Month: June 2026

DEVELOPMENT TRAPS IN SMALL EU ECONOMIES: INSIGHTS FROM CROATIA’S LOCAL TRAJECTORIES

Vinko MUŠTRA

Full professor, Faculty of Economics, Business and Tourism, University of Split, Croatia

vmustra@efstr.hr

Abstract

This paper examines the long-term dynamics of local development traps in Croatia, a small and open EU economy that experienced profound structural shocks between 2006 and 2022, including the global financial crisis and the COVID-19 pandemic and EU accession in 2013. The concept of the development trap has recently gained prominence in the literature, identifying territories that struggle to sustain economic dynamism relative to national and European peers (Iammarino et al., 2020; Diemer et al., 2022; Rodríguez-Pose et al., 2024). While previous research has highlighted the structural and institutional underpinnings of such traps, less attention has been devoted to the different development paths of local sub-national unites in small and open economies. Using a unique dataset covering all 556 Croatian municipalities and towns for 4 three-year periods from 2006 till 2022., this study applies a standardized, multi-period framework to identify two forms of development traps: (1) a stable trap reflecting persistent positioning within the same income decile (DT1) and (2) a downward trajectory trap marked by monotonic decline in standardized income (DT2). A key finding is that development traps vary heterogeneously even within the same county-level units, underscoring the importance of fine-grained territorial perspective. The results also reveal strong path dependence substantial spatial rigidity and pronounced territorial polarization between coastal and continental areas. DT1 and DT2 are not evenly distributed, suggesting differentiated structural vulnerabilities across counties. By providing new evidence from a small EU economy like Croatia, the paper offers a nuanced operationalization of development traps and highlights the need for targeted, place-sensitive policies aimed at reversing entrenched disparities and preventing further territorial divergence.

Keywords: Local development traps, Income dynamics, path dependence, spatial disparities, Croatia

JEL classification: R11, R12, O18,

pp. 79-92

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EVOLVING REGIONS IN EUROPE: APPLICATION OF SPATIAL MODELS TO THE VARIOUS FORMS OF THE EUROPEAN SPATIAL CONCENTRATIONS

Luigi CAPOANI

Adjunct professor at the Department of Economics, Ca’ Foscari University of Venice

luigi.capoani@unive.it

Csaba LAKÓCAI

Research fellow at ELTE Centre for Economic and Regional Studies, Institute of World Economics

lakocai.csaba@krtk.elte.hu

Abstract

The “Blue Banana”, spanning from the United Kingdom to Italy, has been symbolizing economic vitality in Europe. This paper reassesses its contemporary relevance by analyzing economic indicators and regional dynamics, particularly in Eastern and Mediterranean Europe, within the NUTS 2 framework. Leveraging Stewart’s concept of demographic energy and Moran’s spatial statistics, it introduces a robust methodology interweaving territorial and economic dynamics. By examining data layers, this study provides novel insights into the Blue Banana’s significance and its economic impact on Europe during the late 2010s and early 2020s. Furthermore, it illuminates the core area’s interconnections with adjacent economic zones and the emergence of prospective alternative spatial paradigms. The findings indicate that the majority of the Blue Banana regions have remained part of the prominent core area of Europe in terms of the most conventional regional economic indicators. However, emerging alternative spatial concentrations and a partial eastward shift are also visible.

Keywords: Blue Banana, Mediterranean Europe, Eastern Europe, spatial development, productivity

JEL classification: C1, N1, N9, R1, Y1

pp. 63-78

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THE IMPACT OF FINANCIAL EXPOSURE ON STUDENTS’ FINANCIAL LITERACY: EVIDENCE FROM THE UNIVERSITY OF GJIROKASTRA

Dorjana NANO

Ph.D. Doc. York University, School of Continuing Studies, Toronto, Canada

nano.dori0810@gmail.com

Antoneta POLO

Assoc.Prof.,”Eqrem Çabej” University, Gjirokastra, Albania

neta_polo@yahoo.com

Enkela CACA

Assoc. Prof.,”Eqrem Çabej” University, Gjirokastra, Albania

ebabaramo@yahoo.com

Ilirjana ZYBERI

Assoc. Prof.,”Eqrem Çabej” University, Gjirokastra, Albania

izyberi@yahoo.com

Christos AP. LADIAS

Professor, Regional Science Inquiry Journal, Greece

Ladias@rsijournal.eu

Abstract

Financial literacy shapes how individuals manage money and respond to economic challenges. Research has shown that students with greater financial exposure tend to make better financial decisions. This study examines the impact of financial exposure on financial literacy using survey data from 100 students at the University of Gjirokastra, Albania. A Financial Exposure Index (FEI) was constructed to measure engagement with financial environments, including income, work experience, and sources of financial learning. Linear and logistic regression analyses were conducted. Results show that financial exposure has a strong impact on financial literacy. The linear model explains nearly half of the variation in literacy scores, while logistic regression indicates that higher exposure significantly increases the likelihood of achieving adequate literacy (≥70%). Gender and regional background also influence outcomes, though age and marital status are less significant. These findings underscore the importance of practical financial experiences and local context in shaping financial literacy.

Keywords: Financial Literacy, Financial Exposure, University Students, Logistic Regression, Human Capital

JEL classification: A22, G53, D14, I22, C83

pp. 57-62

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