Barriers to Competition in Croatia : The Role of Government Regulation

This paper examines product market
policies in Croatia by benchmarking them to OECD countries
and highlighting how policies that are more conducive to
competition would stimulate a more efficient allocation of
resources and, in consequence, facilitate convergence to
higher income levels. OECD indicators of overall regulation
in product markets indicate that Croatias policies in 2007
were generally more restrictive of competition than were the
policies in OECD countries. This is especially true for
policies concerned with the degree of state control of the
economy and with barriers to entrepreneurship. Regulatory
obstacles to trade and foreign direct investment, by
contrast, are in line with those of pre-accession European
Union countries (Czech Republic, Hungary, Slovak Republic,
and Poland in 2003, as well as Bulgaria and Romania in
2006), albeit well above the OECD average. Regulation of
post, electricity, gas, telecoms, air, rail, and road
transport, as estimated by the OECD energy transport and
communication sectors indicator, is also less liberal than
in the OECD, highlighting the positive knock-on effects for
the rest of the economy that could derive from further
liberalization of network industries.