revenues / total SMEs assets (2009; 2006) 20 45,92 18 69,17 Cooperation of businesses with universities and institutes in R&D 14 3,14 15 2,82

Gross value added per industry employee (2008; 2004) 4 195,79 3 174,03 Marketing and management

Economic results - level Quality of marketing in businesses 8 4,10 7 4,23 GDP per capita (1000kn/inhabitant) (2007; 2004) 9 58,54 9 38,16 Placement of county product and services in Croatian markets and exports 1 5,14 19 4,23 Unemployed persons/total population aged 25-64 (2009; 2006) 15 10,68 11 12,78 Readiness to delegate authority to other colleagues in the company 14 3,59 9 3,75 Unemployed for 12 or more months / total unemployment (2009; 2006) 12 49,96 6 53,75 Senior management positions (relatives vs. professionala managers) 7 4,07 9 3,61 Gross salaries per employee (2008; 2006) 11 67.453,48 8 44.945,09 Employer - employee relationship 5 4,83 14 4,36 Number of employed per capita (2008; 2006) 4 34,94 13 32,71

Economic results - trends GDP Index (2007/2004; 2004/2001) 8 130,49 4 145,49 Employment in SMEs (2009/2007) 3 106,36 Exports (2008/2006, 2005/2003) 18 99,75 14 112,06 Unemployed (2009/2007; 2006/2004) 8 96,74 3 89,64 Profit before tax in SMEs (2009./2007.) 15 71,98 Total employment (2008/2006; 2006/2004) 4 109,89 7 105,48

1 - for 2010: sum of 2006., 2007 and 2008 per capita; for 2007: sum of 2003, 2004 and 2005 per capita 129 2 - for 2010: sum of 2006, 2007 and 2008 / sum of 2006, 2007 and 2008; for 2007: sum of 2003, 2004 and 2005 / sum of 2003, 2004 and 2005. HR034 ŠIBENIK-KNIN COUNTY REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

HR034 ŠIBENIK-KNIN COUNTY

Surface (km²) 2006 2.984

Population 2009 114.122

Unemployment rate (%) 2009 19,0

GDP (mil kn) 2007 6.544

Competitiveness rank 10

Rank of quality of business environment 14

Rank of quality of business sector 13

130 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HR034 ŠIBENIK-KNIN COUNTY

Šibenik-Knin County Competitiveness Profile– Statistical RCI 2010 and RCI 2007 Comparison* Indicators

Demographics, health and culture Šibenik-Knin County Economic results - 1 ADRIATIC CROATIA Šibenik-Knin County Education trends Indicator 2010 2007 Difference

STATISTICAL R 8 9 1 Basic Economic results infrastructure Business Environment R 9 9 0 - level 21 and public sector Business Sector R 6 7 1

Level of Business entrepreneurship infrastructure development PERCEPTIVE R 16 14 -2 Investments and entrepreneurial trends Business Environment R 16 14 -2

Business Sector R 20 15 -5 Šibenik-Knin County Competitiveness Profile– Perceptive Indicators FINAL R 10 13 3

Business Environment R 14 13 -1 Location advantages Šibenik-Knin County Business Sector R 13 11 -2 7 Croatian average Marketing and Local management R = rank government

*comparison is indicative only, due to slight changes in 2010 calculation methodology Clusters Physical 1 infrastructure

Technology, innovations Rule of law

Financial market and Education local competition

131 HR034 ŠIBENIK-KNIN COUNTY REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

BUSINESS ENVIRONMENT

A. STATISTICAL INDICATORS 2010 2007 B. PERCEPTIVE INDICATORS 2010 2007

RANK VALUE RANK VALUE RANK VALUE RANK VALUE

Demographicss, health and culture Location advantages Population estimate (2009, 2006) 18 114.122 18 113.972 Favorable geographical position 4 6,06 Share of population aged 25-64 in total population (2009, 2001) 18 52,29 18 50,68 Favorable climate conditions 5 6,03 Net migration rate in the total population ((2007 - 2009) / 2009; (2002- Price of business facilities/offices and land 5 4,58 7 4,94 4 32,37 2006)/2006) Overheads (public utility fees and construction prices) 2 4,61 Vital index (birth/death ratio) (sum 2007 - 2009; (2002-2006)/2006) 16 66,30 15 64,05 Direct labor cots 5 4,36 Number of physicians per capita (2008, 2006) 11 221,38 8 222,86 Local government Education Public confidence in politicians' financial honesty 14 2,82 Percentage of persons with 2-year college education in population aged 7 5,05 7 5,05 Behavior of public officials in the decision making process 11 3,27 13 3,33 25-64(2001) Influence of illegal payments to business operations 17 3,21 10 4,11 Percentage of persons with university education in population aged 25-64 8 8,04 8 8,04 (2001) Quality of services provided to entrepreneurs by local governnment units 15 3,55 Pre-school education attendance / population aged 0-4 (2008/2009; Quality of communication and cooperation of local government institutions 5 56,45 7 35,99 16 3,52 2005/2006) and the business sector Enrolled students/ population aged 20-24 (2008/2009; 2005/2006) 4 46,67 4 48,34 Physical infrastructure Graduated students / population aged 20-24 (2008; 2005.) 5 9,29 4 6,82 General infrastructure 17 3,21 20 2,44 Basic infrastructure and public sector Quality of railways 10 3,33 9 3,27 Quality of available port facilities and waterways 6 3,76 2 4,69 Recovered waste / total waste (2006; 2004) 17 0,94 13 0,81 Airline connections to other countries 14 2,88 14 4,24 Share of aid in LGUs total revenues (2009; 2006) 17 18,29 12 10,70 Quality of power supply 19 4,15 17 4,69 Number of solved cases per judge (2009; 2006) 8 286,00 6 341,00 Number of unsolved cases in Land Register per capita (2009; 2007) 14 1.442,32 13 1.454,74 Rule of law Average surtax rate in the county (2010; 2007) 16 7,32 17 7,37 Share of gray economy in business activities 19 2,64 10 3,40 Quality of legal framework for dispute settlement 15 3,12 8 3,71 Business infrastructure Protection of ownership rights (financial assets included) 19 3,61 15 3,27 Surface of entrepreneurial zones per capita (2007; 2006) 1 70,02 1 50,28 Costs that companies suffer due to organized crime 19 3,36 Number of employees in entrepreneurial zones (2007) 7 2.084,00 Independence of judiciary from political influences 16 3,52 17 2,80 Business facility public utility fees, 1st zone (highest rate; kn/m3) (2010) 15 135,00 Education Housing prices in the county center, per m2 7 11.600,00 Distance to airports (km), Dubrovnik, Split +50, Pula, Zadar +100 11 107,00 Quality of public schools 17 4,30 17 4,20 Quality of math and science classes in schools 20 3,76 14 4,53 Quality of management and business schools 10 3,64 9 2,69 Availability of scientists and engineers 18 2,67 11 3,58 Investment in education and employee development 11 3,24 19 2,49 Financial market and local competition Availability of sources of finance for businesses 16 2,64 15 2,82 Level of difficulty in obtaining a loan based on sound business plan and 6 2,64 7 3,33 without collaterals Access to finance of businesses with innovative, but risky, projects 10 2,33 6 2,67 132 Competition strength 21 3,30 19 4,36 Customers and purchasing decisions 8 3,21 18 2,69 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HR034 ŠIBENIK-KNIN COUNTY

