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Economic Growth in Croatia: Potential and Constraints

Author

Listed:
  • David Moore

    (International Monetary Fund, Washington)

  • Athanasios Vamvakidis

    (International Monetary Fund, Washington)

Abstract

This paper examines the factors and constraints that affect recent and potential growth in Croatia, as well as policies that can influence it. On current productivity trends, it estimates Croatia’s potential growth rate at 4–41 percent, a result reasonably robust to different methodologies. For growth to be sustained at a significantly higher rate, the business environment needs to be improved through further measures to reduce the administrative burden, legal uncertainties, and corruption. The analysis also emphasizes the importance of attracting more greenfield foreign direct investment, and reforms to reduce the role of the state in the economy through fiscal consolidation and faster privatization.

Suggested Citation

  • David Moore & Athanasios Vamvakidis, 2008. "Economic Growth in Croatia: Potential and Constraints," Financial Theory and Practice, Institute of Public Finance, vol. 32(1), pages 1-28.
  • Handle: RePEc:ipf:finteo:v:32:y:2008:i:1:p:1-28
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    File URL: http://www.ijf.hr/eng/FTP/2008/1/moore.pdf
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    References listed on IDEAS

    as
    1. Elina Ribakova & Balázs Horváth & Dimitri G Demekas & Yi Wu, 2005. "Foreign Direct Investment in Southeastern Europe; How (and How Much) Can Policies Help?," IMF Working Papers 05/110, International Monetary Fund.
    2. Hodrick, Robert J & Prescott, Edward C, 1997. "Postwar U.S. Business Cycles: An Empirical Investigation," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 29(1), pages 1-16, February.
    3. Fischer, Stanley, 1993. "The role of macroeconomic factors in growth," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 485-512, December.
    4. Richter, Kaspar, 2006. "Thailand's growth path : from recovery to prosperity," Policy Research Working Paper Series 3912, The World Bank.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Athanasios Vamvakidis, 2008. "Convergence in Emerging Europe; Sustainability and Vulnerabilities," IMF Working Papers 08/181, International Monetary Fund.

    More about this item

    Keywords

    economic growth; economic reform; potential growth;

    JEL classification:

    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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