THE ROLE OF REGIONAL ECONOMIC ENVIRONMENT IN THE DEVELOPMENT OF ENTREPRENEURSHIP IN CROATIA

Entrepreneurship as an activity has many social impacts, but most often an emphasis is made on its impact on a countries growth and development. Entrepreneurial economy can be expressed through numerous economic variables such as the increase of production and employment. It is because of the important role that entrepreneurship has in the development of a country, an emphasis is made on determining ways in which its development can be stimulated. Besides the national level, the results of entrepreneurial activities can also be viewed on the regional level. Regional analysis of entrepreneurship includes defining the impact of entrepreneurship on the growth and development of regions and identifying regional factors that impact entrepreneurial activities inside the region. There is a problem of defining entrepreneurship, mainly because of its inherent multidimensionality. A large number of researchers in regional analysis use an entrepreneurial event, in other words the act of forming a firm, as an approximation of regional entrepreneurial activity. The purpose of this article is to explain the role of the regional environment in the development of entrepreneurship in the Republic of Croatia, respectively identifying the role of the region in explaining the different rates of firm formation. In defining a region NUTS 3 classification was used. Economic, institutional and social regional indicators are noticed in the literature to have an impact on entrepreneurship. In this article only economic factors were considered and a panel data analysis was conducted with a goal of identifying significant regional indicators in explaining the level of entrepreneurship. This article is an additional step in understanding Croatian entrepreneurship at the regional level because the literature on this topic is scarce and the results can be used by state bodies during the process of forming regional strategies of development in the Republic of Croatia.