Boris Teški’s Investment Barometer: Why Neighboring Countries Still Attract More Investments than Croatia

At Lider’s investment forum ‘Lider invest – west’ held last week in Pula, consultant Boris Teški from Instar spoke about how to create a conducive environment for investments, starting from the thesis that the competitiveness of a country directly affects investments, especially ‘greenfield’ investments from both domestic and foreign investors.

He particularly warned that Croatia, despite progress on the competitiveness ranking, is still at the bottom of the column in some key indicators among 65 countries: knowledge transfer (59th position), foreign skilled workforce (59th), business agility (58th), international experience (57th), attitudes towards globalization (57th), and development and application of new technologies (56th), which all results in neighboring countries continuing to attract more foreign investments than Croatia.

He specifically drew attention to the contribution of gross investments to GDP growth of a modest 1.2 percent with a very unfavorable structure in favor of construction investments.

Teški also mentioned a new paradigm of investments in the post-COVID era and new geostrategic circumstances. This particularly relates to the criteria for evaluating investors (origin, long-term investment, investor strategy), as well as defining sectors and locations for investments, as Ireland does.

As the main factors positively influencing direct investments, especially foreign ones in Croatia, Teški cited geopolitical and legal security, currency and exchange rate stability. He emphasized that the size of the local market and growth potentials, access to raw materials, have never been the key to attracting investments to Croatia, but rather labor skills and average labor costs. The wave of emigration and the departure of a large number of working-age population has disrupted one of the key factors for attracting investors.

With changes in the taxation policy of reinvested profits, changes in immigration policy, and opening the market to highly qualified labor, the key to enhancing Croatia’s long-term attractiveness as a conducive environment for both domestic and foreign investors, concluded Teški in his investment barometer.