Economist and former Economy Minister Ljubo Jurčić explains the basics.
Croatia does have macroeconomic stability, but it keeps going backwards, which raises the question about the goals of the state, said Ljubo Jurčić, president of the Croatian Association of Economists and former Economy Minister. In order for the stability of the fiscal and monetary policies to help achieve social and economic objectives, the industrial policy is key, along with the factors for the increase of production which are not only financial in their nature, he added, reports Poslovni.hr on April 5, 2016.
Jurčić believes that the level of the fiscal and monetary stability determines or limits the level of production. “I think that Croatia should move from the current level of fiscal and monetary stability to the second level, where it would create the conditions or rather a framework for greater domestic production”, said Jurčić, who is also a professor at the Zagreb Faculty of Economics.
“Another problem is that Croatia does not have an industrial policy or the institutional infrastructure and system that would allow for the utilisation of the Croatian resources. It is devastating how we have been treating this area”, added Jurčić.
In order for Croatia to be successful, he said, it needs to be managed efficiently and a modern state system needs to be built. “The former coalition government relied a lot on improvisation, which might have worked in some other circumstances, but the former Prime Minister was not able to lead or coordinate different initiatives. Some good ideas were ‘eaten’ by the unharmonized subsystems”, said Jurčić.
He pointed out that the success of this government depends on being able to open the dialogue between knowledgeable people with different ideas and from different interest groups and thus find the best way to achieve the common interest of the Croatian society.
As for the investments, he emphasized that investors cannot be attracted only with the laws related to investments. “The challenges are great: we need GDP growth of 4 percent in order not to increase the public debt or lower the living standard of the citizens; 5 percent in order not to stagnate, and 7 percent to start catching up with Europe.”
In Jurčić’s words, there are no objective boundaries and it all depends on government’s capability. “The growth requires four well-coordinated policies – fiscal, monetary, industrial and regional”, he said, concluding that the investors will start coming on their own after such policies have been introduced.
