Post by Bozur on Jun 26, 2014 21:48:16 GMT -5
The EU’s new economic laggard
Tony Barber | Jun 23 10:11 | 4 comments |
Croatia's economy is not so sunny
The slow, painful healing of the Greek economy after a catastrophic debt crisis raises an interesting question. Which country now holds the title of No.1 Economic Basket Case of the European Union?
The answer is surely Croatia. It is a small country (4.3m people, not even 1 per cent of the 28-nation EU’s 506m inhabitants) that did not join the EU until last July. It is not a eurozone member. It has gorgeous islands and beaches where life seems distinctly pleasant. So Croatia and its economic troubles often slip under everyone’s radar.
But Croatia is now in its sixth successive year of recession. During this time it has lost almost 13 per cent of its gross domestic product. Unemployment is about 17 per cent of the workforce, and among young people the rate is close to 50 per cent.
This is a social disaster not very different from what has happened over the past five years in Greece and Spain. In Croatia, as in Greece, there is an inefficient public sector that keeps people in jobs that serve no obvious public purpose beyond disguising true levels of unemployment. This problem is magnified by a shortage of private sector companies capable of creating jobs by competing successfully in EU markets.
Clearly, the general weakness of the European economy explains some of Croatia’s difficulties. But not all of them. When Moody’s, the credit rating agency, cut Croatia’s sovereign debt to junk status last year, it cited the government’s “reform inertia” as one reason for its action. It was a fair assessment.
The centre-left government lacks the energy, desire and self-belief to carry out essential reforms such as shaking up the state-owned sector and making business conditions attractive for foreign direct investors. Privatisation programmes are going nowhere. But when the conservative opposition was in power, its record was little better.
They all spend too much time playing politics for its own sake – a point illustrated earlier this month when the ruling Social Democrats expelled from their party a former finance minister, Slavko Linic, who had dared to speak up in favour of economic reform.
It is no coincidence that states such as Macedonia, Serbia and Slovenia – which, like Croatia, once formed part of communist Yugoslavia – have also found it hard to embrace economic reform over the past 20 years. Traditions of public sector jobs tied to party political patronage die hard in south-eastern Europe.
EU membership is supposed to help central and eastern European countries by supplying them with billions of euros in regional aid funds, to be invested in infrastructure modernisation and other such projects. The star performer has been Poland, which has put its money to excellent use (much as Spain did in the 1990s).
However, Croatia proved exceptionally slow in using funds that the EU made available for development in the seven years before it joined the bloc on July 1 2013. There is a crying need for more efficient managers and a predictable legal framework.
The efficient absorption of EU funds will be crucial to lifting Croatia out of its rut. But most of all, what Croatia needs is a breath of fresh air in its political and administrative classes. It would be asking too much to expect them to admit their past shortcomings. But can they not at least roll up their sleeves and start the long-overdue process of modernising the Croatian state?
link
Reply:
Since its inception CROATIA suffers from incompetent governments. To date, CROATIA has not had governments with even basic managament skills. To a large extent, the country was governed by people bred by the public system which itself was/is just partially reformed public sector of ex Yugoslavia (that's why it is so similar when compared among Slovenia, Serbia, Croatia, etc.) Now, we always blame politicians. BUT: I want to give a different perspective. No doubt about it, CROATIAN politicians are probably the least competent, entrepreneurial, educated and experienced social group in CROATIAN society (some of them would probably even fail a basic test of understanding about what is 'criminal behavior'. Many of them are simply ignorant nationalistic morons...). HOWEVER, it is CROATIAN people that choose these politicians, not the politicians themselves. Hence, people repetitively choose wrong people to lead them. This brings us to the conclusion that the root cause of CROATIAN economic disaster, if I may call it that way, is in lack of CROATIAN citizens' political education, low level of political responsiblity, low turn out for national elections as well as overall low propensity to demand for reforms. Everytime there is a proposal to reform a part of the public sector - there is a big strike in the country and people seem to support these strikes. So, every nation's government is a mirror image of that nation's electional decisions. CROATIANS seem to be making wrong decisions for 20 years and don't seem to learn anything from it. Sad but ture, at least in my view.
