According to research conducted by the Department of Economics and Business Economics of the University of Dubrovnik and the Economic Institute of Zagreb, from the third wealthiest country Croatia has become the second poorest new member of the European Union over the past decade.
The research results point to the prevailing trend of decreasing work-intensive activities within the manufacturing industry in all countries of Central and Eastern Europe over the past ten years.
However, in countries with active industrial policy, such as the Czech Republic and Poland, this process was accompanied by a technological advancement of the industry, an increase in sectoral competitiveness and the share of added value of the manufacturing industry in the overall economy, which is why these countries are an example of successful reindustrialization.
On the other hand, in countries such as Croatia, past decade was marked by the decline in industrial competitiveness, the increase in the share of low tech-intensive activities within the manufacturing industry and by the decrease of the industry’s share in the total added value.
In other words, whilst successful former transition countries reindustrialised the economy through their thought-out policies, the process of de-industrialization in Croatia continued and deepened.
The data shows that in 1990, the share of the manufacturing industry in GDP in Croatia was 24 percent, whilst in 2015 it was barely 12 percent. At the same time, the share of high-tech products in the overall industrial production slightly decreased, whilst in all other countries in the region, with the exception of Lithuania and Latvia, increased.
The research also pointed out to further deepening of the differences in the exports competitiveness of the manufacturing industry between the leading countries of Central and Eastern Europe and Croatia.
In countries such as the Czech Republic, Slovakia and Poland, there was an increase in the sophistication of export products in high-tech and knowledge-intensive activities as well as the transition from price competitiveness to the one based on quality.
On the other hand, the research results for Croatia reveal the loss of price competitiveness with the lack of improved quality-based competitiveness.
Therefore, it is not surprising that since the beginning of the transition process until today, from the third wealthiest country Croatia has become the second poorest new member country of the European Union.