Local Economic Development in the Context of the Institutional Efficiency of Local Governments

Abstract

Institutional efficiency of local governments can be defined as permanent readiness to shape economic and social partnerships with both entrepreneurs and local residents, as well as a capacity to provide prompt and competent responses to expectations of business people willing to start or already conducting business in a given municipality. Evaluation of efficiency pertains to the ability of a local government to express its goals, to agree about these goals with the local community and to be efficient in making decisions. The results of international studies demonstrate that in the long run the quality of institutions determines the wealth of individual countries. Socio-economic development depends not only on the economic base and financial support opportunities but also on factors that involve institutions. Bearing above in mind the main purpose of this article was to diagnose the type, direction and extent of interactions between the level of development and institutional efficiency of local governments in Poland. To reach it, the research team used both secondary data (from public statistics) and original data (acquired through a survey study comprising 1,120 representatives of local authorities). The level of efficiency of local governments was assessed with a synthetic measure of efficiency (EFF), whereas development was measured with a synthetic development index (DEV). The results show that the local governments were in a rather unfavorable situation in terms of both efficiency and development. In both cases, the average value of the synthetic measure applied reached a value equal to 30% of the highest possible score. Research proved that there was a correlation relationship between EFF and DEV measures (r = 0.365). In addition, it turned out that the power of impact of development processes resulting in some improvement of efficiency is more intensive than the effect of efficient functioning of municipalities on the development processes that occur within them.