Cutting the red ribbon but not the red tape: the failure of business environment reform in Croatia

Abstract

Hitrorez was an initiative that was supposed to significantly reduce the regulatory burden and improve the business climate. Yet, despite all the institutional and policy transfer lessons applied, this large-scale reform attempt finished abruptly. This article seeks to identify and explain the reasons for its failure and reflect on the influence of path dependence on reform implementation in a fresh capitalist state. Moreover, it provides a transitional society perspective on the duration of reforms, their (ir)‐reversibility and the primacy of personal ties and interests over organisational forms and norms. It confirms the persistence and the lack of ‘ability to fight against’ deeply embedded informal constraints in a post-socialist socio-economic system.