ࡱ> q`ZbjbjqPqP 7`::E&FZ455585lj7n&7lf9"999:<#=D$hEc:":cc99(`l`l`lc299`lc`l`lŅ97 5e}>0n\jZ0g=P J `l9T[g=g=g=kjg=g=g=ncccc$.55  BUSINESSPEOPLE INFLUENCING PUBLIC POLICY THE CASE OF CROATIA   Ru~ica `IMI, MA Faculty of Law, University of Zagreb Trg maraala Tita 14, 10000 Zagreb  HYPERLINK "mailto:ruzica.simic@pravo.hr" ruzica.simic@pravo.hr Abstract: This paper examines the business-government relationship in the policy debate, with an emphasis on the advisory role of business leaders. After a short overview of selected literature sources, it focuses on Croatia, a Southeast European post-communist country in the process of EU integration. The real social dialogue in Croatia started only at the end of 1990s, and it is still developing and gaining importance. Croatia has adopted many lessons from Ireland, and has common past and, it is hoped, a common future with Slovenia, so each of these countries has been taken into consideration in this analysis as well. Some unique features of and prospects for Croatian public-private dialogue are also considered. Keywords: businesspeople, stakeholders, public policy, public-private dialogue Introduction Every day successful business leaders demonstrate an ability to keep their companies profitable and sustainable in spite of and thanks to the internal and external forces of change. Every day governments confront dozens of issues, many of which affect businesses. Every day there is a series of formal and informal interactions among state representatives and businesspeople. Most of these interactions include and influence other actors in society and the general public. To what extent does the interplay between business and government really matter for the public policy on the national level? A review of the literature review makes it clear: it really does matter. Primary sources often go even further: it does make a significant impact. International organisations give guidelines on how to facilitate business-government cooperation in the most effective manner. Although there is no single theory that encompasses the entire area of business, government and societal relations, it has been investigated heavily by many scholars, through numerous lenses and in various disciplines. The literature usually takes for granted the involvement of business people in public policy because it overwhelmingly draws on the mainstream in the developed democratic societies. The sources covering this issue for the post-communist countries began to emerge less than twenty years ago. It is simply due to the fact that this phenomenon in the real sense emerged there only at the beginning of 1990s, and hence is still more innovation than tradition. Although an institutional framework is still being built, there still are informal rules that need time, commitment and adequate management to change. The purpose of this paper is to investigate the extent to which business leaders are engaged in the public policy debate at the national level, focusing on the case of Croatia. This niche seems to be a challenging one because several published works have included mostly hard data and little commentary on the soft issues. The first part of the paper consists of a short overview of selected literature sources. The second part of the paper explores the public-private dialogue in Croatia through several aspects covering a timeline from the beginning of the public-private dialogue to EU integration. This examination will bear in mind the country's economic and socio-political inheritance, current conditions, mentality issues and future prospects. In order to cover the aforementioned literature gap, and to get a full picture that covers both hard and soft factors, several interviews were conducted with selected individuals who have been part of that process in Croatia, Slovenia and Ireland. Ireland was analysed as a global social partnership role model and because of past lessons and future prospects that may apply in Croatia. Slovenia was chosen because of its common socio-political heritage and, it is hoped, a common future in the EU. For additional issues at the EU level, BusinessEurope in Brussels was consulted as well. The full list of the interviewees is included in the Appendix. Role of the businesspeople in countrys development "The most important thing a corporation can do for society, and for any community, is to contribute to a prosperous economy." Porter and Kramer (2006: 13) Today, nine out of ten CEOs surveyed globally believe that a partnership between business, government and civil society must play an important role in confronting worlds key development challenges (WEF, 2005). On the government side, for instance, one of the first initiatives of new British Prime Minister Gordon Brown was the creation of the Business Council for Britain, comprised of leading businessmen who will advise him on policies affecting business (10 Downing St, 2007). At the EU level, social partnership seems to be one of the keys to the development of policies, and it is considered to be a strong component of the European social model (EC, 2007). To encourage the development of the country while not doing their core business, businesspeople can take on one of the following roles in the community: Resign their current position in business and become politicians, or more rarely, keeping both positions; Join, on behalf of their companies, a public-private partnership aimed at delivering public goods, which means providing a financial contribution to community development; Become involved in interest groups, business organisations or advisory bodies in order to influence policymaking. The third point is the focus of this paper; i.e. the advisory role of business leaders when addressing development challenges of a society. State