KVALITET LOKALNIH JAVNIH INSTITUCIJA, PRODUKTIVNOST I INOVACIJE NA NIVOU PREDUZEĆA: POKAZATELJI IZ SLOVENIJE
QUALITY OF LOCAL PUBLIC INSTITUTIONS, PRODUCTIVITY AND FIRM-LEVEL INNOVATION: EVIDENCE FROM SLOVENIA

Author(s): Matija Kovačević, Rok Spruk
Subject(s): Economy, Business Economy / Management, Socio-Economic Research
Published by: Finrar d.o.o Banja Luka
Keywords: local institutions; quality; innovation; productivity; long-term development; Slovenia;
Summary/Abstract: The quality of institutions is an important factor for sustainable growth, productivity, innovation and long-term development. There is a consensus that an institutional environment with low transaction costs, established rule of law and quality state institutions creates better conditions for growth. Societies that have a quality institutional framework tend to increase the level of social capital, because citizens have a higher degree of social trust. In this paper, we investigate variations in the quality of public institutions at the municipal and regional level in Slovenia, as well as the contribution of different layers of institutional quality of Slovenian municipalities and regions to innovation in enterprises. Using the observed and unobserved components of the quality of institutions at the local level, the assessments of the institutional quality of Slovenian municipalities in relation to the rest of Europe were effectively compared. Our estimates suggest that better institutional quality, a more impartial state administration, and a lower level of corruption at the local level are associated with significantly higher probabilities of patent granting by the European Patent Office and the United States Patent and Trademark Office. The projections reveal great and significant benefits of improving the quality of local institutions to the marginal level, while the estimated institutional quality explains inter-municipal differences in the intensity of innovation.

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