Croatian public sector is still in transition towards a public sector that is compatible with EU market economies. With Croatia rapidly approaching Europe, the need for strengthening these processes becomes even more emphasised. With the purpose of approximating the public sector to EU standards arises the need to research its identity on the one hand and compatibility with EU standards on the other hand in order to determine the necessary changes in the Croatian public sector. The intent was to show how important it is to achieve compatibility of certain parts of the public sector with EU standards. Compatibility with the determinants of acquis communautaire as part of the EU accession negotiations will have a substantial impact on the size and the structure of public sector. The work was expected to reach the following results:
- Building a tax model according to EU standards.
- Determining relative competitiveness rates of certain regions in comparison to other regions in Croatia but also to regions of other countries.
- Analysis of effects of fiscal decentralization that would incite a discussion and analysis of this topic, which is relevant for regional development and would facilitate the creation of a quality regional strategy of development.
- The chapter on state aid would require the implementation of some methods of measuring effects as part of a pilot project and it would result in recommendations for measuring effects of state aid.
- Analysis of tax expenditures would determine the losses in the state budget because of the many incentives and abatements in existence in the tax system and it would provide recommendations for reducing losses in the state budget caused by their existence.
- A new model of financing higher education institutions and public research institutes would be made, based on their success measures.
- Analysis of certain political-economic topics would point out basic legislative weaknesses in the budgetary process on both local and state levels and it would provide recommendations for increasing the legislative representatives' knowledge and education on the budget, which would additionally influence the increase in transparency of the budgetary process on all levels of government.
The proposed research would be particularly useful to the Ministry of Finance (but also other parts of the executive government) as it is in charge of financing, management and control of the public sector and its harmonization with the EU. The Ministry prepares different fiscal measures that shape the size and structure of the public sector, and this should be done according to the EU standards.