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Economic Growth in Croatia; Potential and Constraints

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  • David Moore
  • Athanasios Vamvakidis

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 4-4½ percent, a result reasonably robust to different methodologies. To sustain growth at a higher rate in line with the authorities' aspirations, the analysis highlights the critical need to improve the business environment through further measures to reduce the administrative burden, legal uncertainties, and corruption. It 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, 2007. "Economic Growth in Croatia; Potential and Constraints," IMF Working Papers 07/198, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:07/198
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    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=21237
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    References listed on IDEAS

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    1. Matthieu Bussière & Jarko Fidrmuc & Bernd Schnatz, 2005. "Trade Integration of Central and Eastern European Countries: Lessons from a Gravity Model," Working Papers 105, Oesterreichische Nationalbank (Austrian Central Bank).
    2. Fischer, Stanley, 1993. "The role of macroeconomic factors in growth," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 485-512, December.
    3. Klinger, Bailey & Lederman, Daniel, 2006. "Diversification, innovation, and imitation inside the Global Technological Frontier," Policy Research Working Paper Series 3872, The World Bank.
    4. Levine, Ross & Renelt, David, 1992. "A Sensitivity Analysis of Cross-Country Growth Regressions," American Economic Review, American Economic Association, vol. 82(4), pages 942-963, September.
    5. 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.
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    Cited by:

    1. Ines Kersan-Skabic & Lela Tijanic, 2014. "The Influence of Foreign Direct Investments on Regional Development in Croatia," Croatian Economic Survey, The Institute of Economics, Zagreb, vol. 16(2), pages 59-90, December.
    2. Vamvakidis, Athanasios, 2009. "Is there a "reform fatigue" in the euro area?," Economic Modelling, Elsevier, vol. 26(4), pages 767-777, July.
    3. Maru?a Pescu (Beca) & Camelia ?tefan (Baraba?), 2016. "The Effects of Gaps and Disparities on Economic Growth. A Study of 10 Former Socialist Countries from the CEE, Members of the EU," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 18(43), pages 592-592, August.
    4. Konstantins Benkovskis & Ludmila Fadejeva & Julia Wörz, 2013. "How Important Is Total Factor Productivity for Growth in Central, Eastern and Southeastern European Countries?," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 1, pages 8-27.

    More about this item

    Keywords

    Croatia; Economic growth; Foreign direct investment; Privatization; economic reform; potential growth; real gdp; employment; gdp growth; gdp per capita;

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