Investment In Croatia Research Articles

CORRUPTION ENVIRONMENT AND FOREIGN DIRECT INVESTMENTS IN CROATIA

With this research, the authors would like to contribute to the understanding and identification of corruption, which is an important factor that can affect FDI in Croatia. The scientific and pragmatic purpose of this research is to identify an appropriate anti-corruption policy to influence the increase of FDI in Croatia. The research sample includes data for all countries that have FDI in Croatia as well as countries where Croatia has FDI. The authors added indicators on the level of FDI for the level of corruption in Croatia which were statistically processed. The statistical analysis is performed based on a total of 614 different values where the FDI of individual countries is put in relation to Croatia on a yearly basis, and the CPI was measured in those countries in the same year as in Croatia. The main hypothesis is that corruption "as sand" significantly negatively affects foreign direct investment in Croatia. An alternative hypothesis has also been formulated that corruption "as sand" significantly affects Croatia's foreign direct investment in foreign countries. The results showed that in the period from 1999 to 2019 there was no connection between corruption and FDI in Croatia. However, when the connection between corruption and Croatian FDI is observed, such a connection is becoming stronger as the FDI increases. Such a relationship between corruption and Croatia’s FDI can be characterized as "as grease." However, when only seven countries in which Croatia has the most direct investments were considered, a significant positive correlation was found between such investments and measured corruption in those countries, therefore the alternative hypothesis was accepted. The obtained results of the conducted research can provide important knowledge to the creators of Croatian economic policy that the impact of corruption on Croatian FDI abroad "as grease" in the future may be a very limiting factor to an increase in investments when the level of corruption in these countries decreases, which already applies to countries where corruption is shown to be at a low level.

The opportunity to develop strategic spatial planning with the impulse of integrated territorial investments in Croatia

Regional development and spatial planning in Croatia are organised as parallel planning systems regulated by different legislations and coordinated by two ministries, the development of which has been strongly influenced by the European Union (EU). In the last two decades, the intensive development of strategic documentation on a local, regional, and national level regarding diverse territorial governance aspects has had extensive analytical scope but little potential for implementation due to the overlapping of responsibilities and disconnected budget and implementation instruments. The Integrated Territorial Investments (ITI) mechanism of implementation contributed to the understanding of multifaceted territorial governance beyond strategic document drafting. This paper analyses the first phase of ITI implementation in Croatia, i.e. the processes which unified functional urban areas, creating the possibility to develop joint management structures and strategies, integrated projects, and common participative planning models.

THE IMPACT OF OIL PRICES ON INVESTMENT IN CROATIA

If we look at economic growth as a function of labour and capital then, aside from the labour force, investment is a key determinant of capital accumulation and, accordingly, a prerequisite for economic growth and prosperity. During the analysed period (1996:Q1-2015:Q4) investment in Croatia demonstrated pro-cyclically behaviour but showed a higher level of fluctuation then personal consumption or GDP. The aim of the paper is to examine the influence of oil prices on investment during the analysed period using Vector Autoregression (VAR) analysis and to determine the nature of their relationship by permuting four different oil price indicators. The results indicate that investment initially react positively to the growth of oil prices after which their reaction to oil price growth becomes negative (and more pronounced than the initial positive reaction). Contribution of oil price changes to investment fluctuations were also found. Keywords: investment, oil prices

Shareholder value in Croatian banking sector

Abstract The view on banks as investments in Croatia is challenged by two phenomena: dual holdings (owners are intensely involved in bank balance sheet as, apart from equity, they provide a significant portion of deposits and loans) and the impediments to determining the cost of equity (as only a handful of banks are traded and with questionable liquidity in the capital market). The paper contributes to the literature by applying the panel regression on the translog cost function in order to calculate the shadow cost of equity for banks in Croatia for the period from 1994 to 2016. In the next step, the Economic Value Added was calculated by taking into account the dual holding role of bank owners. The results suggest that the shareholders economic value is significantly different from the accounting value. In addition, it seems that the standard view that domestic banks are less profitable than foreign banks is only valid from the accounting perspective.

Preview of BPM6 Methodology and Analysis of Foreign Direct Investment in 2015 in Croatia

Abstract Foreign direct investments include equity capital, reinvested earnings and debt relations between ownership-related residents and non-residents. Since 31 October 2014, the Croatian National Bank has started to publish information in the field of statistics Relations (balance of payments, foreign debt and the IIP) in accordance with the methodology prescribed by the sixth edition of the Manual on Balance of Payments (Eng. Balance of Payments and International Investment Position Manual, BPM6), thus changing the presentational form of direct investment. Direct investments are not classified according to the so-called direction of investments (Eng. directional principle) on direct investment in Croatia and direct investment abroad anymore, but according to BPM6 apply the socalled principle of assets and liabilities (Eng. Assets / Liabilities principle). The aim is to point out the differences between the standards BPM5 and BPM6 and determine which activities and which countries are the most represented in the structure of direct investments in Croatia. By identifying relevant activities and countries in the structure of foreign direct investment, relevant information is obtained about the macroeconomic state of the Republic of Croatia and about the opportunities and potential dangers that certain activities and countries provide.

