Rural development, planning, the harmonization of legislation with the European Union and use of the funds from the European Union programs are
current topics of discussions in Croatia. Therefore, it is necessary to define the indicators of competitiveness which demonstrate the development of
the rural area. The main objectives of this paper were evaluation of competitiveness of the rural area in the territory of the Zagreb County, situated
near the capital city of Croatia–the City of Zagreb, and determining the influence of budget allocation by public administration for the chosen
economic indicators of the rural competitiveness of Zagreb and other Croatian counties. The competitiveness of the Zagreb County, when compared
to the average of the Croatian rural area was explored with the index of rural competitiveness. The selection of indicators for measuring rural
competitiveness is based on the concept of sustainable rural development. The index showed that the rural area of the Zagreb County is less
competitive by 8.45% than the rural area of Croatia. This confirmed the first hypothesis of the paper which was unexpected due to the geographical
position of the County (near the border with European Union and on the direct border with the capital city as the administrative, human resources,
educational, market, and cultural center). This quantitative analysis offers the possibility for further research to estimate the rural competitiveness,
which becomes the necessary groundwork in the decision making process in agricultural and rural policy. The second hypothesis saying that the local
government significantly influences certain economic factors of rural competitiveness was proven by regression and correlation analysis. Conclusions
about rural competitiveness and the public system’s efficiency are additionally substantiated with data obtained through structured interviews with
experts. Experts notably accentuated the problem of authorization transfer in the context of agricultural policy onto lower management levels
(insufficient decentralization), unnecessary bureaucracy and political privileges and nepotism, as well as unprofessional employees in public
administration. The analysis of rural competitiveness and the public system’s efficiency presume an arranged and detailed data base and suggest the
need to set clearer priorities which will be stimulated in order to reach competitiveness on micro and macro levels.