BUSINESS SECTOR

A. STATISTICAL INDICATORS 2010 2007 B. PERCEPTIVE INDICATORS 2010 2007

RANK VALUE RANK VALUE RANK VALUE RANK VALUE

Investments and entrepreneurial trends Technology and innovations Active legal entities - trends (2008/2006; 2005/2003) 2 124,12 5 108,63 Technological development results 19 2,97 19 3,33 Total investments per facility location1 11 21.367,91 10 25.268,71 Implementation of technology in production processes 16 3,24 10 3,73 Share of investments in equipment in total investments per facility location2 20 24,32 15 33,81 Businesses' competitiveness elements 17 3,03 14 3,33 SME investments in new long-term assets /total SME revenues (2009; 2006) 2 12,57 7 10,05 Sectors of export oriented companies 20 3,30 Direct foreign investments (000 EUR) per capita (2005-2009; 2000-2007) 11 380,34 13 145,74 Investment in research and development 12 3,12 13 2,80 Number of SMEs per capita - trends (2009/2004; 2006/2004) 1 154,68 3 115,43 Clusters Level of entrepreneurship development Number of clusters in different sectors 17 2,27 Trades, crafts and freelance professions per capita (2008; 2005) 8 23,77 5 22,84 Number of local suppliers 19 3,33 7 4,36 Number of employed in SMEs per capita (2009; 2006) 14 9,60 15 8,63 Quality of local suppliers 19 3,00 6 4,40 SMEs (period profit - period loss) /total SME revenues (2009; 2006) 20 -5,78 15 1,17 Availability of specialized R&D services 21 2,58 18 3,53 Total SMEs revenues / total SMEs assets (2009; 2006) 18 47,89 20 62,12 Cooperation of businesses with universities and institutes in R&D 15 3,03 9 3,02

Gross value added per industry employee (2008; 2004) 12 150,65 16 107,04 Marketing and management

Economic results - level Quality of marketing in businesses 21 2,85 18 3,27 GDP per capita (1000kn/inhabitant) (2007; 2004) 12 57,21 17 34,87 Placement of county product and services in Croatian markets and exports 18 3,79 21 4,18 Unemployed persons/total population aged 25-64 (2009; 2006) 17 11,95 14 15,39 Readiness to delegate authority to other colleagues in the company 18 3,33 7 3,78 Unemployed for 12 or more months / total unemployment (2009; 2006) 3 42,95 5 53,69 Senior management positions (relatives vs. professionala managers) 15 3,21 18 3,16 Gross salaries per employee (2008; 2006) 7 69.205,35 10 43.982,81 Employer - employee relationship 10 4,39 3 5,02 Number of employed per capita (2008; 2006) 4 34,37 17 31,13

Economic results - trends GDP Index (2007/2004; 2004/2001) 2 134,90 2 147,23 Employment in SMEs (2009/2007) 1 112,20 Exports (2008/2006, 2005/2003) 8 127,15 1 266,53 Unemployed (2009/2007; 2006/2004) 3 93,47 1 81,39 Profit before tax in SMEs (2009./2007.) 2 100,43 Total employment (2008/2006; 2006/2004) 3 110,58 1 107,35

1 - for 2010: sum of 2006., 2007 and 2008 per capita; for 2007: sum of 2003, 2004 and 2005 per capita 133 2 - for 2010: sum of 2006, 2007 and 2008 / sum of 2006, 2007 and 2008; for 2007: sum of 2003, 2004 and 2005 / sum of 2003, 2004 and 2005. HR035 SPLIT-DALMATIA COUNTY REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

HR035 SPLIT-DALMATIA COUNTY

Surface (km²) 2006 4.540

Population 2009 482.501

Unemployment rate (%) 2009 17,9

GDP (mil kn) 2007 28.220

Competitiveness rank 8

Rank of quality of business environment 12

Rank of quality of business sector 9

134 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HR035 SPLIT-DALMATIA COUNTY

Split-Dalmatia County Competitiveness Profile– Statistical RCI 2010 and RCI 2007 Comparison* Indicators

Demographics, health and culture Split-Dalmatia County Economic results - 1 ADRIATIC CROATIA Split-Dalmatia County Education trends Indicator 2010 2007 Difference

STATISTICAL R 4 4 0 Basic Economic results infrastructure Business Environment R 3 3 0 - level 21 and public sector Business Sector R 5 11 6

Level of Business entrepreneurship infrastructure development PERCEPTIVE R 14 13 -1 Investments and entrepreneurial trends Business Environment R 17 12 -5

Business Sector R 13 16 3 Split-Dalmatia County Competitiveness Profile– Perceptive Indicators FINAL R 8 8 0

Business Environment R 12 7 -5 Location advantages Split-Dalmatia County Business Sector R 9 15 6 7 Croatian average Marketing and Local management R = rank government

*comparison is indicative only, due to slight changes in 2010 calculation methodology Clusters Physical 1 infrastructure

