engleski

SUSTAINABILITY OF THE TRADE BALANCE OF GOODS IN THE REPUBLIC OF CROATIA

Deficits of the trade balance of goods in post- transition countries usually indicate deep structural problems of one economy. Historically, Croatia mainly recorded deficits on the trade balance of goods, with certain years as exceptions. It is clear that Croatia has a lack of competitiveness due to unfavorable production structure that can be seen through long-term deficits on the trade balance. Therefore, the aim of this paper is to investigate the sustainability of the trade balance of goods in the Republic of Croatia. When examining the sustainability of a trade balance of goods, it is important to analyze the variables that contribute to the generation of long-term trade deficits. Among those variables, many studies highlighted the structure of trade balance, savings, investments, demographic trends, exchange rate, capital inflows and financial system development. In this paper is employed the econometric approach to assessing the sustainability of the trade balance of goods, based on the cointegration analysis. The obtained results indicate the long-term unsustainability of the trade balance of goods in the Republic of Croatia. Such findings only confirm the lack of goods export competitiveness in the Croatian economy.

current account balance, cointegration analysis, lack of competitiveness in goods

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