Negative trends in the Croatian economy are evident, and one does not need to be an economist to recognize the deep structural economic and political crisis.
It should be clear to many that the state of the economy is a result of years of creating uncompetitive and inefficient economic structures. Special analytical skills are also not required to recognize the responsibility of the political elite for the position in which the Croatian economy and society as a whole find themselves today (we would say undeservedly). No previous government, especially not the current one, can be exempted from responsibility. However, today’s ruling politicians show a high degree of disinterest in economic problems (acting as if these problems will resolve themselves) and a deep ignorance of the role of overall government policies in stimulating the economy and creating new jobs.
The Rise and Fall of Slovenia d.d. According to many indicators, the political elite as a whole simply lacks both the appetite and the capacity to find economic-political solutions that would initiate a new cycle of economic growth and job creation. And this must be today, when the foreign policy position is stable and full EU membership is secured, the fundamental task of Croatian politicians. The Slovenian political elite, for example, very successfully utilized initial competitive advantages at the beginning of the transition (the structure of the Slovenian economy at that time was competitive) and managed to unleash available potentials towards dynamic economic growth that positioned that country, measured by national income, at the top of the transitional countries of Eastern Europe. The Slovenian economic model was based on politically controlled banks and state and quasi-state enterprises. This economic model, once very successful and referred to as ‘Slovenia d.d.’ (which signifies managing the national economy as a single state enterprise), is rapidly disintegrating under the pressure of the economic crisis.
A similar economic model was built by the Croatian political elite, albeit less successful in the international market, but very successful in attracting financial capital, which bet on positional rent and capital gains that could arise from such a position with Croatia’s entry into the EU. Government policies over the past decade have strongly encouraged capital imports, which bypassed the industrial sector and focused on state investments and investments in the private sector’s real estate. The consequences are more than clear: the growth of public and external debt has become an insurmountable obstacle to future economic growth, and past investments have not affected the competitiveness of the Croatian economy in the globalized market. Therefore, the previous model of government economic policies is simply no longer sustainable. Here, analytical discussions about the state of the domestic economy must come to a halt.