Technology, innovations Rule of law

Financial market and Education local competition

135 HR035 SPLIT-DALMATIA COUNTY REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

BUSINESS ENVIRONMENT

A. STATISTICAL INDICATORS 2010 2007 B. PERCEPTIVE INDICATORS 2010 2007

RANK VALUE RANK VALUE RANK VALUE RANK VALUE

Demographics, health and culture Location advantages Population estimate (2009, 2006) 2 482.501 2 476.596 Favorable geographical position 12 4,47 Share of population aged 25-64 in total population (2009, 2001) 9 54,42 11 52,59 Favorable climate conditions 10 5,57 Net migration rate in the total population ((2007 - 2009) / 2009; (2002- Price of business facilities/offices and land 18 2,63 8 3,62 5 22,20 2006)/2006) Overheads (public utility fees and construction prices) 15 3,33 Vital index (birth/death ratio) (sum 2007 - 2009; (2002-2006)/2006) 2 106,02 2 110,72 Direct labor cots 12 3,50 Number of physicians per capita (2008, 2006) 5 241,97 7 230,38 Local government Education Public confidence in politicians' financial honesty 13 2,87 Percentage of persons with 2-year college education in population aged 5 6,35 5 6,35 Behavior of public officials in the decision making process 12 3,13 13 3,33 25-64(2001) Influence of illegal payments to business operations 14 3,50 16 3,94 Percentage of persons with university education in population aged 25-64 3 11,57 3 11,57 (2001) Quality of services provided to entrepreneurs by local governnment units 17 3,10 Pre-school education attendance / population aged 0-4 (2008/2009; Quality of communication and cooperation of local government institutions 7 55,35 4 45,17 15 3,53 2005/2006) and the business sector Enrolled students/ population aged 20-24 (2008/2009; 2005/2006) 6 46,36 2 49,72 Physical infrastructure Graduated students / population aged 20-24 (2008; 2005.) 3 9,58 3 6,91 General infrastructure 16 3,23 17 2,69 Basic infrastructure and public sector Quality of railways 17 2,53 15 2,60 Quality of available port facilities and waterways 3 4,27 3 4,69 Recovered waste / total waste (2006; 2004) 1 41,16 1 29,37 Airline connections to other countries 10 4,23 2 5,67 Share of aid in LGUs total revenues (2009; 2006) 6 9,29 5 7,41 Quality of power supply 16 4,40 9 5,35 Number of solved cases per judge (2009; 2006) 3 349,00 3 375,00 Number of unsolved cases in Land Register per capita (2009; 2007) 21 6.586,51 21 8.336,62 Rule of law Average surtax rate in the county (2010; 2007) 19 8,05 19 7,78 Share of gray economy in business activities 8 3,70 9 3,42 Quality of legal framework for dispute settlement 17 3,03 21 2,81 Business infrastructure Protection of ownership rights (financial assets included) 16 3,90 13 3,33 Surface of entrepreneurial zones per capita (2007; 2006) 15 13,52 12 6,71 Costs that companies suffer due to organized crime 13 3,93 Number of employees in entrepreneurial zones (2007) 9 1.553,00 Independence of judiciary from political influences 19 3,27 20 2,38 Business facility public utility fees, 1st zone (highest rate; kn/m3) (2010) 17 138,00 Education Housing prices in the county center, per m2 2 18.125,00 Distance to airports (km), Dubrovnik, Split +50, Pula, Zadar +100 5 60,00 Quality of public schools 21 4,03 14 4,29 Quality of math and science classes in schools 18 3,97 4 5,35 Quality of management and business schools 12 3,17 6 3,00 Availability of scientists and engineers 9 3,83 6 3,92 Investment in education and employee development 15 2,87 16 2,77 Financial market and local competition Availability of sources of finance for businesses 15 2,73 12 3,15 Level of difficulty in obtaining a loan based on sound business plan and 12 2,17 5 3,38 without collaterals Access to finance of businesses with innovative, but risky, projects 16 1,97 11 2,44 136 Competition strength 15 4,07 13 4,83 Customers and purchasing decisions 9 3,17 12 3,25 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HR035 SPLIT-DALMATIA COUNTY

BUSINESS SECTOR

A. STATISTICAL INDICATORS 2010 2007 B. PERCEPTIVE INDICATORS 2010 2007

RANK VALUE RANK VALUE RANK VALUE RANK VALUE

Investments and entrepreneurial trends Technology and innovations Active legal entities - trends (2008/2006; 2005/2003) 6 120,53 11 104,54 Technological development results 9 3,77 12 3,77 Total investments per facility location1 5 27.202,14 7 28.727,36 Implementation of technology in production processes 8 3,77 15 3,44 Share of investments in equipment in total investments per facility location2 14 29,80 16 33,46 Businesses' competitiveness elements 7 3,83 12 3,38 SME investments in new long-term assets /total SME revenues (2009; 2006) 9 5,98 6 11,94 Sectors of export oriented companies 10 4,10 Direct foreign investments (000 EUR) per capita (2005-2009; 2000-2007) 6 1.303,57 5 1.148,70 Investment in research and development 16 2,80 17 2,52 Number of SMEs per capita - trends (2009/2004; 2006/2004) 6 142,45 4 113,48 Clusters Level of entrepreneurship development Number of clusters in different sectors 12 2,73 Trades, crafts and freelance professions per capita (2008; 2005) 5 25,20 7 22,12 Number of local suppliers 17 3,53 5 4,56 Number of employed in SMEs per capita (2009; 2006) 7 11,88 7 11,58 Quality of local suppliers 10 3,93 10 4,27 SMEs (period profit - period loss) /total SME revenues (2009; 2006) 14 -0,33 14 1,21 Availability of specialized R&D services 13 3,33 15 3,69 Total SMEs revenues / total SMEs assets (2009; 2006) 16 56,25 13 80,18 Cooperation of businesses with universities and institutes in R&D 12 3,30 14 2,88

Gross value added per industry employee (2008; 2004) 9 162,68 10 123,21 Marketing and management

Economic results - level Quality of marketing in businesses 14 3,57 15 3,63 GDP per capita (1000kn/inhabitant) (2007; 2004) 8 58,71 8 38,54 Placement of county product and services in Croatian markets and exports 13 4,10 17 4,40 Unemployed persons/total population aged 25-64 (2009; 2006) 18 12,80 13 15,37 Readiness to delegate authority to other colleagues in the company 12 3,70 20 3,17 Unemployed for 12 or more months / total unemployment (2009; 2006) 11 48,94 7 54,19 Senior management positions (relatives vs. professionala managers) 11 3,40 21 2,60 Gross salaries per employee (2008; 2006) 5 69.301,41 6 46.796,44 Employer - employee relationship 20 3,60 21 4,04 Number of employed per capita (2008; 2006) 4 36,21 10 33,99

Economic results - trends GDP Index (2007/2004; 2004/2001) 3 133,82 5 138,54 Employment in SMEs (2009/2007) 8 102,40 Exports (2008/2006, 2005/2003) 9 125,04 20 102,77 Unemployed (2009/2007; 2006/2004) 6 96,02 7 91,83 Profit before tax in SMEs (2009./2007.) 10 81,08 Total employment (2008/2006; 2006/2004) 8 107,85 10 105,09

1 - for 2010: sum of 2006., 2007 and 2008 per capita; for 2007: sum of 2003, 2004 and 2005 per capita 137 2 - for 2010: sum of 2006, 2007 and 2008 / sum of 2006, 2007 and 2008; for 2007: sum of 2003, 2004 and 2005 / sum of 2003, 2004 and 2005. HR036 ISTRIA COUNTY REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

