Dobrinsky Morning 15Oct

Croatia’s Economic Prospects in a Comparative Perspective: 

Croatia’s Economic Prospects in a Comparative Perspective Presentation by Rumen Dobrinsky UN Economic Commission for Europe Zagreb, 15 October 2004

Eastern Europe in 2004-2005: strengthening of economic growth: 

Eastern Europe in 2004-2005: strengthening of economic growth The key growth factor: dynamic supply side - Ongoing restructuring and expansion of productive capacity, driven by FDI - Strong export performance, despite weak domestic demand in Western Europe - Improved financial intermediation and a booming credit market Domestic demand remains strong and also contributes to economic growth - Strong consumer and investor confidence (+) - Cuts in public spending in central Europe due to large budget deficits (-)

Catching-up in Europe is in progress: 

Catching-up in Europe is in progress

Croatia’s economy in a comparative perspective: per capita income level: 

Croatia’s economy in a comparative perspective: per capita income level

Croatia’s economy in a comparative perspective: economic growth: 

Croatia’s economy in a comparative perspective: economic growth

Croatia’s economy in a comparative perspective: inflation: 

Croatia’s economy in a comparative perspective: inflation

Croatia’s economy in a comparative perspective: unemployment: 

Croatia’s economy in a comparative perspective: unemployment

Croatia’s economy in a comparative perspective: fiscal balance: 

Croatia’s economy in a comparative perspective: fiscal balance

Croatia’s economy in a comparative perspective: total public expenditure: 

Croatia’s economy in a comparative perspective: total public expenditure

Croatia’s economy in a comparative perspective: current account balance: 

Croatia’s economy in a comparative perspective: current account balance

Croatia’s economy in a comparative perspective: FDI (per capita): 

Croatia’s economy in a comparative perspective: FDI (per capita)

Croatia’s economy in a comparative perspective: FDI (as % of GDP): 

Croatia’s economy in a comparative perspective: FDI (as % of GDP)

The economic prospects of south-east Europe: similarities with central Europe: 

The economic prospects of south-east Europe: similarities with central Europe The driving forces of economic reforms - the realistic prospect of EU membership is a key driver of reforms - focus on national priorities (to raise popular support for reforms) The driving forces of economic growth - supply factors: economic restructuring and modernization, relying on human capital - demand factors: robust investor and consumer confidence - indirectly, the realistic prospect of EU membership is also a key growth driver (by changing expectations and stimulating inward FDI) The macroeconomic policy stance - macroeconomic prudence needed - balance between real catch-up and nominal convergence with EU

The economic prospects of south-east Europe: differences from central Europe: 

The economic prospects of south-east Europe: differences from central Europe The future structure of the SEE economies likely to be different from that of EU-8 - The “periphery” factor: large-scale FDI in manufacturing industries (as happened in CE) less likely in SEE - The factor of timing: CE countries benefited from being ahead What future specialization for south-east Europe? - Probably similar to other EU “periphery” economies (Greece, Portugal) - Key sectors: services (such as tourism and high-tech services); small, high-tech manufacturing industries; agriculture/food - The “Irish model” (high-tech power base)? Still a possibility. Requires a consistent long-term policy approach

The economic prospects of south-east Europe: what room for public policy?: 

The economic prospects of south-east Europe: what room for public policy? Public policy should focus on the development of human capital - At present human capital is the main determinant of the competitiveness of nations and the key factor of long-term growth - Investing in human capital should be the main, long-term priority of public policy - Social cohesion is an inherent ingredient of human capital development! Public policy plays a key role for social cohesion. Adequate infrastructure, predictability of policy and a friendly business climate are also important Industrial policy in the traditional sense of “picking the winners” has diminishing chances of success