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Here is the study by Martina Culjak, a Croatian native who currently [May 2006] lives in San Francisco; this study presents the Croatian government's economic policies as compared to the MIEPA list of policies as outlined above. The study on Croatia by Martina Culjak shown immediately below. The ratings herein are based on the following rating scale:
RATING SCALE
5.0 Perfect Facilitation of Wealth Creation
4.0 Midway between Perfect and Neutral
3.0 Neutral Effect on Wealth Creation
2.0 Midway between Neutral and Obstructionist
1.0 Perfectly Obstructionist to Wealth Creation
[Rating scale copyright Mike P. McKeever, 2005. Used herein with permission]
To read a disclaimer about the analysis in this file, scroll to the bottom of the file.
Croatia - Martina Culjak
Comparison of Croatian economic policies to MIEPA criteria as prepared by native student of Croatia, Martina Culjak, studying in the US in May of 2006.
RATING SUMMARY
POLICY NUMBER RAW SCORE ADJUSTED SCORE POSSIBLE PERCENTAGE
1 5.0 15.0 15.0 100 %
2 5.0 15.0 15.0 100
3 2.0 6.0 15.0 40
4 1.0 3.0 15.0 20
5 3.0 9.0 15.0 60
6 4.5 13.5 15.0 90
7 3.0 9.0 15.0 60
8 3.5 10.5 15.0 70
9 2.0 6.0 15.0 40
10 4.0 12.0 15.0 80
11 3.0 9.0 15.0 60
12 1.0 2.0 10.0 20
13 5.0 10.0 10.0 100
14 4.5 9.0 10.0 90
15 3.0 6.0 10.0 60
16 4.5 9.0 10.0 90
17 1.0 2.0 10.0 20
18 1.0 2.0 10.0 20
19 2.0 4.0 10.0 40
20 1.0 2.0 10.0 20
21 1.0 2.0 10.0 20
22 2.5 5.0 10.0 50
23 4.0 8.0 10.0 80
24 2.5 5.0 10.0 50
25 4.0 8.0 10.0 80
26 3.0 6.0 10.0 60
27 3.0 6.0 10.0 60
28 3.0 6.0 10.0 60
29 2.5 2.5 5.0 50
30 5.0 5.0 5.0 100
31 4.5 4.5 5.0 90
32 3.0 3.0 5.0 60
33 3.0 3.0 5.0 60
34 4.0 4.0 5.0 80
TOTAL 104.0 222.0 375.0 59.2%
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INDIVIDUAL POLICIES
1. FREEDOM FROM INSIDE CONTROL 5.0
Croatian citizens are free from any control as long as their activities are legal. They can move easyly through the country and there is no restrictions of any kind on this policy.
Source: Talk with Mr. Branimir Culjak, dipl. economist
2. FREEDOM OF SPEECH 5.0
Since 1991 in Croatia is an indipendent country. It has democratic system and it's citizens are free to express their oppinions. After communizam in ex Yugoslavia, when you would be arrested for singing croatian song, this is something that everybody truly enjoyes nowdays. There are lots of demonstrations, and people express free oppinions in tv, on the radio and in everday occasions.
Source: personal opinion
3. EFFECTIVE FAIR POLICE 2.0
Whatever I read on internet wasn't even close to truth, so in this policy I will use just my personal experience. First of all, there is so much of police in croatia, what would be great if they were at least a little bit effective. Often the guys who work in police get the job through some connections and they don't take their job very proffesionally. Most often you can see policeman in Croatia sitting in a coffe bar at any time of the day. Second thing, even if they work a little bit, they catch someone braking the law, if you offer them couple hundred kunas extra, they will wink and it is all good. It is not in all cases like that , but mostly it is.
Source: personal experience
4. PRIVATE PROPERTY 1.0
To get the permission for building the private property in Croatia is really a long process. Everybody who I had a chance to talk to said to me that beureaucracy is so strong in my country that sometimes people just build homes without the permission, and acctually, just recently , the government had a big cleaning of such properties, they were grounded, but the fact is that is really hard to get permissions to start building, besides that it's hard to get a loan.