Tony Barber | Jun 23 10:11 | 4 comments |
Croatia's economy is not so sunny
The slow, painful healing of the Greek economy after a catastrophic debt crisis raises an interesting question. Which country now holds the title of No.1 Economic Basket Case of the European Union?
The answer is surely Croatia. It is a small country (4.3m people, not even 1 per cent of the 28-nation EU’s 506m inhabitants) that did not join the EU until last July. It is not a eurozone member. It has gorgeous islands and beaches where life seems distinctly pleasant. So Croatia and its economic troubles often slip under everyone’s radar.
But Croatia is now in its sixth successive year of recession. During this time it has lost almost 13 per cent of its gross domestic product. Unemployment is about 17 per cent of the workforce, and among young people the rate is close to 50 per cent.
This is a social disaster not very different from what has happened over the past five years in Greece and Spain. In Croatia, as in Greece, there is an inefficient public sector that keeps people in jobs that serve no obvious public purpose beyond disguising true levels of unemployment. This problem is magnified by a shortage of private sector companies capable of creating jobs by competing successfully in EU markets.
Clearly, the general weakness of the European economy explains some of Croatia’s difficulties. But not all of them. When Moody’s, the credit rating agency, cut Croatia’s sovereign debt to junk status last year, it cited the government’s “reform inertia” as one reason for its action. It was a fair assessment.
The centre-left government lacks the energy, desire and self-belief to carry out essential reforms such as shaking up the state-owned sector and making business conditions attractive for foreign direct investors. Privatisation programmes are going nowhere. But when the conservative opposition was in power, its record was little better.
They all spend too much time playing politics for its own sake – a point illustrated earlier this month when the ruling Social Democrats expelled from their party a former finance minister, Slavko Linic, who had dared to speak up in favour of economic reform.
It is no coincidence that states such as Macedonia, Serbia and Slovenia – which, like Croatia, once formed part of communist Yugoslavia – have also found it hard to embrace economic reform over the past 20 years. Traditions of public sector jobs tied to party political patronage die hard in south-eastern Europe.
EU membership is supposed to help central and eastern European countries by supplying them with billions of euros in regional aid funds, to be invested in infrastructure modernisation and other such projects. The star performer has been Poland, which has put its money to excellent use (much as Spain did in the 1990s).
However, Croatia proved exceptionally slow in using funds that the EU made available for development in the seven years before it joined the bloc on July 1 2013. There is a crying need for more efficient managers and a predictable legal framework.
The efficient absorption of EU funds will be crucial to lifting Croatia out of its rut. But most of all, what Croatia needs is a breath of fresh air in its political and administrative classes. It would be asking too much to expect them to admit their past shortcomings. But can they not at least roll up their sleeves and start the long-overdue process of modernising the Croatian state?
link
Reply:
Since its inception CROATIA suffers from incompetent governments. To date, CROATIA has not had governments with even basic managament skills. To a large extent, the country was governed by people bred by the public system which itself was/is just partially reformed public sector of ex Yugoslavia (that's why it is so similar when compared among Slovenia, Serbia, Croatia, etc.) Now, we always blame politicians. BUT: I want to give a different perspective. No doubt about it, CROATIAN politicians are probably the least competent, entrepreneurial, educated and experienced social group in CROATIAN society (some of them would probably even fail a basic test of understanding about what is 'criminal behavior'. Many of them are simply ignorant nationalistic morons...). HOWEVER, it is CROATIAN people that choose these politicians, not the politicians themselves. Hence, people repetitively choose wrong people to lead them. This brings us to the conclusion that the root cause of CROATIAN economic disaster, if I may call it that way, is in lack of CROATIAN citizens' political education, low level of political responsiblity, low turn out for national elections as well as overall low propensity to demand for reforms. Everytime there is a proposal to reform a part of the public sector - there is a big strike in the country and people seem to support these strikes. So, every nation's government is a mirror image of that nation's electional decisions. CROATIANS seem to be making wrong decisions for 20 years and don't seem to learn anything from it. Sad but ture, at least in my view.