and, Non-State Actors and Society Several theories and case studies have identified the interplay between the state and other actors in the society as an inevitable step in a countrys development. Howlett and Ramesh (2003) stress that capabilities of the state are determined not only by its international position and internal organisation, but also by its linkages to the society whose problems it needs to resolve. In other words, "the state needs support of prominent social actors" (Howlett and Ramesh, 2003: 70) and "policy makers might wonder themselves if the policy makers are somewhere else" (Colebatch, 2002: 22). However, it is claimed that whatever the influence of international or global agenda-setting, the locus of decision-making remains the nation state (Parsons, 2005: 245). Because of the important role that business and labour play in the production process that creates multiple effects for the society, they are considered vital in determining state policy capabilities. Still, business is considered the more powerful actor for reasons ranging from the ownership of the means of production and its strength in promoting different issues in the society, to influence-driven financial contributions to political parties and research institutions. All of the above can produce a wide spectrum of effects ranging from the influence on the impartiality of other professionals and politicians to an erosion or improvement of social welfare (Howlett and Ramesh, 2003: 70-72). Evans (1995) claims that the situation of embedded autonomy is the best one; which means that both the state and society need to be strong and work in partnership. According to the same author, corporate coherence and connectedness creates a basis for successful state involvement in industrial transformation. Parsons (2005: 246) states that "modern government must increasingly be seen as a complex multi-layered, or multi-sphered, activity in which a policy is composed of numerous decision points". Court and Young (2006: 9) argue that "policy makers are obviously influenced by organisational and political context factors" and stress the increased role that actors like NGOs, media and business associations play in policy making. It is also claimed that a variety of multipartite organisations emerged in recent years as an ad hoc, pragmatic response to institutional weaknesses (Zadek and Radovich, 2006). Yet, they are increasingly perceived as one of the most important institutional innovations of the last century. Government, Business, Society There is no theory that can integrate the entire field of business, government, and societal relations (Steiner and Steiner, 2006: 19). But there are scholars exploring the field in three directions: the interactions of corporations with stakeholders; the ethical duties of corporations and managers; and corporate social performance. In his work from the mid-1980s, Wilson (1985) argued that the relationship between business and government is rarely studied comparatively and predicted: "The observer in twenty years time will be struck by the diversity, as well as the extent of the political and governmental ties of business in advanced industrial democracies." Wilsons prediction refers to the period that we live in now. Zadek and Radovich (2006) notice that numerous multi-stakeholder and public-private partnerships have been established over the last two decades, which means in the period after the Wilsons prediction. In Ireland, this is usually considered a synonym for successful public-private cooperation, five successive social partnership agreements that shaped public policy took place in the last twenty years (Baccaro, 2003). Collaborative governance emerged increasingly in mainstream political discourse all around the world (Zadek, 2006). Stating that "Government, at all levels, can improve or detract from the national advantage" Porter (1998: 73) introduced the concept of the competitive advantage of nations that is now widely accepted. Porter claims that competitiveness is created, not inherited, consequently it is not limited to countries with a "rich" inheritance, but includes ones that can create laws and institutions to increase productivity. The role of government in Porters Diamond model is to catalyse and enforce economic development by creating the conditions for better performance by companies, and hence increasing the prosperity of a nation. Porter argues that economic development today is managed through a collaborative process among all the stakeholders in a society. The Porter Diamond is comprised of four interlinked factors, and government should be able to influence all of them. At the same time, governments today are more likely to look for solutions abroad, which is much easier than in the past because of an increasing number of already established and continuously evolving communications and networking opportunities at all levels (Dolowitz and Marsh, 2000). For post-communist countries this method of acquiring new knowledge has gained importance since the beginning of the 1990s. Rose (2005) identifies four important factors for learning from abroad: geographical proximity, psychological proximity, political ties and motivation. Although Central and East European (CEE) countries today may choose where to take their lessons from, they usually apply the lessons from the EU or the United States. They do not look for lessons from their Russian neighbours. The greatest example of this process was the EU's integration of ten post-communist countries in 2004. This paper explores the case of Croatia compared to Ireland and Slovenia because of the lessons it has learned from each of those countries. Public-Private Dialogue in Croatia "Although formal rules may change overnight as the result