Source: www.infocroatiabiz.com; personal experience; talk with other people who had experience in this kind of situation
5. COMMERCIAL BANKS 3.0
To get the loan or financing in Croatia is very hard because you have to pass through a lot of red tape, sometimes , it takes up to 3-6 months to get a simple loan. However, as we move forward, there are new banks oppening which are now supporting oppenings of small and medium enterprises, and if somebody comes with the good plan , it is pretty easy for him to get the loan. So these are two sides of the story, first one is more common, so this policy will get medium score.
Source: www.trazim.hr; talk with accountant and economist from Croatia; my personal experience
6. COMMUNICATION SYSTEMS 4.5
Croatia has a very nice developed communication systems. It's public television is pronunced as the best one in Europe. It has a lot of interesting shows, and keeps people aware of happenings. In Croatia is very common to watch tv, and there are only few housholds without the tv. Also internet is very popular nowdays, lot of people are getting it because there are a new companies which are promoting cheap plans. Cellular phone is the main way to communicate, and maybe croats use it in exageration, because already lot of 8 year old kids are owners of one.
Source: www.cia.gov; personal experience
7. TRANSPORTATION 3.0
The transportation system in Croatia has a lot of things to be improved. Just recently building of lot of new roads was compleated, however, if you want to travel to some smaller town or village, it is very hard to access it, you will most likely have 2 to 3 stops and sometimes there is no transportation to certain part, although if you have your own car,you can access some parts easier, it is truth that the government put a lot of money in building the new roads.
Source: personal oppinion
8. EDUCATION 3.5
Regarding education, one thing is for sure, Croatia has very demanding system of education for all levels. If I compare it with US system I can say it is much more theoretical, informative and hard. Because most of the schools are free, system is created so students really have a hard work to do, and there is a lot of competition.
On Colleges and Universities is the same, but that is an old way to learn , because people don't learn a lot of practical work, just a bunch of information, which, without practice are useless. I think the education system should be improved and should be taken to the next level.
Source: Talk with a professor from Croatia; personal oppinion
9. SOCIAL MOBILITY 2.0
Croatia has mostly public universities, and it is very hard to get to one. Knowledge does play a big role, although, like always there is a lot of cheating in the way that if somebody bringes money to a certain proffesor, he/she might come more easy than somebody else. There is a lot of nipotisam also, and in some parts of the country you can hear how easyly people talk about how much does it cost to come on this position or that position.
Source: Personal oppinion
10. FREEDOM FROM OUTSIDE CONTROL 4.0
Croatia protects it's citizens, in fact, the government sometimes is doing bad thing with this law, because some of the war criminals need to be delivered to the Jail in Haag, but the country keeps postponing their delivery.
sources: www.voanews.com
11. FOREIGN CURRENCY TRANSACTIONS 3.0
"Payment system" shall comprise all payments in kuna among the participants in the payment system. "Payment system" shall also comprise payments in other currencies among the participants in the payment system, as provided by law. That is what Croatian National Bank agrees to, so we can see that not just kuna is accepted in transactions, although, from talk with proffesionals I found out that kuna is mostly used in bussines transactions.
sources:www.hnb.hr; proffesional experience; personal oppionion
12. BORDER CONTROL 1.0
Croatia has a lot of border control, as well as a lot of police and people who control incomming and outgoing goods, however, as in the whole country, there is also lot of corruption in these areas. Growing up next to the border, I can say there is a trumendous amount of prohibited things comming in the country. This policy deserves a score of 1.0.
sources:personal experience
13.CURRENCY 5.0
Croatian currency is kuna. Lately, it became a strong and stabil on the stock market. It is very hard to buy things with any other kind of currency, before doing so, you have to go to exchange office, and change your currency for croatian kuna, which is at this moment worth 5.96 for 1 USD.
sources: www.wikipedia.org; personal experience
14. CULTURAL, LANGUAGE HOMOGENITY 4.5
Croatia is inhabited mostly by Croats (89.6%). There are around twenty minorities, Serbs being the biggest one (4.5%), others having less than 0.5% each. The predominate religion is Catholicism (87.8%), with some Orthodox (4.4%) and Sunni Muslim (1.3%) minorities. The official and common language, Croatian, is a South Slavic language, using the Latin alphabet. Less than 5% of the population cites other language as their mother tongues.
