Why is Croatian macroeconomic convergence towards the EU missing?

Commisioned by: The Institute of Economics, Zagreb
Project duration: October 1, 2019–October 1, 2022
Project manager: Željko Lovrinčević
Collaborators: Andrea Mervar, Davor Mikulić, Goran Buturac, Maruška Vizek, Tajana Barbić, Marina Tkalec

Croatia is lagging behind regarding macroeconomic convergence towards the EU in terms of nominal and real convergence. Other NMS had significant economic gains from EU membership. An obvious question arises: why is Croatia lagging behind? On one hand, convergence speed depends on long term growth dynamics. On the other hand, long term growth depends on demographics, technological progress and capital accumulation. Economic literature has been dealing with the issue of global financial crisis' consequences (2008/09) and its impact on reduction of GDP potential growth and convergence.

This study will address some of the potential causes of Croatia's lagging behind with macroeconomic convergence. Potential sources are: economy structure, international competitive position, slow economy digitalization, failure in attracting FDI, and a lack of international arrangements concerning economic reforms.

RESEARCH AREAS: Macroeconomics; Croatian economy