Investment Incentives in the Negotiate Process toward Croatia’s Joining into EU

The policy towards foreign direct investments in the EU countries is an integral part of their macroeconomic policy, with clearly defined development priorities, and the floats of the direct investments. These counties successfully implemented foreign direct investments into their long-term development policy. Beside the multilateral, regional and bilateral relations, unilateral policies and measures of every EU country have a major influence on the foreign direct investments. Although EU, with its common policies wants to equal the conditions for the investments, the investment incentives of individual EU countries are a very important factor in the decision where to invest. These unilateral measures for encouraging the investments are a hot negotiation topic for EU and member states, in order to equal the terms of the investment in the entire EU territory.The investment incentives used by Croatia are insufficient to attract bigger and more important investors in order to achieve the economic impact, that Croatia wants to achieve through these investments. The amount of foreign direct investments in Croatia is small and concentrated on a very small number of subjects. There are very few new investments. Because of the very strict monetary policy and strong national currency, the incentives present almost the only mechanism for encouraging the investments. This is the reason why during the accession negotiations, Croatia must leave open enough possibilities for increasing the variety and amount of the investment incentives. If not, Croatia will be left behind its’ competitors, which will result in very negative economical and social consequences.

Testing the Model of Endogenous Growth in the Economy of Republic of Croatia (1960-2002)

In this paper relevant time series are study for empirical test of AK model of endogenous growth of the economy of Republic of Croatia. We used contemporary method of time series, testing of unit root and analyses of cointgration regressions. For that purpose research give consideration to characteristics of time series of growth of gross investments, rate of openness and economic growth of Republic of Croatia in the long period (1960-2002). The aim of article is to demonstrate that evidence of stationary in the time series exists. By this it could be accepted AK model of endogenous growth which predicted that the growth of active fixed assets (or physical capital) in the economy is perpetuating the economy growth in Croatia. The results indicating that the permanent changes in the rate of economic growth and rates of investments of Croatia exist because the rates of growth in given time intervals is stationary. The essential conclusion of the paper is that the presence of cointegration through the cointegration equations of regressions and relevant variables in the long term is not proved. Because of this validity of basic AK model of endogenous growth can be denied in a way that the growth of gross investment in Croatia will cause the permanent growth of output.

The relationship between the stock market and foreign direct investment in Croatia: evidence from VAR and cointegration analysis

The aim of this paper is to investigate the existence and characteristics of both the long- and short-term relationships between FDI and the stock market in Croatia. The main hypothesis is that, in the long run, trends in FDI should determine the movement of the stock market through the channel of economic growth. However, in the short run, upward movement on the stock market positively affects Croatian FDI stock, as events on the stock market signalize the vitality and investment climate of the domestic market to foreign investors. The long-term connection is tested by two cointegration approaches ; the results of both models suggest the absence of a long-term relationship among observed variables, which may be explained by the lack of connection between FDI and economic growth in Croatia. The short-run relationship is investigated by a two- variable VAR model, and the results obtained are consistent with the theoretical assumptions, as the stock market did prove to be an important short-term determinant of FDI in Croatia.

Economic viability and geographic distribution of centralized biogas plants: case study Croatia

Current promising increase of agricultural investments in Croatia not only leads us to the implementation of new technologies and procedures but also leads to an increase of public awareness toward modern agricultural production. As a side effect, renewable energy sources, with special emphasis on biogas, are quickly coming under the loop. Because of this effect, a question of total biogas potential for the farming sector in Croatia becomes very important. One of the biggest obstacles in utilizing biogas on Croatian farms is its geographical displacement and small size. Through this paper economic viability and geographical distribution, as key parameters in determining realistic biogas potential on family farms, will be presented with special emphasis on the two most promising farming sectors: cows and pigs. As already mentioned, one of the biggest barriers in utilizing biogas in Croatia is the relatively small size of farms that are not capable of having economically viable biogas production. That is why community biogas plants will be important in increasing biogas utilization in Croatian farming sector. Presented methodology represents basics for regional analysis of biogas potential of a farming sector with Croatia as a case study with cost assessment of community biogas power plants considering transport distances, transport costs, and size of the power plants and family farms involved in community biogas production. The value of finding Croatia’s farming biogas potential is also important since farms are high-volume energy consumers in their everyday operations and part of that energy consumption can be compensated from renewable energy sources like biogas.

Informal Investment in Transition Economies: Individual Characteristics and Clusters

This paper investigates the factors driving informal investment in Croatia, Hungary and Slovenia. Using Global Entrepreneurship Monitor (GEM) data, we find that the low rates of informal investment activity and the small amounts of investments in these countries are driven by entrepreneurial behaviors consistent with limited market economy experience. We extend prior studies by investigating the role of business ownership, and identify significant differences between individuals with and without business ownership experience in terms of having start-up skills, knowing an entrepreneur and fearing failure. Cluster analysis identifies seven distinct groups of informal investors, and reveals the heterogeneity in terms of investors’ age, gender, level of education, amount of investment, start-up skills, ownership status, income, opportunity perception and country of residence.

Public Investments in Croatia

This Occasional Paper occurred as the byproduct of preparations for writing the report by Geoff Dixon, Katarina Ott and Jean-Jacques Dethier “Capital Expenditure by the Government in Croatia: Fiscal Accounts, Budgetary Institutions and Budgeting Process”, The World Bank, Europe and Central Asia Region, Poverty Reduction and Economic Management Unit, June 1998. The authors, Katarina Ott and Anto Bajo (Institute of Public Finance) first published the text in Croatian in the Institute’s journal “Financijska praksa” Volume 23, Number 1, (March 1999). This Occasional Paper is the English language translation of the article published in “Financijska praksa”.