engleski

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

Summing up almost a decade of the process of economic transition in Croatia, it is safe to say it is still very much an unfinished agenda, despite of the evident progress in several areas. This was particularly evident at the beginning of the 2000 when the new government took office. 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 estimated GDP in 1999 is still only about 78% of that in 1989 (EBRD, 2000). For comparison, Poland achieved pre-transition levels already in 1996 (in 1999 GDP of Poland reached 122% 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 weak transition outcomes 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 targeted to 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 decade of 1990s was in that respect a lost decade for Croatia. But the situation has been improving lately. The political changes at the beginning of 2000 have created that &#8220 ; ; window of opportunity&#8221 ; ; . On the other hand, the new EU policy of Stabilization and Association Process for SEE is aiming to 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 several 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, enterprise restructuring, integration, trade liberalisation, foreign direct investment

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