Editing Economy of Croatia (section)

===Pre-20th century ===
[[File:Viktor Kovačić- Palača Burze, Trg Burze, Zagreb, 1922- 1927.jpg|thumb|left|[[Zagreb]] [[Zagreb Stock Exchange|Stock Exchange Palace]] in 1927]]
[[File:Rijeka oil refinery around 1930.jpg|thumb|left|[[Oil refinery]] in [[Rijeka]] in the 1930s]]
When Croatia was still part of the [[The Dual monarchy|Dual Monarchy]], its economy was largely agricultural. However, modern industrial companies were also located in the vicinity of the larger cities. The [[Kingdom of Croatia (Habsburg)|Kingdom of Croatia]] had a high ratio of population working in agriculture. Many industrial branches developed in that time, like forestry and wood industry ([[stave (wood)|stave]] fabrication, the production of [[potash]], [[Sawmill|lumber mills]], [[shipbuilding]]). The most profitable one was stave fabrication, the boom of which started in the 1820s with the clearing of the oak forests around [[Karlovac]] and [[Sisak]] and again in the 1850s with the marshy oak masses along the Sava and Drava rivers. Shipbuilding in Croatia played a huge role in the 1850s [[Austrian Empire]], especially the long-range sailing boats. Sisak and [[Vukovar]] were the centres of river-shipbuilding.<ref>[http://hrcak.srce.hr/81678 Mariann Nagy – Croatia in the Economic Structure of the Habsburg Empire in the Light of the 1857 Census], p. 81-82</ref> [[Kingdom of Slavonia|Slavonia]] was also mostly an agricultural land and it was known for its silk production. Agriculture and the breeding of cattle were the most profitable occupations of the inhabitants. It produced [[cereal|corn]] of all kinds, [[hemp]], [[flax]], tobacco, and great quantities of [[liquorice]].<ref name=Nagy>[http://hrcak.srce.hr/81678 Mariann Nagy – Croatia in the Economic Structure of the Habsburg Empire in the Light of the 1857 Census], p. 88</ref><ref name=Penny>[[Society for the Diffusion of Useful Knowledge]]: The Penny Cyclopaedia of the Society for the Diffusion of Useful Knowledge, vol 22, p. 100-101</ref>

The first steps towards industrialization began in the 1830s and in the following decades the construction of big industrial enterprises took place.<ref>[[Mikulas Teich]], [[Roy Porter]]: [https://books.google.com/books?id=z7GVCC0hlBsC The Industrial Revolution in National Context: Europe and the USA], Cambridge University Press, 1996, p. 310</ref> During the 2nd half of the 19th and early 20th century there was an upsurge of industry in Croatia, strengthened by the construction of [[Croatian Railways|railways]] and the electric-power production. The industrial production was still lower than agricultural production.<ref>Mikulas Teich, Roy Porter: [https://books.google.com/books?id=z7GVCC0hlBsC ''The Industrial Revolution in National Context: Europe and the USA''], Cambridge University Press, 1996, p. 311</ref> Regional differences were high. Industrialization was faster in inner Croatia than in other regions, while [[Kingdom of Dalmatia|Dalmatia]] remained one of the poorest provinces of Austria-Hungary.<ref>{{cite book|last=Tanner|first=Marcus|title=Croatia: a nation forged in war|year=2001|edition=2nd|publisher=[[Yale University Press]]|location=New Haven; London|page=[https://archive.org/details/croatianationfor0000tann_f0k3/page/110 110]|isbn=0-300-09125-7|url-access=registration|url=https://archive.org/details/croatianationfor0000tann_f0k3/page/110}}</ref> The slow rate of modernization and rural overpopulation caused extensive emigration, particularly from Dalmatia. According to estimates, roughly 400,000 Croats emigrated from Austria-Hungary between 1880 and 1914. In 1910 8.5% of the population of [[Kingdom of Croatia-Slavonia|Croatia-Slavonia]] lived in urban settlements.<ref name=Frucht>[https://books.google.com/books?id=lVBB1a0rC70C Richard C. Frucht: ''Eastern Europe: An Introduction to the People, Land, and Culture''], p. 462–463</ref>

