Efficiency Analysis Of Croatian Economy

Recent research of economic data from 1993 to 1998 has proved that existing way of transition and privatization in Republic of Croatia has not fulfilled declared economic and social goals. The unfavorable impacts of wrong transition and privatization process generate permanently economic and social losses. Therefore should be made a study for building up a new proper privatization model to stop unfavorable impacts and set up system to improve economic efficiency and social status of all inhabitants in Croatia. New privatization model has to establish the following structure of shareholders based on history of generating existing equity in Croatia: 1) Owners that had invested own capital before 1945. They would receive shares free of charge; 2) Employees that create equity from net profit of enterprises from 1945 up to 1999. They would receive shares free of charge; 3) Domestic and foreign original owners that have established existing enterprises by own capital from 1945 to 1999; 4) Domestic and foreign legal or physical subjects that have paid in cash liabilities for transition shares or paid off installments for managers' loans. They would receive shares up to the value of cash payments. Through explained characteristics of privatization model could be expected the following favorable effects: 1) Concede the owners' rights to the original investors; 2) Substantial increase of employees' motivation to work efficiently and to increase the real equity value; 3) Protect foreign and domestic already done investments in Croatian enterprises, banks etc.