National Development Strategy Croatia 2030: Roadmap for a Better Future

The preparation of Croatia’s new development strategy for the next decade is an opportunity to 
create a platform for a constructive dialogue among all stakeholders on the path Croatia wants to 
take in the fourth decade of its independence
. The previous national goals of independence, integration 
into the international community and accession to the EU have served as anchors for citizens’ aspirations 
and goals of policy making for over two decades. After these goals were achieved, and after the economy 
recovered from the protracted slump that followed the global financial crisis in 2008, Croatia now needs 
new goals and a new social consensus that will guide the economy and society through the next decade. 
The preparation of the development strategy is an obvious opportunity to advocate for a new common 
ground, new common vision and new social consensus on the type of future Croatia wants for itself and on 
the reforms and investment that are needed to make Croatia’s aspirations a reality. 

---

Croatia 2030: Roadmap for a Better Future
14 
Figure 1. Croatia continues to steadily recover after pro-
longed recession, but…
 
Figure 2
. …still significantly lags behind many CEE peers.
 
Source: CBS 
Source: Eurostat 
Figure 3. Raising growth potential will be essential for fos-
tering economic convergence, ... 
Figure 4
. …otherwise it could take decades to catch
-up with 
the rest of the EU. 
Source: EC 
Source: WB staff calculation 
Figure 5. While public finances are currently on a stable foot-
ing, …
 
Figure 6
. …large state presence still weighs on economic ac-
tivity and allocative efficiency of the economy. 
Source: CNB, Eurostat, EC 
Source: Eurostat 
-20
-15
-10
-5
0
5
10
15
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018f
2019f
2020f
2021f
%
GDP growth and contributions to growth
Private consumption
Change in inventories
Government consumption
Exports
LT
LT
LT
BG
BG
BG
EE
EE
EE
LV
LV
LV
HU
HU
HU
PL
PL
PL
RO
RO
RO
SI
SI
SI
SK
SK
SK
CZ
CZ
CZ
20
30
40
50
60
70
80
90
100
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
GDP per capita, percent of EU28, in PPS
Croatia
CEE
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
RO
PL
BG
EE
CZ
E
U
1
0
SK
LV
HU
LT
SI
HR
Contributions to potential growth, 2015-2018 
average
Labor
Capital
Productivity
Potential growth
Czech 
Republic in 
2018
Poland in 
2018
Slovenia in 
2028
Germany in 
2018
Austria in 
2018
Slovakia in 
2018
Slovenia in 
2018
10000
15000
20000
25000
30000
35000
40000
45000
50000
2
0
1
5
2
0
1
7
2
0
1
9
2
0
2
1
2
0
2
3
2
0
2
5
2
0
2
7
2
0
2
9
2
0
3
1
2
0
3
3
2
0
3
5
2
0
3
7
2
0
3
9
2
0
4
1
2
0
4
3
2
0
4
5
2
0
4
7
Convergence scenarios, GDP per capita, PPS
HRV @1.3%
HRV @2.0%
HRV @3.0%
36.838.2
40.341.338.737.439.3
48.7
57.8
64.4
70.1
81.2
84.7
84.481.0
78.0
74.8
-9
-8
-7
-6
-5
-4
-3
-2
-1
0
1
0
10
20
30
40
50
60
70
80
90
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
2
0
1
2
2
0
1
3
2
0
1
4
2
0
1
5
2
0
1
6
2
0
1
7
2
0
1
8
%
o
f 
G
D
P
%
o
f 
G
D
P
Fiscal performance, percent of GDP
Domestic debt
Foreign debt
Total public debt
Fiscal balance - RHS
Structural balance - RHS
30
35
40
45
50
55
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
in
%
o
f 
G
D
P
Expenditure-to-GDP ratio
Croatia
EU 10

---

Croatia 2030: Roadmap for a Better Future
15 
Figure 7. Unlocking productivity will also 
require improved governance, …
 
 
Figure 8
. …as well as overall business 
environment. 
 
Source: World Bank 
Source: World Bank 
Figure 9
. Aging and strong migration outflows…
Figure 10
. …as well as low activity rates require measures 
for raising both quality and availability of labor. 
 
Source: Drazenovic, Kunovac and Pripuzic (2018),
Source: WB staff calculation 
Figure 11
. The composition of investment has improved….
 
Figure 12
. … but improvement of 
investment climate and 
the efficient absorption of EU funds is needed to boost in-
vestment activity. 
 