In 1918 Croatia became part of the [[Kingdom of Yugoslavia]], which was in the interwar period one of the least developed countries in Europe. Most of its industry was based in [[Drava Banovina|Slovenia]] and [[Banovina of Croatia|Croatia]], but further industrial development was modest and centered on [[Textile manufacturing|textile mills]], [[sawmill]]s, [[Brickyard|brick yards]] and food-processing plants. The economy was still traditionally based on agriculture and raising of livestock, with [[peasant]]s accounting for more than half of Croatia's population.<ref name=Frucht /><ref>[https://books.google.com/books?id=-84_kkgMf2QC The ''First Yugoslavia: Search for a Viable Political System''], Hoover Press, 1983, p. 72</ref>

In 1941 the [[Independent State of Croatia]] (NDH), a [[World War II]] [[puppet state]] of [[Nazi Germany|Germany]] and [[Kingdom of Italy|Italy]], was established in parts of [[World War II in Yugoslavia|Axis-occupied Yugoslavia]]. The economic system of NDH was based on the concept of "Croatian [[socialism]]".<ref name=Yeomans1>Rory Yeomans:[https://books.google.com/books?id=Yxv4-iqVe2wC Visions of Annihilation: The Ustasha Regime and the Cultural Politics of Fascism, 1941–1945], University of Pittsburgh Pre, 2013, p. 197</ref> The main characteristic of the new system was the concept of a [[planned economy]] with high levels of state involvement in economic life. The fulfillment of basic economic interests was primarily ensured with measures of repression.<ref name=Matkovic>[[Hrvoje Matković]]: Povijest nezavisne države Hrvatske, Drugo, dopunjeno izdanje Zagreb, 2002., p. 118</ref> All large companies were placed under state control and the property of the regime's national enemies was nationalized. Its currency was the [[Independent State of Croatia kuna|NDH kuna]]. The Croatian State Bank was the central bank, responsible for issuing currency. As the war progressed the government kept printing more money and its amount in circulation was rapidly increasing, resulting in high inflation rates.<ref>Jozo Tomašević: Rat i revolucija u Jugoslaviji 1941–1945, 2010, p. 785</ref>

After World War II, the new [[Communist Party of Yugoslavia]] converted to a [[Planned economy#Command economy|command economy]] on the Soviet model of rapid industrial development. In accordance with the communist plan, mainly companies in the pharmaceutical industry, the food industry and the consumer goods industry were founded in Croatia. Metal and [[heavy industry]] was mainly promoted in [[Socialist Republic of Bosnia and Herzegovina|Bosnia]] and [[Socialist Republic of Serbia|Serbia]]. By 1948 almost all domestic and foreign-owned capital had been nationalized. The industrialization plan relied on high taxation, fixed prices, [[World War II reparations towards Yugoslavia|war reparations]], Soviet credits, and export of food and raw materials. Forced [[Collectivization in Yugoslavia|collectivization]] of agriculture was initiated in 1949. At that time 94% of agricultural land was privately owned, and by 1950 96% was under the control of the social sector. A rapid improvement of food production and the standard of living was expected, but due to bad results the program was abandoned three years later.<ref name=Frucht />

