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