Improving the business environment to accelerate convergence in Croatia
Raising productivity growth is central to closing the gap with the incomes and well-being
enjoyed in many OECD countries. Croatia has internationally competitive firms, and
a dynamic economy with many young and potentially productive firms. However, overall
performance has been limited by the presence of many less productive firms and more
productive firms that often fail to grow. This likely reflects a business environment
that weakens competitive pressures and makes investments more costly and risky. Reducing
the burdens of lengthy and unpredictable regulatory procedures, resolving legal disputes
faster with a more efficient judicial system, and improving public sector integrity,
will be key for boosting productivity growth. Developing public equity markets and
expanding R&D support would improve access to finance for young and innovative firms.
State-owned enterprises play a comparatively large role in Croatia’s economy but tend
to underperform financially and in delivering goods and services. Improving their
governance, by strengthening the state’s oversight and governance arrangements, can
improve outcomes. This Working Paper relates to the 2023 OECD Economic Survey of Croatia.
Published on December 12, 2023
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