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Leap Forward Required

Croatia attracts foreign investments, but it needs a crucial dialogue between private investors and public stakeholders in order to address challenges like a tight labour market and education gaps

In today’s global economic environment, communication and cooperation between the private sector and the public administration within countries is becoming more important by the day. While public administration should focus on creating a positive investment climate to attract domestic and foreign investors, private investors serve to transfer knowledge, capital and technologies to new markets and countries.

Organisations like the Foreign Investors Council help to facilitate dialogue between the private and public sectors, to share and promote best practices from other countries so that mistakes are not repeated and the learning and implementation process is shortened.

This is also the case with the ESG competencies of foreign companies, as many of them have already implemented these higher business standards in countries where awareness of ESG business conduct was adopted years ago. Our supporting role is to help our members communicate their experiences and the benefits of green transitions to a wider audience, but also to help find ways to implement this new knowledge in the future. Companies and public authorities are initially apprehensive due to the additional costs implied by the implementing of green transition, but we must ultimately teach and explain the medium- and long-term benefits for society. Having information about the ESG experiences of many of their members, FIC organisations, in countries where they are active, consolidate and share these experiences with the public and local authorities at many levels. Sharing these experiences between countries is also a benefit of cooperation among FIC organisations in various geographical regions.

By leveraging ESG expertise from members, FIC organisations consolidate and disseminate these experiences to the public and local authorities across different levels

Having entered the EU 11 years ago, Croatia has reached the end of the official part of its EU accession by now becoming part of the EU and Schengen area. Croatia did not yet fully utilise opportunities for development associated with the process, as integration into the single market creates incentives to grow exports of goods and services and promote foreign direct investment inflows. The next wave of economic internationalisation is yet to come, as the global economy is undergoing permanent changes. Given its geography, EU membership, very good infrastructure and developed ICT sector, Croatia has to advance further in the coming years by attracting significant FDI from innovative companies that create much higher value added per worker and that invest in R&D.

In order for this to happen, two major barriers must be eliminated as soon as possible. Firstly, the country’s labour market is tight and the quality of education is lagging behind when it comes to serving the needs of a modern economy capable to creating high value added – high productivity and wages per employee. Secondly, the quality of regulations and public administration efficiency call for a leap forward to bring administrative processes in line with the standards of the most developed European countries through the applying of comprehensive digitalisation.

The FICC contributes to these efforts by facilitating continuous dialogue between its members and public stakeholders, but also by regularly publishing its White Book – the trademark of FIC organisations – containing specific recommendations of foreign investors that highlight the current bottlenecks and propose solutions to address them and unlock untapped potential.

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