After the war there have been made major attempts to join the cultures and make them respect each other. Young people don't even think about past, serbs and croats are together in school and nobody is talking what happened. Just one little part of the country, which has been affected the most with the war has still a lot of prejudice and little conflicts. But considering the whole country, we can look through the fingers and say that there is a homogenity in this country, because people who live there mostly have the same culture and same language.
sources: www.wikipedia.org; personal oppinion
15. POLITICAL EFFECTIVNESS 3.0
Next big goal for Croatia is joining the European Union. However, there are some requirements that are to be met before the country is accepted. Although there is a lot of corruption in the country, government has to show that there is a progress happening, they are trying to get money from outside of the country, pushing some projects to be done. Finally the majority of the road building is finished, now there is a lot of infrastructure to be built, if there wasn't so much corruption, lot more things could be done faster, but the important thing is that the progress is happening in different fields of economy.
sources: oppinion of economist in Croatia; my personal oppinion
16. INSTITUTIONAL STABILITY 4.5
Croatia is a new country, however there are a lot of big companies that are existing since the country has been part of Yugoslavia. Companies such as Croatian electric enterprise, wood industry, some big universities are very stabile and are existing for years.
source: Personal oppinion
17. HONEST GOVERNMENT 1.0
The government of Croatia is very corrupted as well. Unfortunately, politicians promise a lot before they come on thron, and after that it becomes so obvious they are using their positions to make a profit. You can see that government is buying constantly the newest cars, the most beautiful houses for the politicians and many other things that were hard to afford before. Recently I was listening a speech of one of the best economists in Croatia. His name is Velimir Srica, and he studied on Colombia University. He and his team tailored a plan for the country's faster recovery, but when they pruposed it to the people who rule the country, they refused to accept it. That is telling us how much government really cares for the country. That's why this policy is getting 1.0.
sources: Personal oppinion
18.COMMON LAW 1.0
Croatian judicial system is so corrupted. Police and all the other government owned bodies are in contradiction with the law. There are lot of laws which are brought frequently, however, not so many of them are being understood and followed. Citizens of Croatia are not informed and are being manipulated constantly, with the media system which is still not indipendent. However, as things are moving forward, this year on february 28th, Croatia got anticorruption advise office, which has the main purpose to inform the citizens about the law and their rights. So now they are oppening centers as well as free phone line for citizens to call. I hope this will help the citizens in fight against corruption. For now, this policy gets a very low score.
sources: Personal oppinion
19. CENTRAL BANK 2.0
The Croatian National Bank is the central bank of the Republic of Croatia. It enjoys operational autonomy and independence and is liable to the Croatian Parliament. In pursuing its legally prescribed objectives and tasks, the Croatian National Bank is obliged to co-operate with the Government of the Republic of Croatia, and other public bodies and to take actions, within its authority, to promote such co-operation. The primary objective of the Croatian National Bank, within the powers granted to it, is to achieve and maintain price stability. However,the Croatian Central Bank is still under big influence of government, therefore this policy will get a low score.
sources: CROATIAN NATIONAL BANK, www.hnb.hr; www.transparency.hr
20.DOMESTIC BUDGET MANAGEMANT 1.0
Croatian Government has been constantly causing deficit in domestic budget. Over several past years the government's net income was negative. For the last year results for budget were $14.4 bill. in revenues and $15.65 bill in expenditures. The inflation rate was 2.5%. As visible from these results, Croatian polititians don't have a good strategy how to manage the money and are bringing the country in constant deficit.
sources: www.worldbank.org; www.wikipedia.com/Economy_of_Croatia
21.GOVERNMENT DEBT 1.0
After the war and bad politics in that time Croatia is still recovering. The most current researches show that public debt is 41.7% of GDP and external debt $ 26.4 bill., while the total GDP for the same period is $ 50.3 bill. This shows us that Croatia has a lot of debt to pay before becoming a country with a strong economy. Therefore this policy is scored 1.0.
