ECONOMIC ASPECTS OF CROATIA'S ACCESSION TO THE EUROPEAN UNION - PASSED TEN AND THE FORTHCOMING TEN YEARS

After successful implementation of the Stabilisation programme in October 1993., Croatia has enjoyed high degree of stability of prices and exchange rate all until now. This stability was bolstered by growing infl ow of foreign exchange (remittances, tourism,
privatisation, borrowing abroad) and liberalisation of foreign trade. However, due to the simultaneous fast growth of various costs (tax burden, growth of wages above productivity gains, exploding arrears, costs of ineffi cient administrative and judiciary system, corruption
etc.), domestic currency has been becoming ever more appreciated. Results have been growing defi cits in the balance of payments, loss of competitiveness on the world market, particularly EU market, loss of jobs, and skyrocketing of foreign indebtedness. All these
features stay in contradiction with proclaimed export oriented growth and the Copenhagen preaccession requirements of increasing competitiveness on the EU market. In this paper various consequences of such developments are examined and possible scenarios of exit strategy are proposed.