HR036 ISTRIA COUNTY

Surface (km²) 2006 2.813

Population 2009 214.991

Unemployment rate (%) 2009 7,1

GDP (mil kn) 2007 19.467

Competitiveness rank 3

Rank of quality of business environment 7

Rank of quality of business sector 5

138 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HR036 ISTRIA COUNTY

Istria County Competitiveness Profile– Statistical Indicators RCI 2010 and RCI 2007 Comparison*

Demographics, health and culture Istria County Economic results - 1 ADRIATIC CROATIA Istria County Education trends Indicator 2010 2007 Difference

STATISTICAL R 1 1 0 Basic Economic results infrastructure Business Environment R 2 1 -1 - level 21 and public sector Business Sector R 1 3 2

Level of Business entrepreneurship infrastructure development PERCEPTIVE R 13 9 -4 Investments and entrepreneurial trends Business Environment R 13 11 -2

Business Sector R 10 6 -4 Istria County Competitiveness Profile– Perceptive Indicators

FINAL R 3 3 0

Business Environment R 7 3 -4 Location advantages Istria County Business Sector R 5 3 -2 7 Croatian average Marketing and Local management R = rank government

*comparison is indicative only, due to slight changes in 2010 calculation methodology Clusters Physical 1 infrastructure

Technology, innovations Rule of law

Financial market and Education local competition

139 HR036 ISTRIA COUNTY REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

BUSINESS ENVIRONMENT

A. STATISTICAL INDICATORS 2010 2007 B. PERCEPTIVE INDICATORS 2010 2007

RANK VALUE RANK VALUE RANK VALUE RANK VALUE

Demographics, health and culture Location advantages Population estimate (2009, 2006) 6 214.991 6 211.632 Favorable geographical position 13 4,21 Share of population aged 25-64 in total population (2009, 2001) 2 57,22 3 55,11 Favorable climate conditions 21 3,46 Net migration rate in the total population ((2007 - 2009) / 2009; (2002- Price of business facilities/offices and land 9 4,04 3 16,01 3 36,37 2006)/2006) Overheads (public utility fees and construction prices) 12 3,46 Vital index (birth/death ratio) (sum 2007 - 2009; (2002-2006)/2006) 7 88,53 11 77,74 Direct labor cots 11 3,54 Number of physicians per capita (2008, 2006) 8 230,67 4 233,90 Local government Education Public confidence in politicians' financial honesty 2 4,46 Percentage of persons with 2-year college education in population aged 3 6,76 3 6,76 Behavior of public officials in the decision making process 13 3,00 19 2,98 25-64(2001) Influence of illegal payments to business operations 2 4,21 8 4,14 Percentage of persons with university education in population aged 25-64 5 9,81 5 9,81 (2001) Quality of services provided to entrepreneurs by local governnment units 3 4,18 Pre-school education attendance / population aged 0-4 (2008/2009; Quality of communication and cooperation of local government institutions 2 71,82 2 50,65 12 3,79 2005/2006) and the business sector Enrolled students/ population aged 20-24 (2008/2009; 2005/2006) 9 41,30 10 36,62 Physical infrastructure Graduated students / population aged 20-24 (2008; 2005.) 9 7,29 11 4,88 General infrastructure 9 4,21 9 3,68 Basic infrastructure and public sector Quality of railways 16 2,61 20 1,73 Quality of available port facilities and waterways 9 3,18 6 4,00 Recovered waste / total waste (2006; 2004) 18 0,75 19 0,32 Airline connections to other countries 13 3,32 12 4,43 Share of aid in LGUs total revenues (2009; 2006) 2 5,42 2 3,88 Quality of power supply 20 3,07 8 5,39 Number of solved cases per judge (2009; 2006) 6 302,00 8 329,00 Number of unsolved cases in Land Register per capita (2009; 2007) 6 379,55 3 99,70 Rule of law Average surtax rate in the county (2010; 2007) 8 4,86 9 4,73 Share of gray economy in business activities 3 4,21 17 3,20 Quality of legal framework for dispute settlement 20 2,89 18 3,05 Business infrastructure Protection of ownership rights (financial assets included) 11 4,18 9 3,66 Surface of entrepreneurial zones per capita (2007; 2006) 12 19,48 9 9,66 Costs that companies suffer due to organized crime 21 3,11 Number of employees in entrepreneurial zones (2007) 8 2.002,00 Independence of judiciary from political influences 12 3,82 11 3,07 Business facility public utility fees, 1st zone (highest rate; kn/m3) (2010) 20 138,29 Education Housing prices in the county center, per m2 4 15.587,50 Distance to airports (km), Dubrovnik, Split +50, Pula, Zadar +100 10 100,00 Quality of public schools 20 4,07 12 4,32 Quality of math and science classes in schools 21 2,57 12 4,75 Quality of management and business schools 6 4,04 10 2,64 Availability of scientists and engineers 13 3,14 9 3,68 Investment in education and employee development 8 3,68 12 3,14 Financial market and local competition Availability of sources of finance for businesses 2 3,93 6 3,57 Level of difficulty in obtaining a loan based on sound business plan and 2 3,11 15 3,09 without collaterals Access to finance of businesses with innovative, but risky, projects 2 3,39 4 2,77 140 Competition strength 12 4,36 5 5,30 Customers and purchasing decisions 2 3,68 5 3,50 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HR036 ISTRIA COUNTY

BUSINESS SECTOR

A. STATISTICAL INDICATORS 2010 2007 B. PERCEPTIVE INDICATORS 2010 2007

RANK VALUE RANK VALUE RANK VALUE RANK VALUE

Investments and entrepreneurial trends Technology and innovations Active legal entities - trends (2008/2006; 2005/2003) 4 120,74 2 118,45 Technological development results 20 2,96 1 4,11 Total investments per facility location1 2 57.370,61 4 40.263,28 Implementation of technology in production processes 9 3,71 7 3,89 Share of investments in equipment in total investments per facility location2 12 33,79 12 35,78 Businesses' competitiveness elements 14 3,25 1 4,23 SME investments in new long-term assets /total SME revenues (2009; 2006) 6 7,05 4 13,42 Sectors of export oriented companies 21 3,14 Direct foreign investments (000 EUR) per capita (2005-2009; 2000-2007) 3 2.732,45 6 990,52 Investment in research and development 3 4,18 6 3,48 Number of SMEs per capita - trends (2009/2004; 2006/2004) 3 148,87 1 118,26 Clusters Level of entrepreneurship development Number of clusters in different sectors 2 4,25 Trades, crafts and freelance professions per capita (2008; 2005) 1 39,54 1 39,58 Number of local suppliers 6 4,25 6 4,50 Number of employed in SMEs per capita (2009; 2006) 3 16,36 3 16,31 Quality of local suppliers 20 2,86 5 4,73 SMEs (period profit - period loss) /total SME revenues (2009; 2006) 10 0,50 7 2,70 Availability of specialized R&D services 12 3,36 8 4,02 Total SMEs revenues / total SMEs assets (2009; 2006) 17 54,99 17 71,16 Cooperation of businesses with universities and institutes in R&D 3 4,39 4 3,45