Personal oppinion: www.wikipedia.com/Economy_of_Croatia
22. ECONOMIC STATISTICS 2.5
Croatian government takes information from state department for statistics(www.dsz.hr) which many times doesn't give accurate results. Above all because they still use non standard mechanisms for surveying. Like in many countries reliability of the results is questionable. But in all, many statistic information and results are available for market research. I am scoring this policy 2.5 because there is still lot of things to be improved.
sources:www.wikipedia.com/Economy_of_Croatia23.
23. PROTECTION OF PUBLIC HEALTH AND SAFETY 4.0
Health care in Croatia is very good. Health insurance is privilege of many workers and basic medical treatment is available to people with the low income. Researches show that in 2004 under 5 mortality rate was 7, and infant mortality rate in the same year was 6. In the same year 98% of 1 year old children were immunized against tubercolosis.
sources:www.unicef.org/infobycountry/croatia_statistics
24. HIGH WAGE POLICIES 2.5
According to the statistics from 2004., Croatia had per capita income of $11 200 and 11 % of population below poverty line. Now,as the country is getting closer to Europe, the prices are raising and it is very hard for the people living there to afford some extra things beyond the neccesary ones. That is the reason why this policy is getting score of 2.5.
sources:www.wikipedia.com/Economy_of_Croatia
25. ENVIROMENTAL PROTECTION 4.0
One of the main requirements for enterance in EU for Croatia is clean environment. Recently Croatian Government invested a lot of money in cleaning the Adriatic Coast. The big influence of war on the enviroment of this beautiful country is still visible. Croatia is taking loans and getting support from other countries, there is also big markenting going on to encourage the citizens of Croatia to give their own contribuition to these efforts. The sooner the country achives standards of EU, sooner we'll be accepted and there will also be a big influence on tourism. Croatian government is well aware of this fact, therefore , there is a lot of investments in this field.
Source: www.mzopu.hr
26. STRONG ARMY 3.0
Croatia has very strong army. Lately, the government has put many efforts in modernization of old weapons and achieving the standards for joining NATO. There are many more soldiers then it is needed and in its efforts to join to the NATO, Croatia has gone over 1/3 of the domestic budget. But one thing is for sure, and that is that country deffinitely can defend itself from attack.
resources: Ministry of Defence, Croatia: www.morh.hr; www.hic.hr
27.FOREIGN TRADE IMPACT 3.0
Croatia's GDP in 2004 was $50.33 bil., and total of exports and imports in the same year was $ 24.546, which is almoust the half of the whole GDP. As we can see Croatia is still vulnerable to outside forces.
resources: en.wikipedia.org/wiki/Economy_of_Croatia
28.PROTECTION OF FOREIGN CURRENCY EARNING ENTERPRISES 3.0
Croatia protects and promotes national enterprises, however, the foreign enterprises are treated the same way and they are way more productive than the domestic ones.
I give middle score to this policy because although there is the way the things should be done, legal system in croatia is often ineffective and it creates an enviroment in which personal and political loyalty sometimes trumps economic merit in business and government.
resources:www.efst.com/management; My oppinion
29.MANAGEMENT OF FOREIGN CURRENCY BUDGET 2.5
Total of exports in 2004. for Croatia was $ 7.845 bil., and total of imports in the same year was $ 16.7 bil. . That means there was a deficit of $ 8.855 bil. in total balance. Also, reserves of foreign exchange and gold for that year were $ 8.563 bil. Croatia obviously needs to improve its exports and in that way create the stronger economy. For now, the balance is far from zero.