Source: CBS 
Source: CBS, Eurostat 
0
20
40
60
80
100
120
R
O
M
BG
R
G
R
C
H
R
V
IT
A
H
U
N
PO
L
SVK
L
VA
ESP
C
YP
L
T
U
SVN
C
Z
E
F
R
A
ML
T
BEL
EST
PR
T
G
B
R
D
EU
IR
L
A
U
T
N
L
D
D
N
K
SW
E
L
U
X
F
IN
Worlwide governance indicators - 2019
2008
2018
0
50
100
150
200
Ease of Doing
Business Rank
Starting a
Business
Dealing with
Construction
Permits
Getting Electricity
Registering
Property
Access to credit
Protecting
Minority
Investors
Paying Taxes
Trading Across
Borders
Enforcing
Contracts
Resolving
Insolvency
Doing Business - 2019
Croatia
EU 15
CEE countries
0
10
20
30
40
50
60
70
80
C
ro
a
ti
a
R
o
m
a
n
ia
P
o
la
n
d
S
lo
va
ki
a
B
u
lg
a
ri
a
EU
H
u
n
g
a
ry
S
lo
ve
n
ia
L
a
tvi
a
L
it
h
u
a
n
ia
C
ze
ch
ia
E
st
o
n
ia
Employment and activity rates, LFS, 2018
Employment rate
Activity rate
-60000
-50000
-40000
-30000
-20000
-10000
0
2013
2014
2015
2016
Net emigration, thousands of persons
0
5
10
15
20
25
30
2002-2008
2015-2018
Investment and net FDI, percent of GDP
Share of gross fixed capital investment, % of GDP
Net FDI, % of GDP
-10
-8
-6
-4
-2
0
2
4
6
8
E
n
e
rg
y
A
c
c
o
m
. 
a
n
d
f
o
o
d
s
e
rv
ic
e
a
ct
.
O
th
e
r 
se
rvi
ce
s
IC
T
P
u
b
lic 
a
d
m
.,
e
d
u
.,
h
e
a
lt
h
M
in
in
g
a
n
d
q
u
a
rr
y
in
g
A
g
ri
.,
f
o
re
st
ry 
a
n
d
f
ish
in
g
M
a
n
u
fa
ct
u
ri
n
g
T
ra
n
sp
. 
a
n
d
st
o
ra
g
e
R
e
a
l 
e
st
a
te
B
a
n
ki
n
g
T
ra
d
e
C
o
n
s
tr
u
c
ti
o
n
Change in investment composition, (2015-
2017)/(2002-2008), percentage points

---

Croatia 2030: Roadmap for a Better Future
16 
Figure 13. Benefits of stronger growth will need to be 
shared among all members of 
society…
Figure 14
. …and particular attention needs to be given to bal-
anced regional development.
 
Source: WB staff calculations 
Source: WB staff calculation 
Figure 15. In addition to strengthening inclusiveness, sus-
tainable growth will also require environmentally friendly 
policies
…
 
Figure 16.
…
and investment. 
 
Source: European Environment Agency 
Source: Umweltbundesamt et al. (2017) 
3.2
3.7
3.4
4.3
4.7
6.2
7.2
7.3
7.3
6.1
5.5
4.4
0
1
2
3
4
5
6
7
8
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Pe
rc
en
t
Income-based poverty rate, poverty line (24.9 kuna per day in 2016 
prices), Percent, 2004-2016) 
HBS
EU-SILC
Index of multiple deprivation score (2015)
Hot-Spots
0
10
20
30
40
50
60
70
80
G
e
rm
a
n
y
A
u
str
ia
Sl
o
ven
ia
B
e
lg
iu
m
N
eth
er
la
n
ds
Ita
ly
Li
th
u
an
ia
Lu
xem
b
ou
rg
Sw
e
d
e
n
Den
m
ar
k
E
U
2
8
Fr
an
ce
UK
Ir
el
an
d
Fi
n
la
n
d
C
ze
ch
ia
Sp
ai
n
B
ul
ga
ri
a
H
u
ng
ar
y
Po
la
nd
Sl
o
va
ki
a
Est
on
ia
P
o
rtu
ga
l
C
ro
ati
a
La
tv
ia
G
ree
ce
C
yp
ru
s
R
o
m
an
ia
M
al
ta
Municipal waste recycled and composted, %
2004
2017
0
200
400
600
800
1000
1200
1400
1600
SK
SI
RO
HU
HR
CZ
BG
AT
in EUR
Per Capita Investments to 2040 for full UWWTD Compliance 
Per capita new investment need up to 2040
Per capita re-investment need up to 2040

---

Croatia 2030: Roadmap for a Better Future
17 
1.
Introduction 
1.