Throughout the 1950s [[Socialist Republic of Croatia|Croatia]] experienced rapid urbanization. [[Decentralization]] came in 1965 and spurred growth of several sectors including a prosperous tourist industry. [[SR Croatia]] was, after [[SR Slovenia]], the second most developed republic in [[Socialist Federal Republic of Yugoslavia|Yugoslavia]] with a ~55% higher GDP per capita than the Yugoslav average, generating 31.5% of Yugoslav GDP or $30.1Bn in 1990.<ref>{{cite web | url=https://data.un.org/Data.aspx?q=gdp+per+capita+yugoslavia&d=SNAAMA&f=grID:101;currID:USD;pcFlag:1;crID:890 | title=UNdata &#124; record view &#124; per capita GDP at current prices - US dollars }}</ref> Croatia and Slovenia accounted for nearly half of the total [[Economy of the Socialist Federal Republic of Yugoslavia|Yugoslav GDP]], and this was reflected in the overall [[standard of living]]. In the mid-1960s, Yugoslavia lifted emigration restrictions and the number of emigrants increased rapidly. In 1971 224,722 workers from Croatia were employed abroad, mostly in [[West Germany]].<ref>{{cite web|url=http://www.photius.com/countries/croatia/society/yugoslavia_former_society_guest_workers.html|title=Yugoslavia (former) Guest Workers – Flags, Maps, Economy, History, Climate, Natural Resources, Current Issues, International Agreements, Population, Social Statistics, Political System|website=www.photius.com}}</ref><ref>Ivo Nejašmić: [http://hrcak.srce.hr/index.php?show=clanak&id_clanak_jezik=187703 Hrvatski građani na radu u inozemstvu: razmatranje popisnih podataka 1971, 1981. i 1991.]</ref> Foreign remittances contributed $2 billion annually to the economy by 1990.<ref>Europa Publications Limited. ''Eastern Europe and the Commonwealth of Independent States 1999: 1999''. Routledge, 1999. (pg. 279)</ref> Profits gained through Croatia's industry were used to develop poor regions in other parts of former Yugoslavia, leading to Croatia contributing much more to the federal Yugoslav economy than it gained in return. This, coupled with [[austerity]] programs and [[hyperinflation]] in the 1980s, led to discontent in both Croatia and Slovenia which eventually fuelled political movements calling for independence.<ref name=IBP>International Business Publications: [https://books.google.com/books?id=qND3Dii7qjIC Croatia Investment and Trade Laws and Regulations Handbook], p. 22</ref>[[File:Brodosplit - juice carrier.JPG|thumb|A ship being built in [[Split, Croatia|Split]], 2010]]
[[File:GDP of Croatia at constant prices.png|thumb|right|GDP of Croatia at constant 2010 prices from 1990 to 2017]]
[[File:Real GDP growth in Croatia.png|thumb|right|Real GDP growth in Croatia 2005–2015]]
[[File:Unemployment in Croatia 1996. - 2019.png|thumb|right|Unemployment rate from 1996 to 2019 according to [[Eurostat]]]]

In the late 1980s and early 1990s, with the collapse of socialism and the beginning of [[Transition economy|economic transition]], Croatia faced considerable economic problems stemming from:<ref>{{cite web|url=http://www.iiasa.ac.at/~marek/fbook/00/geos/hr.html|title=CIA – The World Factbook 2000 – Croatia|website=www.iiasa.ac.at}}</ref>
* the legacy of longtime communist mismanagement of the economy;
* damage during the internecine fighting to bridges, factories, power lines, buildings, and houses;
* the large refugee and displaced population, both Croatian and [[Bosnians|Bosnian]];
* the disruption of economic ties; and
* inefficient privatization

At the time Croatia gained independence, its economy (and the whole [[Economy of the Socialist Federal Republic of Yugoslavia|Yugoslavian economy]]) was in the middle of recession. Privatization under the new government had barely begun when war broke out in 1991. As a result of the [[Croatian War of Independence]], infrastructure sustained massive damage in the period 1991–92, especially the revenue-rich tourism industry. The [[Privatization in Croatia|privatization of sovereign assets]] and transformation from a planned economy to a [[market economy]] was thus slow and unsteady, largely as a result of public mistrust when many state-owned companies were sold to politically well-connected at below-market prices. With the end of the war, Croatia's economy recovered moderately, but corruption, cronyism, and a general lack of transparency stymied economic reforms and foreign investment.<ref name="IBP" /><ref name="Benczes">Istvan Benczes: [https://books.google.com/books?id=f4R2BgAAQBAJ Deficit and Debt in Transition: The Political Economy of Public Finances in Central and Eastern Europe], Central European University Press, 2014, p. 203</ref> The privatization of large government-owned companies was practically halted during the war and in the years immediately following the conclusion of peace. In 2000, roughly 70% of Croatia's major companies were still state-owned, including water, electricity, oil, transportation, telecommunications, and tourism.<ref>[https://books.google.com/books?id=lVBB1a0rC70C Eastern Europe: An Introduction to the People, Land, and Culture], p. 473</ref>