of political and judicial decisions, informal constrains embodied in customs, traditions, and codes of conduct are much more impervious to deliberate policies." North (1990: 6) As partly shown in the previous chapter, the burgeoning literature stresses not only that business-government cooperation is inevitable in democratic society, it also points out its invaluable presence and necessity for the prosperity of a nation. This statement, although underpinned by the theories and case studies, if not more deeply elaborated may sound navely straightforward. Hogwood and Gunn (1984) stress the importance of understanding the policy process in a particular country in order to assess whether new processes or policy substance is likely to be implemented. The purpose of this part of the paper is to do that in the case of Croatia to understand the critical issues and the impact of actors in the policy debate, all of it helped by relevant theories and lessons from carefully selected countries. The case of Ireland shows that social partnership was and is the backbone of its economic policy despite the changing economic conditions and tensions in that partnership. Indeed, and it seems to have been a great contributor to the Irish economic success. One important quality is its resilience to changes in both business and governmental structures (Baccaro, 2003). The case of Slovenia shows a very different picture than Ireland in terms of social partnership, although the two nations are similar in terms of economic success. The interviews and research conducted revealed that business and government are relatively separated in Slovenia, primarily because the government dominates companies through state ownership. The main critique is that there are basically two cases: corporate representatives are either enemies of the state in the sense that they are associated with an opposing political party, and are then replaced, then both the ones that are replaced and the ones that somehow manage to survive are by definition excluded from the policy making process. Corporate representatives who are installed by the party in power are merely servants of that party, and do not meaningfully enter the policy making process. The strongest parties in the policy making process are academics because they have close links with all leading parties, and unions because they still have a large membership and are well protected by legal system. In contrast to this picture, Croatian businesspeople mostly see Slovenia as a country that is not that powerful in terms of its institutional framework for public-private partnership, but one which has continuously educated its business elite so that they are aware of their strength and potential when influencing public debate. Besides the same socio-political inheritance, there are still some differences in cultural inheritance between Slovenia and Croatia. Evolution of the public-private dialogue There is a nearly unanimous view in Croatia that the real public-private dialogue began to develop only at the end of 1990s. Until then, even though a change in the socio-political system occurred, a pattern of political patronage in society has continued, and business was only one component of political nomenclature. Compared to the mid-1990s, public-private dialogue is now considered to be more mature and more balanced; there has been a visible improvement in the relations between government and business (Interviews, Brusic, Covic, Marinac, Radman, Vedris, 2007). This phenomenon of the continued dominance of politics over business, despite the transition in a market economy, can be explained by two main reasons: the first one is an inherited one: many leading people remained in influential positions not changing their management style; the other one is situational one: at the beginning of 1990s the priorities of the country were different because of the war then being waged. Box  SEQ Box \* ARABIC 1. The biggest challenges in the development of public private dialogue in Croatia  Source: Lowther and Sever (2006: 4) However, interviewees claim that the progress in the business-government relationship may today be seen in both soft factors like enhanced mutual understanding and respect, and the more tangible results that emerged through a continuity in work. For instance, both the previous and present government, formed by different parties, used the analysis and recommendations prepared by the business association and multi-stakeholder bodies. This dual effect confirms Herzberg and Wrights (2006) claim that focusing on hard outputs like specific policy recommendations is likely to cause an increase in soft outputs like trust and social cohesion. Box  SEQ Box \* ARABIC 2. Spectrum of hard and soft outputs in competitiveness partnerships  Source: Herzberg and Wright (2006: 2) At nearly the same time that real public-private dialogue started in Croatia (1999), the World Bank (WB) and the European Bank for Reconstruction and Development (EBRD) conducted the research on the influence of business people and bureaucrats on the business environment in transition economies (2000). This research measured governance, corruption and state capture and enabled a comparison of Croatia with other European transition countries. It clearly showed that according to several indicators relevant to the topic of this paper Croatia was behind most of these countries, all of whom are now EU members (WB, 2000: 17, 23, 28-31, 34, 47). Some of these indicators include overall quality and efficiency of the services of central government institutions; non-transparent political party financing; predictability of changes in government policies affecting business, and support from the local and national government. Recent reports on global