The state of external equilibrium in Croatia and its long term stability

Dražen Derado
2002 Management : Journal of Contemporary Management Issues  
From the outset of transition Croatia faces a serious problem of external imbalance as a consequence of unfinished structural and institutional reforms. The external balance crisis can be seen through raising international trade deficit and structural characteristics of trade flows. To these unfavorable characteristics belong export reorientation from developed to less developed countries, increasing number of industries in which Croatia has position of net-importer and export structure in
more » ... t structure in which dominate low-value-added products. Increasing trade deficit in 2001 and 2002 followed by further growth in external indebtedness cause increasing burden of debt service and limit the possibilities for economic growth. Taking all this as well as real limits in further external imbalance growth into consideration it can be said that Croatia realizes high level of external disequilibrium. In contrast, advanced transition countries achieve fairly good and stabile external positions thanks to successful economic restructuring and strong export growth.
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