Title page
Contents
Abstract/Résumé 4
Widespread productivity gaps call for improving the business environment 7
Strengthening framework conditions for business 12
Reducing regulatory burdens 12
Improving legal certainty and trust with a more efficient judicial system 18
Levelling the playing field through tackling corruption and clientelism 22
Continuing productivity-supporting reforms through a productivity board 26
Expanding financing options to encourage innovative investment 28
Improving business insolvency can facilitate bank financing especially for high-risk projects 31
Mobilising public equity markets 32
Improving the framework and expanding public support for research and development 34
Strengthening the performance of state-owned enterprises 35
Improving the state's role as owner 37
Empowering supervisory boards to foster good management 38
References 41
Table 1. Examples of alternative dispute resolution mechanisms 20
Figure 1. Productivity catch-up with the average of OECD countries has slowed 8
Figure 2. Closing productivity gaps requires improving performance across all sectors 9
Figure 3. Overall productivity is weighed down by many unproductive firms 10
Figure 4. Strong business dynamism translates less well into sustainable productivity gains 11
Figure 5. Private and foreign direct investment have lagged peers 12
Figure 6. Croatia's formal regulatory framework has improved 14
Figure 7. Regulatory burdens, in practice, are a major obstacle to investments in Croatia 16
Figure 8. Croatia has improved its regulatory framework 17
Figure 9. Resolving cases is slow and trust in courts and judges is low 18
Figure 10. Large numbers of incoming and pending cases pressure courts' performance 19
Figure 11. Perceptions of corruption are high 24
Figure 12. Many businesses report clientelism to be a problem 24
Figure 13. Experience with corruption is common and tolerance of it is relatively high 25
Figure 14. Businesses' use of external financing is low 28
Figure 15. Demand for finance is relatively low 29
Figure 16. Private equity markets are relatively well developed 30
Figure 17. Croatia's financial regulations enable relative transparency but need to better address terrorist financing and money laundering risks 31
Figure 18. Croatia's insolvency framework leaves room for improvement 32
Figure 19. The domestic stock market's capitalisation is low 32
Figure 20. State-owned enterprises play a significant role in some sectors 35
Figure 21. Public ownership is associated with weaker financial performance 36
Figure 22. Delivery of public services could be improved, such as in waste management 37
Boxes
Box 1. Croatia's recent reforms to improve its regulatory environment 13
Box 2. Reforms to reduce regulatory barriers in professional services 15
Box 3. Denmark's Business Forum for Better Regulation 17
Box 4. Alternative dispute resolution mechanisms to solve disputes outside of courts 20
Box 5. Country schemes encouraging alternative dispute resolution mechanisms 21
Box 6. Country examples on fostering trust in the judiciary through public engagement 23
Box 7. Australia's implementation of codes of ethics 26
Box 8. Pro-productivity institutions and the Australian example 27
Box 9. Examples of Croatia's state-owned enterprises 35