Gross value added per industry employee (2008; 2004) 1 305,97 2 258,20 Marketing and management

Economic results - level Quality of marketing in businesses 9 4,04 5 4,27 GDP per capita (1000kn/inhabitant) (2007; 2004) 2 91,43 2 66,34 Placement of county product and services in Croatian markets and exports 21 3,00 9 4,66 Unemployed persons/total population aged 25-64 (2009; 2006) 14 5,48 1 5,55 Readiness to delegate authority to other colleagues in the company 2 4,11 13 3,50 Unemployed for 12 or more months / total unemployment (2009; 2006) 1 29,90 1 40,45 Senior management positions (relatives vs. professionala managers) 9 3,61 10 3,59 Gross salaries per employee (2008; 2006) 10 68.250,18 4 49.807,03 Employer - employee relationship 18 3,86 12 4,45 Number of employed per capita (2008; 2006) 4 45,68 1 43,29

Economic results - trends GDP Index (2007/2004; 2004/2001) 16 121,55 7 134,08 Employment in SMEs (2009/2007) 17 98,24 1 106,59 Exports (2008/2006, 2005/2003) 13 109,50 16 106,21 Unemployed (2009/2007; 2006/2004) 21 115,83 19 102,18 Profit before tax in SMEs (2009./2007.) 18 70,06 18 111,51 Total employment (2008/2006; 2006/2004) 13 107,18 17 102,60

1 - for 2010: sum of 2006., 2007 and 2008 per capita; for 2007: sum of 2003, 2004 and 2005 per capita 141 2 - for 2010: sum of 2006, 2007 and 2008 / sum of 2006, 2007 and 2008; for 2007: sum of 2003, 2004 and 2005 / sum of 2003, 2004 and 2005. HR037 DUBROVNIK-NERETVA COUNTY REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

HR037 DUBROVNIK-NERETVA COUNTY

Surface (km²) 2006 1.781

Population 2009 127.473

Unemployment rate (%) 2009 13,1

GDP (mil kn) 2007 9.280

Competitiveness rank 9

Rank of quality of business environment 11

Rank of quality of business sector 11

142 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HR037 DUBROVNIK-NERETVA COUNTY

Dubrovnik-Neretva County Competitiveness Profile– Statistical RCI 2010 and RCI 2007 Comparison* Indicators

Demographics, health and culture Dubrovnik-Neretva County Economic results - 1 ADRIATIC CROATIA Dubrovnik-Neretva County Education trends Indicator 2010 2007 Difference

STATISTICAL R 9 7 -2 Basic Economic results infrastructure Business Environment R 8 7 -1 - level 21 and public sector Business Sector R 10 5 -5

Level of Business entrepreneurship infrastructure development PERCEPTIVE R 11 11 0 Investments and entrepreneurial trends Business Environment R 12 9 -3

Business Sector R 9 13 4 Dubrovnik-Neretva County Competitiveness Profile– Perceptive Indicators FINAL R 9 10 1

Business Environment R 11 9 -2 Location advantages Dubrovnik-Neretva County Business Sector R 11 10 -1 7 Croatian average Marketing and Local management R = rank government

*comparison is indicative only, due to slight changes in 2010 calculation methodology Clusters Physical 1 infrastructure

Technology, innovations Rule of law

Financial market and Education local competition

143 HR037 DUBROVNIK-NERETVA COUNTY REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

BUSINESS ENVIRONMENT

A. STATISTICAL INDICATORS 2010 2007 B. PERCEPTIVE INDICATORS 2010 2007

RANK VALUE RANK VALUE RANK VALUE RANK VALUE

Demographics, health and culture Location advantages Population estimate (2009, 2006) 14 127.473 15 125.030 Favorable geographical position 19 3,68 Share of population aged 25-64 in total population (2009, 2001) 17 52,86 16 51,46 Favorable climate conditions 4 6,39 Net migration rate in the total population ((2007 - 2009) / 2009; (2002- Price of business facilities/offices and land 21 1,71 2 20,37 6 17,48 2006)/2006) Overheads (public utility fees and construction prices) 20 1,93 Vital index (birth/death ratio) (sum 2007 - 2009; (2002-2006)/2006) 1 109,24 3 99,58 Direct labor cots 21 2,61 Number of physicians per capita (2008, 2006) 7 235,11 9 221,55 Local government Education Public confidence in politicians' financial honesty 16 2,71 Percentage of persons with 2-year college education in population aged 1 7,49 1 7,49 Behavior of public officials in the decision making process 16 2,96 11 3,35 25-64(2001) Influence of illegal payments to business operations 15 3,46 1 4,49 Percentage of persons with university education in population aged 25-64 4 11,28 4 11,28 (2001) Quality of services provided to entrepreneurs by local governnment units 7 3,89 Pre-school education attendance / population aged 0-4 (2008/2009; Quality of communication and cooperation of local government institutions 9 51,48 5 38,61 10 3,89 2005/2006) and the business sector Enrolled students/ population aged 20-24 (2008/2009; 2005/2006) 3 49,33 3 48,66 Physical infrastructure Graduated students / population aged 20-24 (2008; 2005.) 2 10,59 2 7,79 General infrastructure 14 3,43 16 2,81 Basic infrastructure and public sector Quality of railways 21 1,21 21 1,63 Quality of available port facilities and waterways 2 4,93 4 4,37 Recovered waste / total waste (2006; 2004) 14 2,09 17 0,46 Airline connections to other countries 1 5,75 1 5,67 Share of aid in LGUs total revenues (2009; 2006) 11 12,77 6 8,66 Quality of power supply 21 2,96 21 3,65 Number of solved cases per judge (2009; 2006) 7 299,00 14 271,00 Number of unsolved cases in Land Register per capita (2009; 2007) 16 1.578,37 15 1.864,35 Rule of law Average surtax rate in the county (2010; 2007) 20 8,96 20 8,77 Share of gray economy in business activities 9 3,61 12 3,28 Quality of legal framework for dispute settlement 5 4,29 1 4,28 Business infrastructure Protection of ownership rights (financial assets included) 5 4,50 2 4,00 Surface of entrepreneurial zones per capita (2007; 2006) 16 10,18 19 2,06 Costs that companies suffer due to organized crime 8 4,54 Number of employees in entrepreneurial zones (2007) 14 663,00 Independence of judiciary from political influences 14 3,79 16 2,84 Business facility public utility fees, 1st zone (highest rate; kn/m3) (2010) 17 138,00 Education Housing prices in the county center, per m2 1 21.750,00 Distance to airports (km), Dubrovnik, Split +50, Pula, Zadar +100 6 70,00 Quality of public schools 11 5,07 8 4,63 Quality of math and science classes in schools 11 4,79 8 5,07 Quality of management and business schools 4 5,07 2 3,81 Availability of scientists and engineers 13 3,14 4 4,07 Investment in education and employee development 9 3,46 14 2,91 Financial market and local competition Availability of sources of finance for businesses 10 2,89 14 2,86 Level of difficulty in obtaining a loan based on sound business plan and 11 2,18 12 3,19 without collaterals Access to finance of businesses with innovative, but risky, projects 7 2,54 16 2,23 144 Competition strength 11 4,46 15 4,70 Customers and purchasing decisions 10 3,11 3 3,63 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 HR037 DUBROVNIK-NERETVA COUNTY

