Front Matter Page

© 2012 International Monetary Fund

November 12, 2012

IMF Country Report No. 12/303

Republic of Croatia: Selected Issues

This paper on Selected Issues was prepared by a staff team of the International Monetary Fund as background documentation for the periodic consultation with the member country. It is based on the information available at the time it was completed on October 23, 2012. The views expressed in this document are those of the staff team and do not necessarily reflect the views of the government of the Republic of Croatia or the Executive Board of the IMF.

The policy of publication of staff reports and other documents by the IMF allows for the deletion of market-sensitive information.

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Front Matter Page

INTERNATIONAL MONETARY FUND

REPUBLIC OF CROATIA

Selected Issues

Prepared by Reginald Darius and Géraldine Mahieu

Approved by European Department

October 23, 2012

Contents

• I. What Has Kept Croatia’s Growth Low and How to Boost It?

  • A. Croatia’s Growth Performance

  • B. The Spence Commission Growth Report

  • C. The “Growth Diagnostics” Approach

  • D. The Standard Reform Package or “Washington Consensus”

  • E. Reform Priorities in Croatia

  • F. Possible Impact of the Reforms

  • G. Conclusions

• References

• Table

• 1. Doing Business Indicators

• Appendix Figures

• 1. Relative Growth Performance, 2000–11

• 2A. Middle-Income Countries: Growth Accounting, 2000–08

• 2B. Middle-Income Countries: Growth Accounting, 2009–11

• 3. Middle-Income Countries: Employment Growth Decomposition, 2000–11

• 4. Education Level of the Labor Force

• 5. Openness to the Global Economy

• 6A. Business Environment, 2011–12

• 6B. Business Environment, Components, 2005–12

• 7. Access to International Financing, 2000–08

• 8. Access to Domestic Financing

• 9. Croatia and other Eastern European Countries: Structure of Production by Branches

• 10. Investment Structure

• 11. EU and US: Average TFP Growth by Sectors, 1995–07, annualized

• 12. Croatia: Cost of Finance, 2008–11

• 13. Croatia: Innovation Performance

Contents

• II. Croatia—Export Performance, Wages, and Productivity

  • A. Introduction

  • B. Key Findings

  • C. Current Account Balance and External Vulnerabilities

  • D. Export Performance and Market Share Analysis

  • E. Wages and Export Performance: A Micro Analysis

  • F. Conclusion

• Tables

• 1. Export Growth Productivity and Wage Gap (P-W)

• 2. Export, ULC, and Productivity Growth (correlation), 2000–08

• 3. Market Share (Exports of Eastern Europe to the European Union)

• Appendix Figures

• 1. Market Share, 2000–11

• 2. Eastern Europe: Export and ULC, 2000–08

• 3. Eastern Europe: Export and ULC, 2000–08

• 4. Eastern Europe: Export and ULC, 2000–08

• 5. Eastern Europe: Export and ULC, 2000–08

• 6. Eastern Europe: Export and ULC, 2000–08