Effects of Exports on Regional Economic Development in Croatia

The aim of this paper is to analyze the role of exports in the regional development of Croatia. Specifically, the paper employs a panel econometric model to assess the impact of county-level exports on GDP, GDP per capita, and GDP per capita growth during the period 2004-2022. In addition to the main variable of interest, exports by county, several control variables are included, namely investment, employment, human capital (measured through education), and tourism, all of which also influence regional economic performance. Diagnostic tests were conducted to examine the statistical properties and validity of the models used. Based on the results, the fixed effects (FE) model was identified as the most appropriate method. Alongside the econometric analysis, the paper also employs descriptive statistics to outline the main features of Croatian exports at the county level. The findings suggest that exports, investment, employment, and education all have a significant influence on economic growth and income per capita at the regional level. The impact of exports was found to be both statistically significant and positive, indicating that foreign trade plays a crucial role in county-level economic development. Despite these important insights, the analysis also has certain limitations. First, there may be an endogeneity issue within the models. Second, while key macroeconomic variables are included, other potentially important regional development factors such as innovation, EU funding and institutional quality should be considered for future research. Third, the structural heterogeneity among counties (e.g., industrial versus tourism-based regions) could affect the consistency of the model. The main scientific contribution of this paper lies in its empirical confirmation that exports also play a vital role in enhancing economic performance and living standards at the regional level in Croatia.