competitiveness by the World Economic Forum (WEF) in 2005, 2006 and 2007 indicated some improvement in these areas. According to the reports, Croatia is catching up with advanced transition countries. Although it would be convenient for the purpose of this paper to conclude that these positive trends in the economy and society are the immediate result of the public-private dialogue because their developments coincide, this would clearly be too superficial and requires further analysis. Policy debate: Business leaders motivation It is a common perception that high profile businesspeople have (almost) reached the top of the Maslow hierarchy of needs. What, then, is their next step? Exploring the engagement in non-profit sector, Rose-Ackermann (1996: 701) argues that: "altruism and non-profit entrepreneurship cannot be understood within the standard economic framework". Croatian business leaders stressed overwhelmingly the external reasons connected to developments since the beginning of 1990s in Croatia and the other European post-communist countries, to which is Croatia usually compared. In this situation businesspeople wanted to make their contribution to the rapid revival of the Croatian economy through cooperation with other actors in society, using developed countries as a role model. They recognised the necessity of transferring knowledge and experience from abroad, and of resolving the problems with inherited laws and regulations that were obstructing the business climate, and hence, their businesses as well. Croatian independence was recognised as a specific push factor, that means being in a position to influence your own newly-founded state. They also wanted to improve the image of managers and entrepreneurs that was created in the 1990s as a result of the transition period and of an inappropriate relationship between business and politics. They strove to present businesspeople in a new light: as people with a responsibility to the national economy, social issues, government, employees, and trade unions. Rose-Ackermann (1996) claims that non-profit activities provide a shell in which people can express their beliefs without the pressure of being accountable to profit-seeking investors. Figure  SEQ Figure \* ARABIC 1. What can business achieve when engaging in the reform process?  Source: Andreasen and Herzberg (2005: 7). Not all this engagement is equal to pure uncompromised commitment. The interviewees assess that for some businesspeople involvement in business associations and advisory councils is to some extent a shortcut to advance their careers and to gain easier access to politicians. Another issue that inevitably arises is money, in the sense that in none of the organisations studied in Croatia are businesspeople paid for their work. However, it does not nullify the value of networking that can be achieved through that kind of engagement. In the National Competitiveness Council, this was a conscious decision in order to not compromise their work; it was thought that "even if the amount [of remuneration] would be very small, the price of negative publicity would be too high" (Interview, ovi, 2007). In Ireland, members do not receive any money as well. In the Slovenian Strategic Council for Economic Development (SSCED) the minimum costs are covered through the attendance fee. In any case, interviewees agree that money is not a motivation and it cannot be a motivation in the future. Businessmen with experience in community work admit that they have benefited much in terms of new knowledge. Stone (2000) reminds that learning is usually uneven or partial in the policy community, only some members share "consensual knowledge". She argues that factors like political opportunism, and economic and bureaucratic interests cannot be underestimated. Figure  SEQ Figure \* ARABIC 2. The learning process in the public-private dialogue process  Source: UNCTAD (2001: 19) Instead of a summary, the feedback of the former President of the Irish National Competitiveness Council will be cited. Patterson (Interview, 2007) lists following motivation factors: interesting issues that you deal with, networking with long-term effects, leaving a legacy in your country, and status. He concluded: "For Croatia, one of the great things about having your independence is that you can think these things for yourself. I do believe that freedom of action is a huge benefit. And Croatia now has that, so use it! Thats the punch line. Ireland has been able to do things its own way." Policy Debate: Government Attitude It is expected that both government and other stakeholders have desire, skills and commitment as critical factors for efficient cooperation (UNCTAD, 2001; UNICE, 2006). Harris (2006) warns that there is a tiny line between business-government collaboration, which brings positive results for the economy, and possible collusion, which brings negative effects for society as a whole. In the report that followed the UNICE initiative of educating social partners in new CEA EU member states: "One seminar participant described government attitudes to social dialogue as comparable to the need to have exotic animals in a zoo. The government knew that, to please the EU, it needed such animals but in reality, it considered them to be difficult to control, expensive to feed and temperamental. Although it was careful to keep these animals alive, the government would seek to control the animals behaviour rather than creating conditions that would allow it to prosper. (UNICE, 2004: 24) The above statement may be (still) true for Croatia if the following statement from the EC (2004: 92) Opinion on Croatias Application for EU membership is borne in mind: "business associations are consulted by the government, but further efforts are needed