The Importance of Intellectual Capital for the Sustainable Growth of Regions: Evidence From the Republic of Serbia

Introduction

The world is facing global disproportions between developed and undeveloped countries, as well as between regions within certain counties, and these disproportions represent a great obstacle for global economic development. The gap between rich and poor is each day greater and greater, the inequalities in the income distribution are immense, and unbalanced regional development becomes a global issue. Therefore, in order to reduce regional disproportions, achieve balanced regional and socio-economic development, increase the living conditions of citizens, and reach economic welfare, it is necessary to give special emphasis to regional development strategies and policies (Rakić & Rađenović, 2013, p. 129).

Regional development represents an integral part of the overall socio-economic development of a country. Thus, governments all over the world are putting huge efforts and invest funds in order to diminish regional disproportions, and to some extent, alleviate their consequences. As a result, they adopt numerous regional strategies and policies to reduce the economic and social inequalities between regions, aimed at supporting job creation, competitiveness, improving quality of life, and sustainable economic growth and development. Quality, effectiveness, and management of the public policies at the macro and regional levels are analog to the strategy of the firm at the micro-level. Effective government policies can help in the realization of potential competitive capabilities of a nation or region, that strive from the wealth of natural resources (comparative advantages), by efficient resource allocation. However, what in the case when a nation or region does not have natural wealth that enables the fulfillment of long term competitive advantages on the international market? Certainly, prospective and sustainable solutions are intellectual resources that the government, by its supporting policies, must create, constantly enhance, and efficiently manage.

According to the European Union (EU) regional policy, “sustainable growth is increasingly related to the capacity of regional economies to innovate and transform, adapting to an ever-changing and more competitive environment” (https://ec.europa.eu/regional_policy/en/policy/themes/research-innovation/). Sustainable development implies “the integration of economic, social, and environmental issues in all societal spheres and levels in the short- and long-term” (Steurer et al., 2005, p. 264). While sustainable development theory describes the relationship between enterprises and society, the stakeholder relations management theory enables the strategic management of enterprise-society relations (Pérez & del Bosque, 2014). Namely, sustainability relates to an enterprise's obligation to be accountable to all its stakeholders in all its operations and activities to achieve sustainable development in all three dimensions. Networking and building on local resources give rise to a new understanding of community and social economy. According to Retolaza and San-Jose (2011), stakeholder and social economy perspectives, to a great extent, overlap, and their convergence leads to a wide range of possible synergies. In that regard, regional and international social economy networks play a significant role in diffusing knowledge about relevant social, technological, institutional, and policy innovations (Utting, 2015, p. 2). This involves the creation of ecosystems that encourage innovation, research, and development (R&D), and entrepreneurship (Saiz-Álvarez & Palma-Ruiz, 2019). Hence, those countries and regions investing more in education, training, life-long learning, R&D, and science have greater possibilities for economic growth and development. Namely, continuous investments in education, innovation, information and communication technologies (ICTs), and supporting institutional and economic infrastructure lead to the increased formation and implementation of intellectual capital, consequently resulting in the sustainable economic growth (Stevanović et al., 2018, p. 779). In such circumstances, the wealth of nations and regions depends on the level of knowledge and its effective and efficient usage (Krstić & Vukadinović, 2009, p. 460).