engleski

General Equilibrium Analysis of the Croatian Accession to the World Trade Organization

The core part of our work is a design of the Croatian CGE model, using version 4 of the standard GTAP database. Our approach to the data issue is to demonstrate how one can quickly adapt the standard GTAP database to include a country not previously included in the database, utilizing a transparent process whereby the available data on Croatia is merged into the existing GTAP database, followed by simulations of trade policy options: Stage 1 - Croatia joining WTO; Stage 2 - Croatia joins CEFTA; and Stage 3 - Croatia joins the European Union on top of membership of CEFTA and WTO accession. Our results indicate that Croatia will suffer virtually no substantial welfare losses as it undertakes transitional steps to EU accession. Moving towards the WTO tariffs is a necessary step in that transition, and while there are some initial welfare losses these are small and are more than made up for by the eventual welfare gains. Our simulation results also show where the production and trade structure of the Croatian economy might be expected to change. It is important to note that some sectors may decline or expand during the earlier stages of the transition, only to find those changes offset as the reforms continue.

general equilibrium; trade agreement; trade policy; trade liberalization; welfare gains

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