to institutionalise business advocacy and public-private dialogue". However, government may not be the only party responsible for the obstacles in communication, reminds UNICE (2004). In the short term this situation may be convenient for one of the stakeholders (not necessarily business) in the partnership, but usually it does not bring good overall results. Government has to display adequate capacity, political will and leadership, while business has to be organised, have leadership and must articulate their interests without fear of penalty, argue Herzberg and Wright (2006). They also state that in successful partnerships the personal involvement of countrys president or prime minister is very common. This was the case in Croatia on several occasions, but not on a permanent basis. Short-term versus long-term interests may also be another description for business versus government input in the partnership and regarding the question of compatibility. Interviewees state that in countries and in businesses you need both long-term and short-term, simply because if the short-term does not work, there is no long-term. People with a short-term focus can work effectively with people with a long-term focus if there is another key element mutual respect, and not just declaratively during common meetings. Furthermore, and of great importance, it is self-evident that government is the only stakeholder with the power of implementation. Hence, the success of the public-private dialogue appears to be determined more by the honest and positive commitment of government officials than by any other stakeholder. Government needs to say that they do not have all the answers, but they want to discuss and solve the relevant issues (UNCTAD, 2001). It may be argued that businesspeople have much to offer in terms of knowledge and experience, but do not always know how the policy system functions. As consequence, the role of the state is indispensable for successful cooperation. The appropriate use of business leaders capabilities depends to a large extent on the states ability to define and create a "pipeline" to use them. It is a common perception that the state should be more proactive. Finally, the state is an influential actor not simply because it controls final policy creation and implementation. It is also a very big employer and a big buyer in Croatia and in many other transition countries. In that position it might be: "either unable or unwilling to separate the roles of politics and business ownership." (UNICE, 2004: 24). The motivation of business leaders might therefore be compromised. To conclude, one of the interviewees claimed that government should regularly re-examine its cooperation with advisory bodies through three steps: "Are the things that this body is looking at right things? If yes, is what this body is saying - interesting? What is the Government going to do about it? Policy Debate: Institutions A very important indicator for assessing this process is the success of institutional drivers. Interviewees recognized that two institutions played very important roles in strengthening social dialogue: the Employers Association, established after Croatia became independent, and National Competitiveness Council, established in 2002 as a part of the breakthrough in public-private dialogue. The roles of the Economic-Social Council and the Croatian Chamber of Commerce are questionable because of their direct connection to the state, while the work of other institutions is appreciated, but still not seen as being sufficiently strong. The role and accountability of the CCC are questionable because it is funded by compulsory membership fees paid by all companies in Croatia (a very rare case in European transition countries). It is generally considered not to be active enough in articulating and representing business interests. In the case of Croatian institutions, government funding is obviously connected to a lack of independence and passivity on important issues, while in the Irish case being government funded has never been an obstacle for Forfas to be efficient. It is even considered to be an advantage since Forfas presents views that are balanced among all of the stakeholders. The issue of funding and its influences on autonomy of the organisations is considered as a factor within this analysis, but cannot be addressed in detail. It is useful to mention that foreign organisations helped the process of public-private cooperation development in Croatia. Yet, as recognised in other transition countries as well (UNICE, 2004), there was a permanent temptation to ask the Government for quick fixes to the resource question. Organisations like USAID not only serve as donors, but as knowledge actors as well. In this additional role they may act as resource banks, help in advocating policy ideas, spread ideas through their domestic and international networks, establish structures and encourage practices (Stone, 2000). Although a positive trend exists in the quality of the business-government relationship in Croatia, obstacles related to daily cooperation and capacities and capabilities for expert and administrative support of peak associations still exist. By strengthening the public-private dialogue, the amount of work for peak associations has placed a massive strain on their available resources. This problem might be solved through better coordination and cooperation of the existing organisations. Currently, there are many opportunities for collaboration that would make those organisations more efficient and accountable, but they are rarely used. There is also a growing phenomenon of an inflation of associations and councils, with same people holding leading positions in several of them at the same time. On one hand, this