Business Environment in Croatia


Croatia is strategically located in Europe and is at the crossroads of the Balkan, Adriatic Sea, Central Europe; besides it is also located within the proximity of the Mediterranean region. Among the economies sharing a common border with Croatia is Bosnia and Herzegovina, Hungary, Serbia, Montenegro and Slovenia. According to the World Bank, Croatia is an emerging economy that offers the best business environment for both local and international firms. Among the main factors that make the Croatia to have an attractive business environment is the fact that it has a very high human development index and the improving economy. The economy is also a member of the European Union, Union of Mediterranean, NATO, Council of Europe, and the World Trade Organization. Although the economy is dominated by the service sector, other sectors of the economies are booming include the information technology and the real estate.
Croatia is an open economy with the major trading partners being Herzegovina, Italy, Slovenia, Germany, Russia, Bosnia, and Austria, among other. The main exports are transport equipment, foodstuffs, chemicals, machinery, and textiles. The main imports include fuel, foodstuffs, chemicals, electronic equipment, and machinery. The economy is a member of several trading partners; thus, the government has limited control on trade. There has been vast Foreign Direct Investment (FDI) until the 2008 global economic meltdown. A formal business environment characterizes the economy and cross-cultural management is widely accepted with the main language being Croatian. The government promoted FDI and partners with many multi-nationals by creating a good business environment characterized by tax breaks, and liberal frameworks. As a result, the multinationals form partnerships with local firms in efforts to promote economic growth. The multinationals enjoy the high purchasing power characteristic of the citizens. More so, the country is politically stable and enjoys diplomatic relations with more than 150 countries.

The suitable business environment has played a role in the economic development in Croatia. Among the major firms operating in the economy include Agrokor, INA, Hrvatska elektroprivreda, and Konzum, among others. Tourism is the major source of foreign exchange because Croatia is ranked number 18th in regards to tourist destination in the globe. This has triggered the real estate in Croatia investors to take advantage of the business opportunity arising due to the demand for luxury hotels and restaurants. The ready market for the local citizens and international visitors has played a key role in triggering vast real estate and infrastructural development.


Irrespective of the favorable business environment, the major drawbacks while engaging in business in Croatia is the high degree of corruption, land ownership issues, and inefficiencies in public administration. Additionally, the Britain exit from EU is likely to affect businesses across the members of the EU. However, the government has been working towards improving towards improving the governance and accountability across all the sectors of the economy. The government is collaborating with the private sector to ensure that firms continue to earn returns from their investments. Thus, the future business environment for international and local businesses is bright.