The establishment of the current system of local government in the Republic of Croatia started in 1992 by bringing the basic legislative framework. The system was established in 1993, and was implemented through the implementation of the first local elections. In Croatia there are a total of 555 local governments: 428 municipalities, 127 cities and 20 district (regional) governments, or counties. City of Zagreb as Croatian capital, has a special status of the city and county, so that in the Republic of Croatia there are total of 576 local and regional governments. The structure of local and regional self-government exists 23 years and is based in specific social, political and economic conditions. This framework has now changed and that affects the practical functioning of this system. There are great differences between counties, municipalities and towns. They are reflected in the demographic, economic, organizational and human disproportion. It is necessary to increase regional competitiveness of counties. Analysis of regional competitiveness will offer insight and tracking progress or falling behind individual counties or regions as well as its ability to "catch up" with developed than themselves.