Author(s):
1. Irena Klemencic, Prirodno-matematički fakultet Banja Luka, Croatia
2. Predrag Bejakovic, Institute of Public Finance - Zagreb, Croatia

Abstract:
In a knowledge-based economy the exploitation of knowledge and ideas plays the predominant part in achieving this goal. A key component is the development of human capital, i.e. knowledge, competencies and capabilities of all employees. The competitiveness of the whole Croatian economy can be protected only with systematic improvement in competitiveness of labour force and entrepreneurial skills. That is particularly important for small and medium enterprises and craft businesses. This paper presents the findings of theoretic and empiric surveys which show that the development of education has long-term positive impacts shown in economic development and GDP growth. Education can also contribute to protection and maintaining of freedom, peace, co-operation, trust and other institutional benefits that favour the socio-economic development. The situation in Croatia regarding development of employees and entrepreneurial skills is still not satisfactory. However, there have been obvious changes and improvements. The paper will show that even though the process of formal education is long-lasting and it needs a lot of time for significant changes in educational structure, it should be persistent and patient in implementation of educational policies as well as in monitoring of positive, but also negative consequences of mentioned policies. Possible changes can be observed only throughout several years with constant promoting of the education and entrepreneurial skill importance. The enterprises stress that the most important area they are facing is the access to finance and capital, followed by attitudes and working behaviour of employees. The role of the state in the financing of education and professional training is of particular importance. Tax incentives may provide companies with additional encouragement for investments in education and the state may also provide funding for educational programmes. The tax regulations contain provisions on tax subsidies for education, but as studies show, those possibilities are used insufficiently. The surveys show that the enterprises are aware of the importance of skill development of their employees. Considering still unsatisfactory awareness about the possibilities of using the state support and participation in educational programmes, there is need for systematic work on informing about the importance of education and available educational programmes conducted by the line ministry and other bodies, and the possibilities for encouraging their funding and co-financing. It is also important to intensify co-operation between firms and chambers, particularly in Northwest Croatia. At the same time, it is necessary to continue the research on the need for education of entrepreneurs in general, in order to understand the effects, monitor progress, identify defects and propose measures for improvement. This may also be an important step in improving the necessary cooperation between the business world, especially small and medium enterprises and crafts, with the education system.

Key words:
SME, entrepreneurial skills, tax incentives, Croatia

Date of abstract submission:
10.02.2014.

Conference:
REDETE 2014 - Researching Economic Development and Entrepreneurship in Transition Economies