The early 1990s experienced high inflation. In 1991 the [[Croatian dinar]] was introduced as a transitional currency, but inflation continued to accelerate. The anti-inflationary stabilization steps in 1993 decreased retail price inflation from a monthly rate of 38.7% to 1.4%, and by the end of the year, Croatia experienced deflation. In 1994 Croatia introduced the [[Croatian kuna|kuna]] as its currency.<ref name="Benczes" /> As a result of the macro-stabilization programs, the negative growth of GDP during the early 1990s stopped and reversed into a positive trend. Post-war reconstruction activity provided another impetus to growth. Consumer spending and private sector investments, both of which were postponed during the war, contributed to the growth in 1995–1997.<ref name="Benczes" /> Croatia began its independence with a relatively low external debt because the debt of Yugoslavia was not shared among its former republics at the beginning. In March 1995 Croatia agreed with the Paris Club of creditor governments and took 28.5% of Yugoslavia's previously non-allocated debt over 14 years. In July 1996 an agreement was reached with the London Club of commercial creditors, when Croatia took 29.5% of Yugoslavia's debt to commercial banks. In 1997 around 60 percent of Croatia's external debt was inherited from former Yugoslavia.<ref name="Benczes2">Istvan Benczes: [https://books.google.com/books?id=f4R2BgAAQBAJ Deficit and Debt in Transition: The Political Economy of Public Finances in Central and Eastern Europe], Central European University Press, 2014, p. 205-206</ref>

At the beginning of 1998 value-added tax was introduced. The central government budget was in surplus in that year, most of which was used to repay foreign debt.<ref>OECD: [https://books.google.com/books?id=WxvKqey-mmoC Agricultural Policies in Emerging and Transition Economies 1999], p. 43</ref> Government debt to GDP had fallen from 27.30% to 26.20% at the end of 1998. However, the consumer boom was disrupted in mid 1998, as a result of the bank crisis when 14 banks went bankrupt.<ref name="Benczes" /> Unemployment increased and GDP growth slowed down to 1.9%. The recession that began at the end of 1998 continued through most of 1999, and after a period of expansion GDP in 1999 had a negative growth of −0.9%.<ref name="unstats">{{cite web|url=http://unstats.un.org/unsd/snaama/introduction.asp|title=United Nations Statistics Division – National Accounts|website=unstats.un.org}}</ref> In 1999 the government tightened its fiscal policy and revised the budget with a 7% cut in spending.<ref name="Gale">Gale Research: [https://books.google.com/books?id=uX8pX4H3u0kC Countries of the World and Their Leaders: Yearbook 2001], p. 456</ref>

In 1999 the private sector share in GDP reached 60%, which was significantly lower than in other former socialist countries. After several years of successful macroeconomic stabilization policies, low inflation and a stable currency, economists warned that the lack of fiscal changes and the expanding role of the state in the economy caused the decline in the late 1990s and were preventing sustainable economic growth.<ref name="Benczes2" /><ref name="Gale" />

{| class="wikitable"
|-
!Year|| GDP growth || Deficit/surplus* || Debt to GDP || Privatization revenues*
|-
|1994|| 5.9% || 1.8% || 22.2% ||
|-
|1995|| 6.8% || −0.7% || 19.3% || 0.9%
|-
|1996|| 5.9%  || −0.4% || 28.5% || 1.4%
|-
|1997|| 6.6% || −1.2% || 27.3% || 2.0%
|-
|1998|| 1.9% || 0.5% || 26.2% || 3.6%
|-
|1999|| −0.9% || −2.2% || 28.5% || 8.2%
|-
|2000|| 3.8% || −5.0% || 34.3% || 10.2%
|-
|2001|| 3.4% || −3.2% || 35.2% || 13.5%
|-
|2002|| 5.2% || −2.6% || 34.8% || 15.8%
|-
| colspan="5" |*<small>Including capital revenues</small> <br />*<small>cumulative, in % of GDP</small>
|}