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The Dilemma over Washington Consensus Guidelines or Industrial Policy: Lessons from Croatia

Author

Listed:
  • Sanja Franc

    (Faculty of Economics and Business, University of Zagreb)

  • Antea BariÅ¡ić

    (Faculty of Economics and Business, University of Zagreb)

  • Zoran Wittine

    (Faculty of Economics and Business, University of Zagreb)

Abstract

During the 1990s Croatia went through the process of transition to market economy mostly following the Washington Consensus policy guidelines. Since the period before the last global financial crisis, Croatia has shown almost no convergence to developed European Union member states and has been among the least developed ones. This paper examines the causes of Croatian development lag, while providing an overview of contemporary development policies and international production fragmentation trends that affected them. The paper points out to several important factors that shaped the Croatian development path. Expectations from foreign capital were overrated, as the foreign direct investment consisted mainly of brownfield investment in large monopolistic companies and was rarely directed to export-oriented sectors. Accession to the World Trade Organisation was followed by stronger growth of imports than exports and joining the European Union did not bring economic growth as fast as expected. Lack of industrial policy implementation has led Croatia to deindustrialisation and increasing importance of the tourism sector as a form of the Dutch disease.

Suggested Citation

  • Sanja Franc & Antea BariÅ¡ić & Zoran Wittine, 2020. "The Dilemma over Washington Consensus Guidelines or Industrial Policy: Lessons from Croatia," Notitia - journal for economic, business and social issues, Notitia Ltd., vol. 1(6), pages 49-62, December.
    • Handle: RePEc:noa:journl:y:2020:i:6:p:49-62
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Washington Consensus; industrial policy; global value chains; Dutch disease;
    All these keywords.

    JEL classification:

    • O20 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - General
    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development
    • F68 - International Economics - - Economic Impacts of Globalization - - - Policy

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