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Country profile - Societal developments (Croatia)

Country profile
SOER Country profile from Croatia
Published: 26 Nov 2010 Modified: 08 Apr 2011

Until 1991, Republic of Croatia was a part of the former Socialist Federal Republic of Yugoslavia - SFRJ, together with Serbia, Montenegro, Bosnia and Herzegovina, Slovenia, Macedonia and Autonomous Provinces of Vojvodina and Kosovo and Metohija. Since 1980, unemployment in former SFRJ grew from 5.7% in 1980 to 8.6% in 1990, devaluations became more frequent, annual inflation rates reached 70% in 1985 and supply and consumption were subject to rationing [4]. The federal government initiated a transition from planned to market economy but the socialist self-management system already started to collapse and could not recover from economic and political crisis.

The first multi-party parliamentary elections were held in 1990 and the Republic of Croatia was declared independent in 1991. But those processes, unfortunately, were accompanied by the aggression on Croatian territory undertaken by Yugoslav National Army and paramilitary Serbian and Montenegrian forces.  The defensive Homeland War (1991-1995) ensued, in which more than 30% of the Croatian territory was occupied. In the 1991-1995 period 5,500 persons emigrated from Croatia to other European countries. The direct material damage caused by the war is estimated at USD 27 billion [5], while indirect damage includes a delayed transition, GDP reduced by approximately 35% with the consequence of missing out the first wave of foreign investment.


Figure 4. Changes in GDP since 1990 in Croatia, 1990 – 2006

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Figure 4. Changes in GDP since 1990 in Croatia, 1990 – 2006
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Figure 5. Croatian population by age and gender, estimate for 2007

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Figure 5.  Croatian population by age and gender, estimate for 2007
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Economic reforms were initiated during the war: liberalisation of foreign trade, the abolition of price control and the equalisation of the status of foreign and domestic investors. A decline in GDP in the 1992-1993 period was followed by a period of GDP growth (Figure 4). In 1992, Croatia acquired IMF membership, 1994 saw the start of a stabilisation programme and the introduction of a new currency – the Croatian kuna (HRK), and in 1996 marked the beginning of the process of privatisation of state-owned enterprises – their transformation into privately owned companies [6].

Changes in share of the main sectors in economy – agriculture, industry, construction and services -  since the beginning of transition in 1990 point to slow structural changes. Changes at the start of the transition were primarily a consequence of an appreciable fall in industrial output due to wartime events. In sectoral terms, 2008 tourism is the biggest source of income, amounting to nearly 20% of GDP [7].

Half of Croatia̕s population lives on 26.8% of the land area. The biggest population increase occurred in the suburbs of regional centres. Approximately 25% of the population is concentrated in the City of Zagreb and in the County of Zagreb, which together occupy 6.6% of the national territory [10]. The age structure of the population has changed from a progressive one in 1953, through stagnation in 1991, to a markedly regressive in 2001 [3]. The estimated structure of the Croatian population by age and gender in the year 2007 is shown in Figure 5.

Croatia became a member of the United Nations and the Organization for Security and Co-operation in Europe (OSCE) in 1992 and of the Council of Europe in 1996, joined the World Trade Organization (WTO) in 2000, and in 2008 became a non-permanent member of the UN Security Council.  Since April, 2009, the Republic of Croatia has been a full member of NATO.

The main steps towards EU integration have been the signing of the Stabilisation and Association Agreement (2001), submission of the application for membership (2003), acquiring the status of a candidate (2004) and the start of negotiations (2005). The current negotiation process indicates 22 negotiation chapters as provisionally closed, 11 as opened (closing benchmarks set), and 2 chapters with special status (Institutions and Other Issues – to be dealt with at the end of negotiating process).


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