Croatia

   

Policy Performance

#34

Economic Policies

#39
Despite notable recent gains, Croatia’s overall score for economic policies places it in the bottom ranks (rank 39) in international comparison. Its score on this measure has improved by 0.8 points since 2014.

The robust growth levels seen in recent years have slowed somewhat, but remain steady. However, investment and gross capital formation rates have fallen. While public debt levels remain high, with a significant share held externally, deficits have been replaced by small surpluses, and the country has exited the EU’s excessive deficit procedure.

Unemployment rates have fallen to around 8.4%. Employment rates are low but rising, while wages that fell or stagnated during the recession have begun to rise. Labor demand is skewed toward low-skilled jobs, driving university graduates in particular abroad. However, emigration among the working-age population more generally has resulted in worker shortages in key sectors.

A new round of tax reforms has reduced VAT on key consumer items, and reduced the VAT rate overall. The personal-income tax has limited redistributive effects. A planned property tax has been repeatedly postponed. Private-sector R&D rates are growing, but research expenditures remain very low by EU standards.

Social Policies

#36
With significant inclusion concerns, Croatia falls into the bottom ranks (rank 36) in the area of social policies. Its score on this measure has improved by 0.1 point relative to 2014.

The education system is inefficient, with outcomes lagging behind EU standards. An experimental curriculum reform is underway, with a particular focus on improvements in STEM subjects. Poverty and social exclusion remain major problems, with the fragmented social-transfer system having little impact.

The health care system is inclusive, but quality varies widely by region, and the system runs persistent deficits. Primary care doctors took to the street during the review period to protest planned reforms. While the employment-rate gap between men and women has fallen to below the EU average, labor-market discrimination against younger women and women with children remains widespread.

The pension system is not fiscally sustainable, though ongoing reforms have improved the situation somewhat. Reintegration of ethnic-Serbian returnees remains a problem. The country has hardened its border policies, with police seeking to keep migrants from crossing the border with Bosnia-Herzegovina.

Environmental Policies

#24
With new programs in the early phases of implementation, Croatia falls into the lower-middle ranks (rank 24) with regard to environmental policies. Its score in this area has declined by 0.1 point relative to 2014.

The country’s environmental policy has been strongly shaped by EU accession. Waste management, water management and air quality are the most important issues. However, program implementation has been slow, with considerable investment still needed to reach goals in these sectors.

The environmental reporting system was improved in 2018, but regulatory enforcement has not been a strong focus.

The country supports U.N. environmental programs, and works closely with the European Union on related issues. It has reduced its emissions of greenhouse gases, with renewable sources accounting for a 20% share of energy consumption.

Democracy

#35

Quality of Democracy

#34
While electoral procedures are largely fair, Croatia receives comparatively low scores (rank 34) with regard to quality of democracy. Its overall score in this area has improved by 0.1 point relative to 2014.

Recent campaign-finance laws have increased transparency, but enforcement is difficult, with many means of evading legal restrictions available. Public funding of parties has been reduced. Political influence over the media is strong, with reporters who criticize the government subject to dismissal. Media pluralism is quite limited.

Access to government information has substantially improved. Civil rights are formally protected, but Roma and ethnic-Serbian citizens face discrimination, and human-rights advocates are criticized. Active disinformation campaigns have targeted the LGTB community, undermining protection of their rights. Domestic war-crimes prosecutions remain biased.

Regulation is sometimes inconsistent and changes often. Courts lack independence, and a significant case backlog persists. Corruption remains a serious political problem, with high-profile politicians and public figures indicted, but with final sentences slow to be brought.

Governance

#37

Executive Capacity

#39
Lacking a smoothly functioning administration, Croatia falls into the bottom ranks internationally (rank 39) with respect to executive capacity. Its score in this area has declined by 0.4 points relative to its 2014 level.

Strategic decisions are often made on a pro forma basis, and lack follow-through. A Prime Minister’s Office unit tasked with coordinating line ministry polices has limited capacity to provide policy analysis. Interministerial coordination and communication is of poor quality, requiring frequent prime-ministerial intervention.

EU accession has spurred RIA development, though only a small share of bills undergo the full RIA procedure, and the public has little interest in the process. Ex post evaluations are rare. Consultation with outside stakeholders has typically remained a formality.

Enforcement of regulations is politicized and subject to corruption, creating conditions of clientelism and regulatory capture. An administrative reform has led to the abolishment of dozens of public organizations and agencies. The digitization of the public administration is a goal, but has proceeded slowly.

Executive Accountability

#34
With several notable weaknesses, Croatia scores relatively poorly (rank 34) with regard to executive accountability. Its score on this measure has risen by 0.1 point relative to its 2014 level.

Citizens’ policy knowledge is on average comparatively limited. While most media are focused on entertainment, a few newspapers do provide good coverage of political and economic affairs. Independent, objective broadcasters are capturing market share from the partisan public broadcaster.

Parliamentarians have limited resources. Oversight powers are formally sufficient, but sometimes disregarded by ministers. The Audit Office is independent, with a wide-ranging scope of activity, but the government tends to react slowly to Ombudsman requests. A data-protection authority is working to implement the GDPR, but has noted that many companies essentially ignore compliance obligations.

Political parties are dominated by their leadership ranks. Economic-interest organizations are influential, with some actively pushing for reforms needed to keep the country from falling behind regional rivals. A number of other interest organizations have sophisticated policy-development capabilities.
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