BUSINESS SECTOR

A. STATISTICAL INDICATORS 2010 2007 B. PERCEPTIVE INDICATORS 2010 2007

RANK VALUE RANK VALUE RANK VALUE RANK VALUE

Investments and entrepreneurial trends Technology and innovations Active legal entities - trends (2008/2006; 2005/2003) 9 119,53 1 128,21 Technological development results 18 3,14 9 3,86 Total investments per facility location1 4 40.014,58 8 26.074,31 Implementation of technology in production processes 11 3,68 17 3,12 Share of investments in equipment in total investments per facility location2 19 25,51 17 31,11 Businesses' competitiveness elements 13 3,43 16 3,19 SME investments in new long-term assets /total SME revenues (2009; 2006) 4 10,96 1 16,44 Sectors of export oriented companies 12 4,04 Direct foreign investments (000 EUR) per capita (2005-2009; 2000-2007) 5 2.359,24 3 1.634,53 Investment in research and development 15 3,00 16 2,65 Number of SMEs per capita - trends (2009/2004; 2006/2004) 5 142,62 5 112,82 Clusters Level of entrepreneurship development Number of clusters in different sectors 10 2,96 Trades, crafts and freelance professions per capita (2008; 2005) 4 26,87 10 20,63 Number of local suppliers 16 3,75 16 4,07 Number of employed in SMEs per capita (2009; 2006) 5 14,19 5 14,16 Quality of local suppliers 12 3,82 14 4,16 SMEs (period profit - period loss) /total SME revenues (2009; 2006) 21 -6,80 12 1,45 Availability of specialized R&D services 5 3,96 6 4,07 Total SMEs revenues / total SMEs assets (2009; 2006) 21 35,88 21 51,93 Cooperation of businesses with universities and institutes in R&D 11 3,32 13 2,93

Gross value added per industry employee (2008; 2004) 8 171,00 13 112,45 Marketing and management

Economic results - level Quality of marketing in businesses 5 4,57 12 3,74 GDP per capita (1000kn/inhabitant) (2007; 2004) 4 73,67 5 45,86 Placement of county product and services in Croatian markets and exports 3 4,93 3 4,81 Unemployed persons/total population aged 25-64 (2009; 2006) 1 9,92 9 11,82 Readiness to delegate authority to other colleagues in the company 1 4,25 21 3,09 Unemployed for 12 or more months / total unemployment (2009; 2006) 2 42,10 4 53,06 Senior management positions (relatives vs. professionala managers) 4 4,46 4 4,12 Gross salaries per employee (2008; 2006) 9 68.425,15 5 47.344,43 Employer - employee relationship 4 4,86 7 4,72 Number of employed per capita (2008; 2006) 4 38,99 6 36,82

Economic results - trends GDP Index (2007/2004; 2004/2001) 1 141,25 6 137,13 Employment in SMEs (2009/2007) 16 98,44 Exports (2008/2006, 2005/2003) 5 134,47 2 177,48 Unemployed (2009/2007; 2006/2004) 4 95,11 4 91,38 Profit before tax in SMEs (2009./2007.) 21 59,85 Total employment (2008/2006; 2006/2004) 7 107,95 12 104,80

1 - for 2010: sum of 2006., 2007 and 2008 per capita; for 2007: sum of 2003, 2004 and 2005 per capita 145 2 - for 2010: sum of 2006, 2007 and 2008 / sum of 2006, 2007 and 2008; for 2007: sum of 2003, 2004 and 2005 / sum of 2003, 2004 and 2005. REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

146 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

Research Methodology

147 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

148 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 Research Methodology

Research Methodology

The methodological approach to regional competitiveness re- The research on the competitiveness of Croatian regions The results of the analysis of quantitative and qualitative data search conducted in Croatia largely relied on the methods of (NUTS2) and counties (NUTS3) has been conducted by anal- on the business sector (enterprises) and business environment the two leading studies of country competitiveness at the na- yzing quantitative (statistical) and qualitative (survey) data in determined the competitiveness sub-indexes. The statistical tional level already conducted by the World Economic Forum the two components of the quality of business operations – the sub-index consists of eight pillars of competitiveness, while (WEF) and the Institute for Management Development (IMD). business sector (companies and businesses) and the business the survey sub-index consists of nine. The eight pillars inclu- The foundation for the analysis of the survey indicators is the environment. The regional competitiveness index, that is the ded in the statistical sub-index have been developed based WEF Business Competitiveness Index, while the analysis of competitiveness ranking of counties and regions, is based on on 123 “hard” indicators, while the nine pillars included in the statistical indictors was based on the calculation methodolo- perceptive and statistical ranks. The rankings are weighted, survey sub-index have been developed based on 68 survey gy of the IMD Global Competitiveness Index. Both indexes are with perception making up one-third of the ranking and stati- indicators for each region and each county. based on the assumption that wealth creation takes place pri- stics making up two-thirds. marily at the enterprise level and that enterprises operate in a Regional Competitiveness Index Model national environment which either enhances or hinders their ability to compete domestically or internationally. Competitiveness Pillars 1. Demographics, health and culture The World Economic Forum Business Competitive- 2. Education ness Index uses a microeconomic approach and fo- Business Environment cuses on two sub-indexes: the quality of the busine- 3. Basic infrastructure and public sector ss sector and the quality of the business environment. 4. Business infrastructure Statistical This index was used by the World Economic Forum in indicators 5. Investments and entrepreneurial trends (2/3) 2008. For more details go to: www.weforum.org 6. Level of entrepreneurship development Business Sector The IMD Global Competitiveness Index lists countries 7. Economic results - level 8. Economic results – trends that have the greatest influence on the global econo- Regional my and developing countries with the help of interna- 1. Location Advantages Competitiveness tionally comparable statistics and has been published Index 2. Local Government since 1989. The Index is determined based on statistical indicators, which account for about two-thirds of the 3. Infrastructure Business 4. Rule of Law Environment “weight” of the overall ranking, and an entrepreneurs’ Perceptive survey, and 20 sub-factors that are weighted equally 5. Education indicators (5%) and divided into 4 main competitiveness factors: (1/3) 6. Financial market and local competition economic performance, government efficiency, business efficiency and infrastructure. For more details see: 7. Technology and Innovations www.imd.ch/wcc 8. Clusters Business Sector 149 9. Marketing and management Research Methodology REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

