IDEAS home Printed from https://ideas.repec.org/p/wii/rpaper/rr304.html
   My bibliography  Save this paper

Croatia's Delayed Transition: Competitiveness and Economic Policy Challenges

Author

Listed:
  • Vladimir Gligorov

    () (The Vienna Institute for International Economic Studies, wiiw)

  • Hermine Vidovic

    () (The Vienna Institute for International Economic Studies, wiiw)

Abstract

The report gives an overview of the overall trends in output and employment in Croatia, and of the country's fiscal and external sectors. It concentrates in more detail on the manufacturing sector and its competitiveness in comparison with developments in other Central, East and Southeast European economies. Finally some economic policy issues specific to Croatia are discussed. The Croatian economy, hit hard by output declines in the 1990s, has not yet recovered to its pre-transition levels. In contrast to the largely successful stabilization of prices and the exchange rate, Croatia's external position has deteriorated considerably over recent years. Gross foreign indebtedness reached a record level in 2003, more than 80% of GDP. A positive role is played by the services sector high surpluses are registered in services trade, and the sector has also a high proportion in the total FDI stock, primarily in the transport and telecom segment. 2002 manufacturing output reached only slightly more than 60% of its 1990 level; the single positive exception was the paper and printing industry. In comparison with the EU and the CEE countries, the output structure of Croatian manufacturing is more similar to the less advanced southern EU countries and also to Bulgaria and Romania. On the EU market Croatian manufacturing has been continuously losing export shares. As Croatia's trade deficit with the EU was growing, the deterioration was observable in most manufacturing branches, pointing to a widespread weakening of the country's international competitiveness. As for exchange-rate and fiscal policies, if increasing risks to macroeconomic stability are to be avoided, a move towards a more flexible exchange rate may still be advisable in order to enhance industrial competitiveness and to allow for a more supportive monetary policy. Further fiscal adjustments would be needed to promote investment and thus increase employment.

Suggested Citation

  • Vladimir Gligorov & Hermine Vidovic, 2004. "Croatia's Delayed Transition: Competitiveness and Economic Policy Challenges," wiiw Research Reports 304, The Vienna Institute for International Economic Studies, wiiw.
  • Handle: RePEc:wii:rpaper:rr:304
    as

    Download full text from publisher

    File URL: https://wiiw.ac.at/croatia-s-delayed-transition-competitiveness-and-economic-policy-challenges-dlp-274.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Eichengreen, Barry & Rose, Andrew K & Wyplosz, Charles, 1996. "Contagious Currency Crises," CEPR Discussion Papers 1453, C.E.P.R. Discussion Papers.
    2. Bonin, Holger & Rinne, Ulf, 2006. "Report No. 8: Evaluation of the Active Labor Market Program "Beautiful Serbia"," IZA Research Reports 8, Institute for the Study of Labor (IZA).
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Croatia; manufacturing; foreign trade; FDI; foreign debt; fiscal deficits; economic policy;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
    • P52 - Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wii:rpaper:rr:304. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Customer service). General contact details of provider: http://edirc.repec.org/data/wiiwwat.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.