All other nations in the region of the Western Balkans, with exception of Albanians, are more religious than Croats. They elected Ivo Josipovic, a declared non-believer and agnostic, as president of the country and he continues to be Croatia's most popular politician. Now that Croatia is finishing its accession talks, the government and other political forces will have to convince their citizens that it is worth becoming an EU member, something that is not easy to do.
Croatian citizens will most probably vote in favour of joining the EU in the referendum but most have no illusions that membership will change their lives. Surprisingly there is more support for Croatian membership of the EU among existing EU citizens than among Croatians themselves. Germany was the biggest supporter of Croatian independence back in and it was ready to recognise it without the support of other EU members.
This was not an easy move just two years after German unification, when many others in Europe were suspicious of how a bigger Germany would act at European level.
Some say that the only time Germany might have regretted its recognition of independence was in summer , when Croatia beat Germany in the quarter finals of the World Cup in France. This is different from the case of the EU's two newest members Bulgaria and Romania. Many countries believe that admitting them to the EU in was a mistake as they were not ready, but no-one admits this officially. Since they consider Bulgaria and Romania a bad example they wanted us to be a good example.
That's why it took so long for Croatia to finish the negotiations. When Bulgaria and Romania joined, this was welcomed in Croatia and the rest of the Balkans.
It was understood as 'if they can do it then everybody, even us, can do it as well'. A better business climate will help to stem the growth of imbalances, shift gears of the convergence machine, and make Croatian enterprises globally competitive. The need for change in this front is pressing as Croatia lags its comparators when these entered the EU.
What does it take? Croatia must make it easier to create, operate and protect business activities. And Croatia does much worse than the comparator group of countries in many of these areas. A concerted effort to improve these three areas in particular would yield big benefits.
Despite high rates of technology adoption, and the high level of research in universities and scientific think-tanks, the ability to forge research into commercially viable manufacture has eluded Croatia. Croatia spends about 0. Labor markets that need modernization.
These results suggest a need to reduce labor market rigidities to ensure that it contributes to higher and sustained economic growth. Croatia needs improvement in raising labor productivity and generating employment. Croatia in particular lags in its ability to increase labor productivity.
Business regulation plays an important role in the process of creating jobs and increasing productivity. Reforms in these areas can be especially important in transforming small and medium enterprises into larger firms. With a declining population, and with an exchange rate essentially tied to the Euro, increasing labor market flexibility in order to increase productivity is key. A regulatory environment conducive to private sector growth is also closely related to the success in expanding foreign markets.
Thus, reforms that make it easier for firms to export and run their business operations are likely to lift the export performance of an economy and overall employment. Only with radical change can Croatia counteract a rapidly aging population and a shrinking labor force, by encouraging people to participate—especially among women, youth and the elderly.
This must be aligned to ensure that work pays for both the employee and the employer, requiring changes in labor taxation and social benefit design. Disincentives to labor force participation, such as the generous availability of early retirement, must be addressed, and incentives for participation, for instance, improved child care facilities that allow women to better juggle multiple roles, and allowing older workers to phase in retirement on a part-time basis.
And too large a Government. Croatia will also have to make big changes in how it organizes government. European governments are too big, and Croatia is no exception. Indeed, Croatia currently spends more than some of the best performers among emerging European countries—the Czech and Slovak Republics. The highest priority must therefore be public expenditure consolidation. To ensure fiscal sustainability, adjustments to expenditures must be accompanied by structural reforms—reforms to the pension and health systems, modernized social assistance systems and a more streamlined public administration.
Expenditure adjustments mean better targeting spending for the truly needy and vulnerable. What governments do and how they finance their activities are as equally important as the size of government. Countries like Sweden show that big governments can go together with thriving, dynamic economies. The option is either to become more efficient or to become smaller. But Croatia has not done well in either front. As on example, social transfers are, as a percent of GDP, above their level. Two important sectors for the country, two important EU policies with which Zagreb has had to deal — not always with the best outcome, due to lack of preparation and poor management of negotiations.
Paul Stubbs, British sociologist at the Institute of Economics in Zagreb, lives in Croatia for 25 years and claims, supported by figures, that Croatia did not benefit the EU membership, while its citizens remain indifferent on the issue. Over the past five years, Croatia has recorded a steady decrease of its population. The trend in focus. Two years after its entry into the European Union, Croatia saw the arrival of the first waves of refugees and migrants.
With the change of government in , the first instances of solidarity gave way to rejection and violence.
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