The value of the competitiveness pillars is the average of increased significance was implicitly included in the Statistical pillars and business environment indicators the ranked values of their corresponding indicators, while calculation through the addition of more environment sub-indexes are the averages of the corresponding competi- pillars (2/3); Demographics, health and culture tiveness pillars. In the end, the Regional Competitiveness In- - in 2007, equal consideration was given to perceptive dex is the weighted average of standardized variables based and statistical indicators in the final overall competitive- The authors have attempted to illustrate basic information on the statistical characteristics of those variables. Thus, the ness ranking, but in 2010 more consideration (2/3) was on population (estimate of population in 2009, percentage of Regional Competitiveness Index calculated is information- given to statistical indicators. population aged 25-64 and percentage of population youn- al and should not be referenced in isolation from the sur- ger than 25 in total population, net migration rate in the pe- vey and statistical sub-indexes and initial indicators in other riod 2006-2009 and vital index), health (number of physicians, studies and interpretations, as this would not provide a real- 1. Statistical (quantitative) analysis pharmacists and dentists per capita) and cultural conditions in istic overview of the strengths and weaknesses of the com- individual counties (movies’ visitors, users of public libraries petitiveness of Croatian counties and regions. The quantitative analysis is based on IMD methodology, and active members of different associations). which simply averages the values of the competitiveness indicators to calculate the sub-factors, which are then av- Education The Primary methodological differences in eraged to calculate the final competitiveness index. The main difference between the methodology applied to this The level of a population’s education has been measured by the calculations of the Regional Competi- study and the IMD’s is that the recalculation of the indica- calculating the percentage of the population, ages 25-64, tiveness Index of 2007 and 2010 tor values to the sub-index level was done based on the who have attended school and to what level, observing the rank of their values and not on the standardized values IMD number of children attending pre-school education and not- A comparison of the final rankings of Croatian counties by uses. ing the ratio of enrolled and graduated students. Data for a competitiveness in 2010 and 2007 indicates only minor range of years were considered and trends of that data noted changes in calculation methodology in 2010: In the statistical (quantitative) analysis, 640 statistical in- (relevant years for different data vary, from 2001 to 2009). formation points were used. They were chosen based on - statistical indicators – individual indicators have been their reliability, authority and comparability. This informa- Basic infrastructure and public sector tion was used to create 123 indicators, some being static redefined and new indicators introduced, according to To assess the quality of infrastructure, both data on the density (at annual level), and others illustrating multiannual trends. data availability; of State, local and county roads and efforts invested in envi- Most of the indicators have been expressed in relation to - perceptive indicators – individual indicators have been ronmental protection (total waste, recovered waste, investment the estimated population of a region, which is a much more redefined and new indicators introduced, like location and current environmental protection expenditure) were taken reliable denominator than GDP. The sources of statistical advantages and quality of local government; into account. Public sector rankings were based on revenue- information were the Croatian Bureau of Statistics, Finan- - in 2007, some survey questions were weighted, but in producing measures of local and regional government units cial Agency, Croatian Employment Service, Croatian Na- 2010, simple averages were calculated based on 9 pi- (taxes and surtaxes), the number of judges, the number of com- tional Bank, Croatian Chamber of Commerce, Ministry of llars (6 for the environment and 3 for the business sec- pleted cases per judge, the number of unsolved Land Register the Economy, Labor and Entrepreneurship, Ministry of Fi- tor); cases, the number of days necessary to register ownership in nance, Ministry of Sea, Transport and Infrastructure, Min- - in 2007, explicit weightings were used to account for the Land Register, the number of months of delay in solving istry of Justice, Croatian Employers’ Association and the the increased significance of the business environment cases, and the possibility to solve cases in 7 days. The number Institute of Public Finance. in comparison with the business sector, but in 2010 the of criminal offenders was also taken into account.

150 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 Research Methodology

Business infrastructure Economic results – level and trends 7. Agriculture, fisheries 8. Infrastructure and construction The relative strength of the business infrastructure was From 2007 to 2009 counties were compared using data on 9. Health, social care or education determined by observing the number of registered perso- employment, unemployment, exports, imports, retail turno- 10. County Office for the Economy, Croatian Chamber of nal, cargo and working vehicles; the number and surface of ver, tourist overnights, taxation, revenues and incomes of Economy or Croatian Employment Service entrepreneurial zones; the number of employees in entre- local and county budgets. preneurial zones; public utility fees for business facilities; Additionally, the survey was conducted so that at least one the percentage of trucks and road tractor units with EURO5 third of the respondents came from areas outside of the standards in the total number of licensed vehicles; prices of 2. Perceptive (qualitative) analysis county center. housing; and distance to airports. Qualitative analysis, i.e. the use of information obtained The respondents were asked to rank their answers on a through research on the views of entrepreneurs, is more fre- scale of 1 (the worst/the poorest) to 7 (the best). Unreli- Statistical pillars and business sector indicators quently used in economic analyses for several reasons. Be- able survey responses have been eliminated based on the sides the fact that it allows for the gathering of unique data criteria used by WEF, slightly modified. In other words, the Investments and entrepreneurial trends that is not as available as statistical information, qualitative analysis excluded respondents whose evaluation or aver- analysis also includes assessments by persons with relevant age assessment deviated by more than 2 standard devia- The indicators used to rank entrepreneurship and invest- specialized knowledge on various elements of competitive- tion points from the Croatian average. ment trends were compared to those of previous years or ness that cannot be measure with statistical indicators. to multiannual data and have been used to avoid the influence of extraneous circumstances in the analyzed year. A survey of entrepreneurs has been conducted using the Perceptive pillars and business environment The data used included information on the number of ac- research methodology that was employed by the WEF in the indicators tive legal entities, companies, cooperatives, crafts and free development of the Business Competitiveness Index. The professions (the number of owners and number of emplo- Location advantages original questionnaire has been modified to better fit with yees in legal entities), total investments, investment in the county level research. A large sample of people were given manufacturing industry, investments in equipment, hous- The advantage of a particular location was ranked based a phone survey that was stratified according to 10 criteria. ing construction, direct ownership investments and data on on the responses to five survey questions addressing the A total of 674 questionnaires were completed. The survey SME operations. following: The quality of the geographic location, favorable sample was structured so that (to the extent possible) each climate conditions, the prices of land and business facili- Level of entrepreneurship development of the categories of respondents listed below accounted for ties, total operation costs, the purchasing power of the local at least 10% of the total number of respondents: population, direct labor costs and the county’s economic Some of the indicators previously analyzed under “Invest- growth potential. ments and Entrepreneurial Trends” have been used again, 1. Industry – small companies but this time, they have been used as static indicators to 2. Industry – medium-sized companies describe the state of entrepreneurship per capita or as per- 3. Industry – large companies centages. Data from 2008 and 2009 on the manufacturing 4. Craftsmen – manufacturing craft industry and SME activities (costs of employees, total reve- 5. Trade nues, total profit, etc.) was also used. 6. Business services

