engleski

Privatisation, Transition and Integration of Croatia: In Quest of the Lost Decade

It is almost a decade since the process of economic transition started in Croatia, but in spite of the evident progress in several areas, it is safe to say that transition in Croatia is still very much an unfinished agenda. There are several arguments and empirical evidence that could support this statement, but two or three most profoundly illustrate it. The first indicates the scale of progress in transition process rather plastically and shows that Croatia has not yet achieved its pre-transition levels of GDP and industrial production, namely the GDP in 1998 is still only about 78% of that in 1989 (EBRD, 1999). For comparison, Poland achieved pre-transition levels already in 1996 (in 1998 GDP of Poland reached 121% of GDP in 1989). Secondly, Croatia, as opposed to many Central and Eastern European countries, left the decade of 1990s without having any institutional arrangement which would firmly direct her towards the process of integration with the EU - the mainstream process of integration of post-socialist countries into the global market system. There are also several other unfulfilled transition objectives such as achievement of the efficiency gains from privatization and restructuring, foreign trade gains, institutionally functioning market ruled by law, socially balanced development etc. This means that Croatia was less effective than others in implementing structural reforms that could improve allocative efficiency and generate fast productivity gains. Evidently, Croatia badly needed a new framework which could direct her towards achieving both faster growth and deeper integration into the European and world market structures. The political changes at the beginning of 2000 have created that "window of opportunity". On the other hand, the EU Stabilization and Association Process for SEE will hopefully provide the realistic framework for elimination of the main political impediments which prevented Croatia from joining the club of the most advanced countries in both transition and integration. The paper summarizes the progress of transition in some key areas (in particular those where the problems persisted throughout the 1990s such as privatization, enterprise restructuring, integration with EU, trade liberalization and foreign investment) and identifies needed policy changes and conditions for achieving faster economic transition and integration of Croatia. The context of the Stability Pact implementation in the broader region of SEE is also taken into account.

Croatia; privatisation; restructuring; integration; trade liberalisation; foreign investment

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