June the 21st, 2021 - Croatian stagnation has once again been forced out into the limelight as the latest competitiveness ranking highlights the country's multitude of shortcomings.
As Poslovni Dnevnik/Ana Blaskovic writes, the second title, and the same action: the global competitiveness scale run by the Institute for Business Development Development (IMD) from Lausanne, Switzerland for 2021, shows the same as a wide range of others - Croatian stagnation in terms of competitiveness. Croatia is ranked an embarrassing 59th in the competition of 64 countries, and all other member states of the European Union (EU) have better results.
The moves made in the last year have pushed Croatia only one place up, but the scale itself today includes another country. The fact that Croatian stagnation has far from gone away is highlighted by the cross-section of the past five years. From 2017 until today, Croatia has been ranked in a very narrow range, between 59th and 61st place.
"Croatia's position on the competitiveness scale has only improved marginally when compared to last year, and is still lagding behind comparable countries, the newer EU member states," said Ivica Mudrinic, the president of the National Competitiveness Council (NVK), IMD's partner institute.
Mudrinic announced at the last session of the NVK that he was retiring from the leading position, but he didn't state the reasons for the choice. Until the election of a new leadership, he will be replaced by Council member Ivan Misetic.
According to 334 criteria, two-thirds of which are statistics and the rest the opinions of enterprise owners and the like, the best country in terms of competitiveness is rather unsurprisingly Switzerland, which dethroned Singapore. The Swiss are followed by Sweden, Denmark, the Netherlands, last year's winner Singapore, Norway, Hong Kong, Taiwan, the UAE and the USA.
In addition to the fact that Croatia is unfortunately the worst in all of Europe, and that only Mongolia, Botswana, South Africa, Argentina and Venezuela received lower marks, there are other things to speak of, too. Some of the neighbours in the country's immediate region, such as Slovakia, Hungary and Romania, which are Croatia's biggest competitors in attracting investment, ''know-how'' and job creation, have all significantly improved their own respective rankings.
Slovakia jumped seven places (50th), Hungary five places (42nd) and Romania three places (48th). However, deterioration in terms of competitiveness was recorded by Poland, which fell by as many as eight places (47th), Slovenia (40th) and Bulgaria (53rd) fell by five places, and the Czech Republic, which fell by one place (34th). Again, despite the setback, they all achieved better results than Croatia.
Out of 20 competitiveness indices, Croatia received good grades in the areas of international trade (29th), price levels (33rd), healthcare and the environment (38th) and education (44th).
Croatian stagnation has quite convincingly placed the country in the very last in the practice of governance and the labour market (64th), attitudes and values (63rd), business legislation (61st), basic infrastructure (60th), as well as foreign investment and finance (59th).
Enterprise owners rated Croatian skilled labour, a high level of education, reliable infrastructure, access to finance and cost competitiveness as the most benevolent factors of all. On the other hand, those critical observations didn't spare the terms of an effective legal environment, the capacity of the government, the tax system, corporate governance and (in)stability and (un)predictability of policies.
Although within a year IMD has noticed progress in a number of areas (from economy, employment, taxes, productivity…), a decline has been observed in international trade, foreign investment, prices and public finances.
Therefore, it is not unexpected for the IMD to repeat what everyone regularly points out, from the World Bank, the European Commission, foreign investors to domestic experts, it is crucial to reform and digitise the judiciary, public administration and local government units.
Despite the tax spikes, the total tax burden in Croatia is still much too high. Special emphasis is placed on broad digitalisation as a precondition for reforms and an easier jump in the development of individual sectors of the economy.
"Events during the pandemic and expectations in the post-pandemic period, fueled by a new financial envelope from the EU, raise hopes that they could accelerate these much-needed structural changes," Mudrinic said optimistically.
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