Multiple Shocks and Changes in the Development Gradient of Croatia’s Regions

Abstract

Over the course of the past two decades Croatia has experienced four large political and economic shocks. The first was the transformation which resulted in self-managing socialism being replaced by a capitalist system. This process began in Croatia in 1989 (while Croatia was still part of Yugoslavia) and many argue it is not yet completely finished. The second shock was independence: Croatia was one of the seven new states eventually spawned by the break-up of Yugoslavia in 1991. The third shock was the Homeland war during which Croatia’s independence was contested and successfully defended in the second of the Four Wars of the Yugoslav Succession. The Homeland war (the name it is given in Croatia) lasted four years — from 1991 to 1995. The fourth shock started with the EU integration process. Croatia signed the Pact on Stability and Accession in 2001, it became a candidate country in 2004 and the process accelerated when membership negotiations started in 2005. Of course, these shocks were not purely external (indeed, only one, the war, was external). The generation of these shocks — and most certainly their form — was primarily a result of internal political economy developments and domestic policy choices that were taken in a given setting and path dependency. To a somewhat lesser (but far from insignificant) extent they were imposed externally through various forms of conditionality.