30. LAYERS OF COLLECTIVE ACTION 5.0
Being a young country, and experiencing democracy after so many years of slavery, croats are very happy to have a lots of different unions, it is very easy to establish some union, and there are also many people establishing political parties with different ideas about the system in the country. I don't think it is neceseraly a good thing, but at least it is showing that there really exists a freedom of expression, first time after many years. Therefore, this is the policy which gets 5.0 from me. One thing that croats are really good at, is talking.
resources: www.en.wikipedia.org/wiki/Socialist_Labour_Party_of_Croatia; personal oppinion and expirience
resources: en.wikipedia.org/wiki/Economy_of_Croatia
31. PRO BUSINESS CLIMATE 4.5
According to oppinions of some investors, Croatia is at this moment the most interesting country in the world to invest in. It has extremly positive business climate. It welcomes foreign investors, but favores the domestic ones, Croatian Goverment gives a lot of support to people who want to invest in new businesses.
The good facts about the climate and enviorment are: Favorable geographic position, developed entrepreneurship, tradition in doing business in the world, modern legal framework for foreign investments, low profit tax rate (25%), opportunities for the development of tourism and trade and skilled labor force. Therefore, I give the score of 4.5 to this policy, expecting that one day I will be able to tell you from my personal experience about investing in croatian tourism.
resources: www.nekretnine.org (How to do business with Croatia); My personal oppinion; and, talk with economist from Croatia, also with an investor from Usa
32. GOVERNMENT ENTERPRISES 3.0
Since gaining independence Croatia made significant progress in the implementation of its reform program, however, it still faces a number of important issues, including privatization of state-owned enterprises and banking reform. In this year, the Government constructed special plans which should bring more then 5 bil. kunas(almoust one bil. USD) . to the country. At this moment, the Government has partial ownership of 1010 enterprises.
In the same time the unemployment rate should decline from 13.3 to 12 % in the next year. Although the country is making progress, there is still lots of things to be taken care of, and that's why I will give a score of 3.0 with hope that the other students from Croatia will be able to score this policy better in the coming years.
resources: www.inogate.org/html/countries/croatia.htm, INOGATE, European Comission; www.mfin.hr/str/1/par/749, Ministry of Finance of Republic Croatia
33. INTERNATIONAL SECURITY AGREEMENTS 3.0
Croatia, as a country emerging from war, is trying to gain its recognition in the world. Therefore, Croatia is a friendly country and opened for help in the war situations for other countries. It has progressed from being a recepient of UN peacekeeping missions to a troop contributing country by sending its soldiers to participate in the UN peacekeeping opperation in Sierra Leone. Croatia now serves in 12 UN peacekeeping missions throughout the world. Croatia seeks to increase its involvement in the UN and has announced its candidature to become a member of the Security Council for the term 2008-2009. I think that Croatia has good intentions with helping the world to keep the peace. I am giving 3.0 to this policy, because I think that Croatian Government many times brings the decisions which are helpfull for some country, but risky for Croatia's own security, but I hope all this engagement will bring the results in the comming years.
resources: www.mfa.hr/MVP.asp?pcpi=1390, Ministry of Foreign Affairs and Euro
34. PROTECTION OF DOMESTIC ENTERPRISES FROM GOVERNMENT MANDATED COSTS 4.0
In order to encourage reconstructions and development of certain areas, the Government of Croatia is now issuing a decree, whereby certain taxpayers are extempt from the tax or the tax rate is reduced. In addition, taxpayers who come from the territory of special government protection may apply a higher protective interest rate (20 or 15 %) under certain conditions.
The Croatian Government also encourages and supports opening and developing of small and medium enterprises. Croatia has a well educated workforce, particularly strong in language skills! However, even with all these advanteges, I can say as a person who came from Croatia 1.5 months ago that there is still a lot of corruption, red tape and burocracy. In the 2004 Corruption Perception Index survey compiled by Transparency International, the intrernational watchdog organisation for corruption, Croatia recived an index score of 3.5 out of 10 (10 being highly clean).
If we can avoid all the bad side effects, there is a very good chance of developing a positive enviroment for business in Croatia. I am giving a score of 4.0 because I think that Croatian investors and companies are favored by the government. Becaue they are so valuable in this time when the country is trying to recover from the effects of war.
resources: www.state.gov,US department of State,Investment Climate statement(Croatia); www.southeasteurope.gov, Taxation in Croatiapean Integration, 1997-2005
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