may enable communication, and compensate for the lack of coordination among organisations. On the other hand, it might create a danger of a ruling elite and the lack of opportunity to bring in new people with fresh ideas. However, it is difficult to measure to what extent this "invisible" work of associations really contributes to the quality of policy formulation. Could it be the case that the politicians like involving NGOs only as PR platform for reforms that are not likely to be supported by the general public? And in cases where they do not agree with NGOs they may include them only to satisfy a requirement for "NGO involvement". EU Momentum The central question of this section is: Croatian businesses are already in the EU and the state is not. Why not use those experiences? And what else can be learned in the accession process? Croatian business leaders participate in various European and global projects and initiatives, but they also do business in EU countries. Indeed, they may have more real life experience in the EU than does the state or government. Businesspeople state that their experiences are not used enough, not only during negotiations but also as an opportunity to transfer knowledge and experiences. This institutional deficit is not in form, but in content. For instance, the CCC has a representative office in Brussels, but it is perceived to be not doing its job with appropriate pace and through adequate activities. There is also a lack of financial and material resources in the CEA and that was, without exception, also found in the employers associations new EU member states (UNICE, 2004). EU accession significantly increases the workload of organisations. It is also a fact that the old and established EU members had time to switch resources gradually from the domestic to the European level, whereas new EU member states had to resolve simultaneously the adoption of acquis and new items on the EU agenda (UNICE, 2004). On the other hand, as Harris has argued (2006), the incentive for business people to come together may be their perception of vulnerability to international competition -- in this case, the EU. Still the individual power of big companies in a common market has to be taken into account.  Not only do their own financial resources and achievements influence the power of (big) businesses over national governments. External processes such as globalisation and EU accession also influence such power. Bottom Line: Real Influence or Better Networking Only? Did we have influence? Yes, we did. Did we change the world? No, we did not. But it helped. Patterson (Interview, 2007) Croatian businesspeople see the lack of institutional efficiency as one of the greatest obstacles to public-private cooperation, or to say this more practically, the contributions may be the best ones, but if there is nobody to implement them, the result would be the same as without any contributions in the first place. The Irish Government was, for instance, very efficient in implementing changes. The expertise of Forfas was a very supportive factor for the reform process. Forfas influence is considered to be strong but quiet and that is why other government departments are willing to cooperate with them, and it also allows stakeholders contributions to be channelled into the policy debate. As one Forfas employee described: "We try to be honest and produce policies both in favour of business, but also realistic in terms of the government and why it was elected." (Interview, Aylward, 2007). On a unanimously positive note, Irish and Croatian interviewees proudly said that with time they managed to make all the decisions through consensus with all of the parties involved in the process. This assertion seems to be ideal, unless we are reminded of some of the critiques of consensus, briefly summarised in Margaret Thatchers famous quote: "To me, consensus seems to be the process of abandoning all beliefs, principles, values and policies. So it is something in which no one believes and to which no one objects." (Conservative History Journal, 2007) Kingdon (1995) modified famous Cohens famous concept of the "garbage bin" saying that political decisions are the result of three streams: political events, problem recognition and policy proposals. Croatian interviewees stated that through their advisory work they influenced the national mindset, in other words they exerted influence on all three streams. Bearing in mind that "public opinion can be highly attentive and mobilised by activists who seek to frame issues" (Young et al, 2002: 218) it appears to be possible. Still, is there a way to prove it, to measure it? Baccaro (2003: 692) stated that in Ireland the first social partnership agreement "was the most politically contested and hence the most difficult of all". Irish interviewees stated that the world was not changed by their activities, but they did make a difference in way the social actors behave and understand each other. They did facilitate some changes, and they did build a common trust. In brief, "you cannot measure it really, but the thinking was influenced." (Interview, Aylward, 2007). The same assessment was made by the BusinessEurope on cooperation at the EU level. It may be important to note that neither in any of the countries studied, nor at the EU level, was there an formal requirement for the participation of in policymaking. It has simply become a part of the culture of communication and a win-win cooperation among stakeholders. Conclusion When raising issues about public policy and the involvement of business, there is a potential trap of ideological and political labelling and simple-minded slogans. Reasonable solutions are not "one-size-fits-all", nor can they be strictly connected to the size of