Investments spur productivity, create jobs and discourage emigration

Published: 8/3/2018

Well and efficiently allocated investments could spur productivity, enhance competitiveness, create new jobs and discourage emigration, noted the Croatian National Bank Governor Boris Vujčić at the conference "Investments – Moving productivity frontier", jointly organised by the European Investment Bank (EIB) and the Croatian National Bank and held on 7 March 2018.

Dario Scannapieco, Vice-President of the EIB, presented the results of the EIB Group survey on investment and noted that Croatia should take advantage of the years of growth following the EU accession to create conditions for long-term competitiveness and sustainable development.

Martina Dalić, Deputy Prime Minister and Minister of Economy, Entrepreneurship and Crafts of the Republic of Croatia, pointed out three priorities of the Government associated with stronger investment growth – faster and better absorption of EU funds, measures to boost the investment environment and reforms to improve the functioning of public institutions.

Elaborating on the EIB's survey results, Debora Revoltella, Director of the European Investment Bank said that investments have been recovering steadily, but remained well below pre-crisis levels, while the lack of adequately skilled staff and rigid regulations on the labour and goods markets hamper further investment growth. Among obstacles to investment activities mentioned by Croatian firms was the access to financing sources, both in terms of financing costs and collateral. The EIB's survey showed that Croatian firms thought that public investment should focus on professional training and ICT infrastructure. Vedran Šošić, Vicegovernor of the Croatian National Bank, mentioned also the results of the survey on the access to finance of SMEs, which is conducted by the CNB and which points to the regulatory framework as the greatest obstacle to doing business in Croatia. While in the 2015 survey SMEs pointed to the inability to collect claims as a major hindrance, in 2017 they mentioned the lack of adequately skilled staff. Also, there is room to enhance the absorption of EU funds, which could provide an impetus to further growth. However, structural impediments continue to stifle investment growth potential, said Vicegovernor Šošić.

While Croatian GDP has come close to the pre-crisis level, investments have been rising and employment has been trending up for five years in a row, real and potential growth continue to lag behind that of peer countries, said Servaas Deroose, Deputy Director-General of the European Commission. Deroose argued that obstacles to investment should be removed, in particular those in public administration and the business environment. Croatia has yet to embark on key reforms, pointed out Deroose, with their implementation also being essential in deciding on euro adoption.

Panellists at the panel on investment dynamics in Croatia, moderated by Gordi Sušić, Director of the CNB's Economic Analysis Department, were Debora Revoltella, Vedran Šošić and Servaas Deroose, who were joined by Paloma Lòpez-Garcia, Senior Economist at the European Central Bank, and Dubravko Mihaljek, Head of Macroeconomic Analysis at the Bank for International Settlements.

Investments in real life were the topic of the second panel at which the panellists were as follows: Miguel Morgado, Director, European Investment Bank, Marija Tufekčić, Executive Director, Plavi partner d.o.o., Jasmina Dovgan, Board Member, Signalinea d.o.o., Darko Ranogajec, President, OMCO Croatia and Jacques Feron, President, Međunarodna zračna luka Zagreb. The panel moderator was Anton Kovačev, Head of the EIB's Office in Croatia.