An Overview of Economic Crisis in Croatia: Causes and Its Consequences

Abstract

This study highlights the effects of transformation of the inherited political system, with the reference to the way political parties and state institutions function as well as determine the negative impact of the transformation of the political system into the area of economy. In evaluating the causes of the crisis, those characteristics unique to Croatia must be seen in comparison to the majority of other post-communist countries.   This is mainly related to the peculiarities of an inherited socialist system, and the circumstances in which the process of political and economic transformation of the Croatian society was begunThe process of multiple transformation of the socio-political system based on a peculiar paradigm of self-management of social ownership was carried out as the newly constituted state struggled to retain its independence and territorial integrity.  According to the author, these factors are the key to understanding Croatia's current economic and social crisis, which is caused by the current value system. This system, built in the early 1990s, is a direct result of the war and a poorly managed transition. The applied value structure caused a gradual disintegration of civilization and became an impediment to further democratisation. Instead of advancing democracy toward the rule of law and justice, a “distorted” set of principles opened the way for the emergence of institutional corruption.  According to the author, the inconsistencies that occurred during the period of political transition from a one-party regime to a democracy founded on democratic pluralism and the rule of law are the root of the issue. During the last decade of the twentieth century, the outcome of this democratic transition was the establishment of a political structure dominated by the dominance of one powerful political party and a weak opposition. Another issue raised by the author is the organisational model of the majority of newly formed political parties, which is characterised by a rigid hierarchical structure, with a powerful leader in charge of a small elitist circle of people who developed this political programme. It is concluded that implemented political transformation of the society was politocracy—an established model of the rule of political parties that functions in today’s conditions. Also,the phase of economic transformation has allowed the rise of plutocracy, which has paved the way for the practise of ruling in favour of the citizen, to the detriment of the common good, in near collaboration with politocracy.  According to the author, the most important necessity for Croatia to emerge from its economic crisis is a shift in its system of values,, and the prerequisite for this is the implementation of structural reforms in all fields of society—above all, the reform of the political system.