• 19.1%

    unemployment rate

  • 20%

    women in Croatian Parliament

  • 76

    life expectancy at birth

  • 1.46

    total fertility rate

  • 440

    protected areas of nature

  • 61

    Internet users per 100 inhabitants

About Croatia

Introduction

Girl from Lika
Girl in traditional costume from the Lika region/Photo: Nena Lukin

Croatia gained independance from Yugoslavia in 1991. An armed conflict accompanied the break-up of the former Yugoslavia and Croatia fought the Homeland War from 1991-1995. Croatia today is a parliamentary democracy at the crossroads of Central Europe, the Balkans and the Mediterranean. With an estimated population of 4.4 million in 2011, it is divided into 20 counties and the City of Zagreb, its capital and largest city. The focal Croatian economic assets include the Adriatic coast, substantial agricultural areas, significant fresh water resources, along with the traffic infrastructure.

History

Dubrovnik
Dubrovnik ancient stone walls/Photo: Inia Herenčić

The lands that today comprise Croatia were part of the Austro-Hungarian Empire until the close of World War I. In 1918, the Croats, Serbs, and Slovenes formed a kingdom known after 1929 as Yugoslavia. Following World War II, Yugoslavia became a federal independent Communist state under the strong hand of Marshal Tito. Although Croatia declared its independence from Yugoslavia in 1991, it took four years of sporadic, but often bitter, fighting before occupying Serb armies were mostly cleared from Croatian lands, along with a majority of Croatia's ethnic Serb population. Under UN supervision, the last Serb-held enclave in eastern Slavonia was returned to Croatia in 1998. In April 2009, Croatia joined NATO; and will become a EU member state as of July 2013.

Challenges

Zadar
Zadar landmarks reflected in a puddle of water/Photo: Jerolim Vulić

Croatia has been mired in recession since 2009, and 2012 brought no recovery. GDP fell by 1.8%, after  stagnation in 2011 and declines of  1.2% in 2010 and 5.9% in 2009. The prolonged downturn pushed registered unemployment to 21.1% in December 2012. Young people are particularly hard-hit, with 40% under 25 jobless, and more than half of these seeking work for more than a year.

 

Prolonged economic distress and persistent structural weaknesses underline the development challenges that even a relatively prosperous country can face. Croatia's GNI per head of USD 13,748 qualifies it as a high-income economy. However, economic malaise, regional disparities, and institutional shortcomings continue to provide an argument for ongoing development support.

 

Croatia’s economic trouble reflects broader European weaknesses. However, many of the country’s problems stem from a long-standing failure by policymakers to enact reforms to improve competitiveness and encourage job-creating investment. Croatia’s business environment remains difficult.

 

The country ranks 84th of 185 countries in the World Bank’s Doing Business rankings, lower than any current EU member state and many neighbors in Southeast Europe. State ownership remains pervasive; benefits are poorly targeted; red tape strangles even the simplest transactions; labor laws remain highly restrictive. Labor force participation rates, at just 53%, are the lowest in Europe – lower even than in Greece.

 

As borrowing becomes more difficult and growth remains elusive, Croatia could be forced to make dramatic cuts in public-sector employment and spending, like other indebted European countries. Tourism remained the main hope for growth. Visitor numbers recorded heady increases in 2012, but revenues rose only marginally and failed to push the broader economy into growth.

 

In these conditions, EU funding is increasingly seen as Croatia's salvation, particularly in overcoming regional disparities and assisting war-affected areas.  Upon accession, Croatia will have access to EUR 1.5 billion per year. However, EU requirements are rigorous and preparations are delayed. The risk is that Croatia, like other new member states before it, will find it a big challenge to absorb EU funds.

Successes

Motovun
Town of Motovun in Istria/Photo: Inia Herenčić

A referendum in January 2012 put a seal of approval on Croatia's EU accession treaty that the outgoing government had signed, after six years of arduous negotiations, in December 2011. EU membership awaits Croatia on 1 July 2013. 

 

Croatia is in the process of shifting from a recipient of development assistance to a provider. As it marks 20 years of independence and looks forward to EU membership in mid-2013, it is also seeking to assume a more prominent role in international bodies, including the UN. Although the country's financial resources are limited, it is rich in experiences that are relevant for other countries, drawing both on its success in overcoming the consequences of conflict and on the lessons learned in the arduous process of European integration.

 

In the global 2013 human development index, or HDI ranking, Croatia ranks 47th of 187 countries and places in the “very high human development” category. This ranking puts Croatia behind most current European Union (EU) member states, including Slovenia (ranked at 21), the Czech Republic (28), Estonia (33), Slovakia (35), Hungary (37), Poland (39), Lithuania (41), and Latvia (44). But Croatia ranks ahead of Romania (56) and Bulgaria (57), as well as neighbors Montenegro (52), Serbia (64), the former Yugoslav Republic of Macedonia (78), and Bosnia and Herzegovina (81), all of which fall in the category of “high human development.“ 

 

Although Croatia’s HDI performance is strong on two indicators (gross national income per head and life expectancy at birth), its position overall is weakened by attainments in education, including a mean of just 9.8 years of schooling for adults over 25. When the depth of inequality is factored in, moreover, Croatia’s rating drops by 15.1 percent.

 

Croatia is mentioned as one of a number of emerging economies, including Kazakhstan, Russia and Turkey, which are now becoming providers of development assistance. Together, these emerging economies had aid disbursements exceeding $4 billion in 2011. These new donors are also active in sharing experience and knowledge with countries with a common heritage.

Country flag
Country map
Statistics
Capital
Zagreb
Population
4,417,781
Area (in sq. km)
56,594
Area (in sq. mi)
21,851
Language(s)
Croatian
At risk of poverty rate
20,6 %
Per capita income
USD 13,748
Human Development Index Rank
47 out of 187
 

Sources: Croatian Bureau of Statistics (Zagreb, 2012); Human Development Report 2013