151 Research Methodology REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

Local government competition was ranked by using information on import barriers, the strength of local competition, the quality of The quality of the local government was ranked based on anti-monopoly policies and the complexity of customer the responses to questions that addressed confidence in demands. local politicians’ financial honesty, officials’ neutrality, corruption, the methods used to design economic policies, Perceptive pillars and business sector indicators the availability of ICT equipment, the implementation of public procurement procedures, the quality of local govern- Technology and innovations ment services and cooperation with the business sector. Innovation and technology development have been ranked Infrastructure by using survey indicators that describe the ease of obtaining licensed technologies, the total level of technology de- Basic infrastructure was ranked according to survey indi- velopment, companies’ absorption of technology, produc- cators of the quality of the general infrastructure, railways, tion process complexity, orientation toward exports and in- ports, air transport and the availability of power supplies and vestments in research and development. phone lines. Clusters Rule of law Local clusters were ranked by using survey questions that The performance of the legal system on the sub-natio-nal addressed the existence of networks of interest-connected level was ranked through survey questions on the intensity companies, the number and quality of local suppliers, es- of the gray economy, the functionality of the legal frame- pecially of machines and equipment, the availability of re- work, the independence of the judiciary, the protection of search and development services, the existence of scien- ownership, protection from crime and organized crime, the tific institutions and the cooperation of universities with the quality of the police, and the implementation of standards business sector. for the quality of environmental protection. Marketing and management Education 10 survey indicators addressed the quality of market oper- The quality of education was ranked through survey ques- ations, if business focus was on customers, the distribution tions on the general quality of public and business schools, of products and services, the evaluation of trade trends and knowledge of mathematics, availability of scientists and en- volume, the delegation of authority, financial incentives for gineers and investments in education at the corporate level. managers, nepotism, management control and employer- employee relationships. Financial market and local competition

The financial market was ranked through indicators of the competitiveness of financial services, access to loans and 152 venture capital and access to the stock exchange. Local REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

Sources

153 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010

154 REGIONAL COMPETITIVENESS INDEX OF CROATIA 2010 Sources

Sources

Annoni, P., K. Kozovska: „EU Regional Competitiveness European Regions and Cities – Partners for Jobs and Regional Competitiveness Index of Croatia 2007, National Index 2010“, EUR 24346-2010, European Commission, Growth Strategy, Committee of the Regions, 2007 Competittiveness Council and United Nations Development Joint Research Centre, Institute for the Protection and Se- Program, Zagreb 2008 curity of Citizens, Luxembourg, 2010. Institute of Public Finance (www.ijf.hr) Regional Competitiveness Operational Program 2007 - 2009, Instrument for Pre-Accession Assistance, 2007 Annual Report on Croatian Competitiveness 2008, National Law on the Adoption of an Agreement between the Croa- Competitiveness Council, Zagreb, 2009 tian Government and the European Comission amending Regions for Economic Change: Fostering Competitivene- their previous Agreement on the financing of the semi- ss through Innovative Technologies, Products and Healthy Annual Report on Croatian Competitiveness 2006, National annual Operational Program ‘Regional Competitiveness’, Communities, March 2007 Competitiveness Council, Zagreb, 2007 which provides Community assistance from the Instru- ment for Pre-Accesion Assistance for Regional Develo- Regulation on the Establishment of the Agency for the Annual Report on Croatian Competitiveness 2004, National pment in Croatia, International Gazette 03/11 Regional Development of the Repulic of Croatia, Official Competitiveness Council, Zagreb, 2004 Gazette 155/08 Law on the Regional Development of the Republic of Croa- Annual Report on Croatian Competitiveness 2002, National tia, Official Gazette 153/09 Strategy for the Regional Development of the Republic of Competitiveness Council, Zagreb, 2002 Croatia, 2011-2013, Ministry of Regional Development, Ministry of Economy, Labor and Entrepreneurship (www. Forestry and Water Management, May 2010, version 1.0 Central Finance and Contracting Agency (www.safu.hr) mingorp.hr) Summary of HITROREZ Project implementation, 28. 7. Croatian Bureau of Statistics (www.dzs.hr) Ministry of Finance (www.mfin.hr) 2009. (http://www.hitrorez.hr)

Croatian Employers’ Association (www.hup.hr) Ministry of Justice (www.pravosudje.hr) The Global Competitiveness Report 2010-2011. (http://www.weforum.org/reports) Croatian National Bank (www.hnb.hr) Ministry of the Sea, Transport and Infrastructure (www.mmpi.hr) Towards Quick Convergence: Challenges and Cooperation Decision on the Clasification of Regional and Local Gover- Overview, World Bank, Zagreb, 2008 nment Units According to Level of Development, Official Operational Program for Human Resources Development Gazette 89/10 2007–2009, Instrument for Pre-Accession Assistance, 2007 Working for the Regions: EU Regional Policy 2007- 2013, 2008. (http://ec.europa.eu/regional_policy/intro/ Doing Business, The World Bank, 2010. Porter, M. E.: „The Competitive Advantage of Nations“, working1_en.htm) (http://www.doingbusiness.org) New York: Free Press, 1990 Yearbook 2009, Croatian Employment Service (www.hzz.hr) 155 United Nations Development Programme Resident Representative Office in Croatia

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