Do Local Budgets Influence Regional Development? Empirical evidence from Romania

Abstract

Public agenda constantly include the topics of sound local finances and promoting regional development, especially in the context of the government’s efforts to ensure a sustainable path of economic growth. From this point of view, our research is intended to empirically determine the role played by local finances on regional development, having Romania as a case study. We computed a Regional Development Index at county level, by comprising nine dimensions of progress: Our analysis encompasses data from TEMPO online database of National Institute of Statistic and from Ministry of Development, Public Works and Administration. The empirical evidence suggests a positive and significant relationship between some indicators of local budgets and our computed Regional Development Index. Reported to these results, our recommendations are directed towards the local fiscal policy, aiming to optimize the design of local budgetary indicators.