Discuss the main barriers to business development in the assigned country. Croatia - Essay Example

2011). Croatia was one of the wealthiest Yugoslav republics before the break up. It suffered badly during the 1991-95 period when output collapsed and the Croats missed the early opportunities of waves of investments in Europe that was followed after the collapse of the Berlin wall. But due to increased and sustained efforts to build the battered economy, its recovery started during 2000 and 2007. It had a moderate and steady GDP in between 4% and 6%. There was a rebound of the tourism industry which contributed well to the GDP growth.

Moreover credit driven consumer spending also was another reason for the growth of GDP. Inflation was controlled and the currency Kuna was stable. But in spite of these growth potentials, difficult times still remain in Croatia. There are growing unemployment, increase trade deficit and unbalanced regional development. In Croatia, the state retains larger part of the economy. Privatization efforts are often met with stiff public resistance. Although macroeconomic stabilization has been achieved in the economy, there is a lag in structural reforms because of the resistance against privatization and lack of interest shown by politicians.

Joining to the EU may somewhat change things in Croatia. It could accelerate fiscal and structural reforms in the country. . However during recent years the Croatian economy has shown signs of revival. Its latest GDP purchasing power parity is estimated to be $78.52 billion; the GDP official exchange rate is $59.92 billion. But the real GDP growth rate has gone down to negative 1.4% in 2010. The GDP per capita income is $17500 making its rank to 67th in the world. The unemployment rate in the country is 17% and the public debt is 55%.

It has an external debt of $59.7 billion (The world fact book. 2010). Over the last three years, the Croatian economy has undergone vast changes. Thousands of new private enterprises have sprung up. Government owned enterprises are in the process of transformation and privatization. It has abundant natural and human resources as well as a long standing business tradition. Moreover after the collapse of communism, new legal systems which would steer the economy are being developed in Croatia. There is tremendous hope that the economy would be a market driven economy in the future (How to do Business with Croatia?2010). One among the significant barriers that has affected the business sector in Croatia is the hangover of communist regime.

Even though Croatia is now very well advancing towards attaining membership in the European Union, the aftermath of communist rule in the country has significantly damaged some developments with regard to privatization. Many large commercial companies in Croatia still are supported alone by the state, notably the shipyard industry. Attempts made to sell of the assets to private enterprises have failed due to tough resistance. It is inevitable that a renewed effort is needed to address these problems effectively.

The economy of the country has contracted over the last two years due