THE STATE AND THE ECONOMY: WHERE IS CROATIA?

The aim of this paper is to gain new knowledge about the role of the state in the economy in Croatia. Signi fi cant impacts on the changing role of the state in the economy in Croatia since its interdependence have been made by the transition of the economy, globalization, integration and liberalization of the markets. The results of Croatian economic policy have been noticed in the reduction of the economic activity, the signi fi cant growth of the de fi cit and indebtedness, the development of pessimistic expectations and the lack of investment. The conditions of high indebtedness cause the restrictive nature of fi scal policy, and it can have negative in fl uence on economic activity. The results show that competitive transition countries, which have the lower tax effort, realize higher rates of economic growth. For the purpose of the realization of economic growth and the decrease of indebtedness, fi scal consolidation through the reduction of public expenditures and tax efforts is needed. For the elimination of the current account de fi cit in balance of payment it is important to achieve, through fi scal restructuring, a structural surplus instead of the present structural de fi cit. The results obtained are in line with the expectations about the continuation in the process of the changing role of the state in economy in the upcoming