Ivo Bićanić

EU Accession and Croatia's Two Economic Goals: Modern Economic Growth and Modern Regulated Capitalism

Croatian society in general, and the economy in particular, are facing two major challenges: (1) the development of Modern Economic Growth (MEG), and (2) systemic change to Modern Regulated Capitalism (MRC). Neither of these challenges is new; but now, for the first time, they appear in the context of EU membership. The paper does not offer an unconditionally optimistic view. Accelerated economic convergence or MEG are not necessarily imminent, and EU membership may not necessarily lead to immediate Europeanization. To keep the process on track, the paper argues that three short‐term goals deserve a central place: (1) consolidating support for market plus democracy types of reforms, (2) defining a proactive growth policy and increased growth rates and (3) Europeanization of the country. While there are many reasons to hope for a favourable outcome, we argue that the ‘jury is still out’ on both issues; and for Croatia, the biggest danger is the possibility of EU membership without MEG or MRC.

Multiple Shocks and Changes in the Development Gradient of Croatia’s Regions

Over the course of the past two decades Croatia has experienced four large political and economic shocks. The first was the transformation which resulted in self-managing socialism being replaced by a capitalist system. This process began in Croatia in 1989 (while Croatia was still part of Yugoslavia) and many argue it is not yet completely finished. The second shock was independence: Croatia was one of the seven new states eventually spawned by the break-up of Yugoslavia in 1991. The third shock was the Homeland war during which Croatia’s independence was contested and successfully defended in the second of the Four Wars of the Yugoslav Succession. The Homeland war (the name it is given in Croatia) lasted four years — from 1991 to 1995. The fourth shock started with the EU integration process. Croatia signed the Pact on Stability and Accession in 2001, it became a candidate country in 2004 and the process accelerated when membership negotiations started in 2005. Of course, these shocks were not purely external (indeed, only one, the war, was external). The generation of these shocks — and most certainly their form — was primarily a result of internal political economy developments and domestic policy choices that were taken in a given setting and path dependency. To a somewhat lesser (but far from insignificant) extent they were imposed externally through various forms of conditionality.

A NUTS2 View of Regional Inequality in Croatia, 1968–2008

Croatia is a small economy. This is true both with respect to its GDP (pre-recession, 2008 GDP was €47.4 billion, only 25% of almost equally populated Finland), population (with 4.4 million inhabitants according to the 2011 population census, it is approximately the size of metropolitan Milan or St Petersburg) and area (with an area of 56,542 square kilometres, it is slightly below the size of Lake Michigan). Furthermore, it is sparsely populated (with 81 persons per square kilometre, it is at 72% of the EU average) and ranked as an upper middle-income economy (with US

Poverty and development in Southeast Europe

17,336 per capita in PPP in 2008, it is 65% higher than the World Bank average for this income group and ranks 64th on the World Bank GDP per capita PPP ranking). With regard to its population the whole country could easily be one NUTS2 region (out of 271 NUTS2 regions in the EU27, 13 have a larger population and 79 a larger GDP).

Cox Regression Models for Unemployment Duration in Romania, Austria, Slovenia, Croatia, and Macedonia

The least fortunate individuals, families, social groups and regions of societies are called ‘poor’, as are the least developed economies. Today, societies recognize five important features of poverty. First, it is widespread, existing even in the richest societies. Second, the poor are usually considered neither responsible for their state of poverty nor able to extricate themselves without help. Third, economic development does not solve economic poverty. Without intervention, poverty may change with economic development, but it does not disappear. Fourth, povertys far‐reaching impact on the economy is negative and large enough so that it cannot be disregarded; this makes poverty a social problem. As a result, all societies have a system of redistribution to help their poorest members. In modern societies, this redistribution occurs through a transparent institutionalized system of transfers, which leads to the fifth feature: the system of redistribution is a policy choice that is never neutral. The way society helps its poorest members also significantly influences society and the economy. Under different circumstances and for different policy goals, different systems may be most appropriate. These features make a discussion of poverty especially important for Southeast European economies in transition. In this poorest region of Europe, poverty is the main generator of instability, and the transition process generates extensive poverty. An understanding of poverty is crucial to understanding the future of Southeast Europe. This paper attempts to untangle aspects of this complicated issue in the context of contemporary Southeast European economies. The first section discusses the relationship of economic transition to poverty and economic inequality in the region. The second surveys the limited available data that supports these links. The third discusses the unavoidable ambiguities of poverty in an economic policy context, followed by a section that treats poverty issues in Southeast European transition economies in light of their growth perspectives. The final section offers some tentative conclusions on the role poverty issues will play in the future of these economies.