government, some doctrine or socio-economic system. Theories and case studies clearly identify roles for business beyond its primary role in the society. In democratic societies governments solicit business for advice, and business leaders seek to influence public policy. They both see this as a win-win situation. The intensity of interest and willingness for dialogue is not always the same on every issue, but communication exists. Is this only a cover for government to implement the reforms that would not be popular with the general public and, at the same time, may government be honestly irritated by a continuous review by stakeholders? Is this an opportunity for business leaders to make their resumes even more impressive because they could have political power through the power of their budgets anyway? I would say no. There is some truth in these questions, but the phenomenon is more complex. Limits, within and outside the scope of this paper, cannot be avoided. Especially when analysing the case of a transition country like Croatia. For instance, public policy literature takes institutional efficiency (as an important pre-condition for implementation of social dialogue) for granted and this aspect is lacking in Croatia. The same thing happens with case studies and interview findings in developed societies stakeholders in these countries are used to cooperation with other stakeholders in society. A "mainstream" such as in developed societies is something that only started to develop in Croatia less than ten years ago. Still other countries demonstrate that significant progresses in the relations between business and political spheres often happened in a climate of economic emergency. Croatian independence and its urgent need to catch up with other European transition countries seem to have been a potent motivational cocktail for all stakeholders in society. It may raise the question of an inappropriate closeness between business and government, but living in a small country implies a highly networked society and fast, informal ways of communication. The cases of Ireland and Slovenia show that an informal approach does not necessarily have to be negative, it may simply be the more efficient and more flexible way of making things happen. To conclude, I would argue that pure altruism and uncompromised commitment are not the only drivers for all stakeholders. Yet results have been better with public-private dialogue than without it, so let it continue and develop further. It may not achieve all the goals set, but it usually leads to greater success than without such communication -- as long as the dialogue is developed as something more than a mandatory technical procedure, and as long as it contributes to a culture of relationships at a national level. The fact that government should represent long-term interests does not make politicians intrinsically vision-oriented, nor do shorter term interests make business leaders short-sighted. Dialogue between them may make a difference. List of Abbreviations APIU Croatian Trade and Investment Promotion Agency BAC SEE Business Advisory Council South Eastern Europe CCC - Croatian Chamber of Commerce CEA Croatian Employers Association CEE Central and Eastern Europe CEEMAN Central and East European Management Development Association CEO Chief Executive Officer CNB Croatian National Bank EBLC European Business Leaders Convention EBRD European Bank for Reconstruction and Development EC European Commission ERT European Roundtable of Industrialists ESC Economic-Social Council EU European Union GSV Economic-Social Council IBLF International Business Leaders Forum ICB Irish Central Bank IEA Institute of Economic Affairs IFSRA Irish Financial Services Regulatory Authority IoD Institute of Directors LBS London Business School MP Member of Parliament NCC (Croatian) National Competitiveness Council NGO Non-Governmental Organisation OECD Organisation for Economic Cooperation and Development PM Prime Minister SEE South Eastern Europe SSCED - Slovenian Strategic Council for Economic Development UN United Nations UNCTAD United Nations Conference on Trade and Development UNICE Union of Industrial and Employers Confederations of Europe (now BusinessEurope) US United States VPM - Vice Prime Minister VRH Croatian Government WB The World Bank WBCSD - World Business Council for Sustainable Development WEF World Economic Forum References 10 Downing Street Website (2007). 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List of Interviewees Following persons were interviewed in order to find out their views on the Croatian public-private dialogue and their comparative international experience (interviewees listed alphabetically with their appointments that are most relevant for the research): Brusic, Anny, CEA, Director of the SME Association Covic, Zeljko, CEO of PLIVA, member of the Barr Group NCC, First president, current member CEA, member of the Council of Members, former president IoD, member Lenardic, Mira, NCC (Partner institute of the WEF), Secretary General Lovric, Petar, CEO of Ecus CEA SME Association, Board Member Member of numerous SMEs working groups Marinac, Darko, CEO of Podravka NCC, President CEA Council of Members, member, former president ERT Board, member IBLF, member EBLC, member APIU Advisory Board, member ESC, member Radman, Goran, Chairman of Microsoft South East Europe Stability Pact BAC SEE, member NCC, member CEEMAN, Board member APIU Advisory Board, member Vedris, Mladen, Head of the Chair of Economic Policy, Law School, University of Zagreb; Strategic adviser of Sonder Ltd Former VPM and MP CCC, former president NCC, member APIU Advisory Board, president CNB Advisory Board, member The significance of having these interviewees was on one side in their role