This section focuses on the basic characteristics of the economy of the Republic of Croatia, as well as on market information.
Listed as the basic features of Croatia's economy are industry, agriculture, forestry, fishing industry and food, drink, and tobacco production, construction, transport and communication, and trade.
In describing basic macroeconomic indicators, a special emphasis was paid to gross domestic product, balance of payments, inflation, foreign exchange reserves, foreign debt, unemployment, credit rating, and trade with the rest of the world.
In terms of primary goals of economic policy of the Republic of Croatia, a special position is given to foreign investments which are very important for the future development of the country and further restructuring and modernization of the economy. In this context, areas of investment environment, legal framework for investments and investment prospects in Croatia’s economy are described.
Croatia is included in the group of countries with small and open economies, which are largely connected to other foreign markets. The priority of Croatia’s economic policy is the continuation of making a stabile and strong market-oriented economy which is competitive in the global market, constant reinforcement of macroeconomic stability and the continuation of structural reforms for the purpose of securing stabile and sustainable economic growth, increase in production, especially import and increase in employment. The particular emphasis is on creating a favourable business environment harmonized with the business environment prevalent in the European Union, further development of market economy, stimulation of private investments, promotion of international competitiveness, and entrepreneurial and market freedom.
HITRO.HR service was introduced in 2005 as a means of strengthening entrepreneurship with the specific goal of simplifying administrative procedures, and in January 2006 Croatia's Tax Administration activated e-PDV, a service which allows all the users who are in the VAT system to file their VAT tax return in electronic format. Also, the Government started the e-Hrvatska programme, using which they plan to introduce information systems into the entire education system and also one of the plans is to introduce on-line access to health service, which would enable better medical service. Future plans include designing and setting up networks, which would enable on-line access to civil service, health service, education service, and justice before 2007. During 2006 an initiative was started together with the science community in Croatia in order to advance the cooperation between Croatia’s economy and science.
Creating conditions for sustaining high economic growth rates was also initiated, especially through enhancing competitiveness and flexibility of the market, which will help in tacking the problem of unemployment. Through the growth in production and export and through stimulating export activities, restructuring large Croatian companies owned by the state and increase of competitiveness of Croatian products on the global market will have a positive effect on Croatia’s foreign debt and balance of payments deficit.
Basic economic goals include export growth, quality standards introduction, meeting ecology requirements and achieving expenditure efficiency. Climate, relief, and soil diversity enables a wide agricultural range of products, while low level of pollution is good for the development of ecological production. Croatia, as one of the significant tourist destinations in the Mediterranean, has a long tourist tradition and big development prospects. During the past couple of years Croatia is classified as one of the European destinations with the highest growth rate. Construction restructuring trend in Croatia, relevant during recent years, is in accordance with modern European trends, where it is easier for small and medium companies to adapt to modern market requirements. An advantageous geographical position provides opportunities for the development of transport infrastructure and activities as one of the important factors of the entire economic and social development of the country.
One of the primary goals of the economic policy of Croatia’s government is to create a stimulating business environment, harmonized with the standards used in the EU and countries with developed market economies. The Government plans to achieve its dedication to reforming national economy, with the goal of attracting foreign investors to Croatia, on domestic, as well as on international level.
A Directorate called Investment Promotion and Export Directorate at the Ministry of Economy, Labour and Entrepreneurship is responsible for the implementation of the Law on incentives for investments and for the granting incentives, tax and customs benefits to domestic, as well as to foreign investors.
Trade and Investment Promotion Agency has been active since 2002 and its basic activities are directed towards proactive searching, informing, attracting and realization of qualified investment projects which include production of goods and services with high added value intended for export, as well as projects which will generate new jobs. Since the Act on the Termination of the Croatian Trade and Investment Promotion Agency proposed by the Government of the Republic of Croatia became active with the 8th of November 2010, all Agency's activities are transfered and transacted by the Investment Promotion and Export Directorate at the Ministry of Economy, Labour and Enterpreneurship of the Republic of Croatia.
Export orientation is necessary for a successful economy, higher GDP growth, higher standard of living, and more jobs. In January 2007 Ministry of Economy, Labour and Entrepreneurship in cooperation with the association called Croatian Exporters, Croatian Chamber of Economy, Croatian Chamber of Trades and Crafts, Croatian Employers’ Association and Croatian Bank for Reconstruction and Development presented the “Croatian Export Offensive” (Hrvatska izvozna ofenziva - HIO). The main objectives of the strategy are directed towards solving crucial issues for export growth, such as small capacities, production fragmentation, and insufficient competitiveness. The strategy gets a special meaning from the founding of six export clusters, namely: water, small shipbuilding, textile and clothing, ICT solutions, wood and furniture, and mariculture and Croatian fish.
It can be expected that the EU accession negotiations will have a positive effect on a larger inflow of foreign capital, especially into greenfield investment projects, which should eventually increase the economic growth and global competitiveness of the Croatian economy.
Croatia achieved its greatest accomplishment on the international level on October 4, 2005 by starting the EU accession negotiations, after a positive avis from the Council of the European Union. The screening process is currently in progress. Croatia is also, as a member of the WTO, in the process of active harmonization of its legislation in accordance with the standards of the WTO. Croatia has signed the Stabilization and Association Agreement with the EU, and this agreement came into force in 2005.
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