in the organisations listed, but on the other the reports and guidelines of the organisations in which the interviewees are listed are used in the paper. Ireland was taken into consideration for the reasons of past and future lesson learning from the social partnership. Following persons were interviewed: Aylward, Ciaran, Forfas, Policy Analyst Patterson, Brian, former President of the Irish NCC IFSRA, Chairman ICB Board, member Due to common socio-political inheritance and hopefully common future in the EU, Slovenia was taken into account as well, and explored thanks to following interviewees: Coh, Marko, former Assistant Lecturer at the University of Ljubljana, Faculty of Economics, course: Business, Government and Society LBS, PhD student Miles, Keith, SSCED, (the only foreign) member Portfolio career in business in UK IEA, former Director of Finance and Administration For some additional social partnership inquiries at the EU level, following interviewee is consulted: Kettlewell, Peter, Senior Adviser, BusinessEurope Altogether there were twelve interviews, ten of which were face-to-face; six of them conducted in Zagreb, two in Dublin and two in London. The remaining two interviews were conducted by telephone. The interviews used for this paper were part of the research conducted from April to August 2007 for the Master Thesis Businesspeople Influencing Public Policy: Could and Should Government Use Their Inputs Better? The Case of Croatia. This thesis was a requirement for a Master of Arts degree in Public Policy at Kings College London, University of London, in 2006/2007. All of the interviews were conducted in accordance with the recommended Guidelines of Kings College, London.  Some of the findings and references in this paper resulted from the research conducted for the scientific project Adaptation of Croatian Institutions to European Criteria: Identity and Change. The author's participation at the Conference (for the purpose of the paper presentation) was also funded by the scientific project Adaptation of Croatian Institutions to European Criteria: Identity and Change. This Project is being implemented with the support of Ministry of Science, Education and Sports of the Republic of Croatia.  These factors are factor conditions; demand conditions; firm strategy, structure, and rivalry; related and supporting industries.  UNCTAD (2001: 1) uses Isaacs definition of dialogue saying that it is not merely a set of techniques for improving organisations, enhancing communications, building consensus or solving problems. It is based on the principle that conception and implementation are intimately linked. Same source stresses that in the process of public-private dialogue it is clearly identified that policymakers and their associates do have responsibility for the final policy formulation and implementation, but do not have a monopoly on knowledge, perspective and wisdom.  At that time these countries, the majority of whom are now EU members, began their transition, and Croatia was in the midst of a war. By the end of the 1990s, these countries were rapidly progressing, while Croatia found itself lagging behind countries compared to which it was previously an advanced economy. Although in the general public it was not perceived that way, international benchmarks were clearly showing that. Eftymiadis (2006: 227) argued that this process, which occurred in some other SEE countries as well, is "a triple process of transition: from communism to political democracy, from economic isolation to an open market, and from a set system of order to ethnic conflict and social unrest".  One of the pictures used to convince the private sector to engage in the reform process facilitated by the WB in BiH and many other countries. The Croatian National Competitiveness Council is an independent advisory body comprised of leading businessmen, government representatives (prime minister and ministers), trade union leaders and selected representatives from academia (rectors and deans).  The Slovenian Strategic Council for Economic Development is an advisory body appointed by Slovenian Government. Its main task is to discuss and give opinions on the development issues. It is empowered to submit policy proposals in accordance with the Development Strategy and Lisbon Strategy with the overall aim of achieving stable economic growth.  Forfs is the Irish national policy and advisory board for enterprise, trade, science, technology and innovation. It provides the  HYPERLINK "http://www.entemp.ie/" Department of Enterprise, Trade and Employment (DETE) and other stakeholders with analysis, advice and support on issues related to enterprise, trade, science, technology and innovation. Forfs provides administrative and /or research support to a number of independent bodies including the Irish National Competitiveness Council and Small Business Forum.  For instance, USAID provided significant technical and financial assistance to the NCC in its start-up phase.  There are two examples from Ireland: "Ireland is a small country and our productivity growth and value of exports is coming from a very small base, a majority are multinational companies. So, if the head of Microsoft or Intel in Ireland says that there is a problem with the business environment, their issue will be taken very seriously by the Government." (Interview, Aylward, 2007) ".the chief executive of Cadburys that had a big manufacturing plant here. He said: Look, I have to go to a meeting every month where I have to put on the table my costs for making so many bars of chocolate to be exported and I have a competitor plant in France and in the UK. If my costs are higher, they will take the order. It is as simple as that. 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