Maastricht Criteria and the Inclusion of Underground Economy - the Case of Croatia

European Union has introduced an explicit obligation for all member states that the official GDP data need to include the estimation of the underground economy, resulting from statistical or economic reasons. For this purpose, the so-called Eurostat Exhaustiveness programme has been developed for the group of candidate countries, ten of which have become full members as of the 1st of May 2004. In line with the results of this programme, the new EU members include the correction for the value of the underground economy into their official GDP figure. With the inclusion of underground economy, the consequent value of Croatian GDP per capita, measured according to the purchasing power parity, reduces the gap in comparison to the EU-25. Furthermore, the proportion of total expenditures in GDP of the general government sector is reduced as well, which places Croatia below the NMS-8 country average. In terms of the Maastricht convergence criteria, the underground economy inclusion procedure does not affect the fact that the criteria are not met. The inclusion of the underground economy influences two indicators: proportion of the government sector deficit in GDP and the proportion of the public debt in GDP. The inclusion of the underground economy does not influence on fulfilling the criteria concerning the government sector deficit. The criteria concerning the size of public debt are fulfilled by Croatia even without the inclusion of the underground economy. Inflation criteria and the size of long-term interest rates criteria are not directly linked to the GDP value

JE LI BDP PRIKLADAN POKAZATELJ ODRŽIVOG EKONOMSKOG RAZVITKA?

The System of National Accounts (SNA 1993, ESA 1995) as an internationally agreed framework for the compilation and presentation of economic data defines gross domestic product (GDP) as an overall indicator of economic growth. Accounting for the environment’s contribution to the economy and human welfare was considered extremely difficult, requiring the resolution of intractable methodological problems and the generation of a large amount of data. Besides environmental aspects, GDP also fails to fully explain differences in overall satisfaction of the citizens and perception of quality of life and well-being. One of the most ambitious efforts to reform the calculation of an indicator of economic welfare is presented in Daly and Cobb (1989). They propose a GDP substitute, the Index of Sustainable Economic Welfare (ISEW) which, apart from the conventional national accounts data includes environmental variables and income distribution indicators. In this paper we apply the ISEW methodology to the Croatian economy and construct the index of sustainable economic welfare for Croatia in the period 2000-2010. Index of Sustainable Economic Welfare constructed for Croatia has not recorded signifi cant differences in comparison to GDP trends. Until 2003, the ISEW index was below GDP and personal consumption. In period 2003-2006 ISEW recorded higher levels than GDP while in 2007 and 2008 both indices are moving in line. During the recession period, overall welfare has not decreased substantially because GDP drop is partially compensated by non-monetary activities with positive impact on household wellbeing.Sustav nacionalnih računa (SNA 1993, ESA 1995) predstavlja međunarodno usuglašen okvir za izradu i prikaz ekonomskih podataka, a kao temeljni pokazatelj ekonomskog razvitka i rasta koristi se bruto domaći proizvod (BDP). BDP prema svojoj definiciji ne obuhvaća ukupne učinke ekonomskih transakcija na okoliš i ne mjeri blagostanje pojedinaca budući bi konstrukcija takvog pokazatelja zahtijevala rješavanje složenih metodoloških problema i uključivanje brojnih dodatnih varijabli u obračun. BDP također ne objašnjava ukupne razlike u zadovoljstvu građana i njihovu percepciju o kvaliteti života i blagostanju. U ekonomskoj literaturi kao jedan od najambicioznijih prijedloga za izračun indikatora koji bi bio primarno vezan uz mjerenje blagostanja najčešće se spominje rad Daly i Cobb (1989). Oni su pored BDP-a osmislili konstrukciju indeksa ekonomskog blagostanja (ISEW), koji bi osim konvencionalnih pokazatelja vezanih uz nacionalne račune obuhvaćao i određeni skup indikatora vezanih uz stanje okoliša i raspodjelu dohotka. U ovom radu je primijenjena metodologija izračuna indeksa ekonomskog blagostanja za hrvatsko gospodarstvo u razdoblju 2000.-2010. Indeks izrađen prema toj metodologiji u analiziranom razdoblju nije zabilježio značajne razlike u trendovima u usporedbi s kretanjem BDP-a. Do 2003. godine indeks ekonomskog blagostanja pokazivao je niži rast od rasta BDP-a i osobne potrošnje. U razdoblju 2003.-2006. indeks ekonomskog blagostanja pokazivao je višu razinu od BDP-a, dok se tijekom 2007.-2008. oba indikatora kreću usklađeno. U recesijskom razdoblju, za razliku od BDP-a indeks ekonomskog blagostanja nije pokazao značajno smanjivanje budući je pad monetarnih transakcija bio djelomice kompenziran kretanjem nemonetarnih aktivnosti koje pozitivno doprinose blagostanju kućanstava

THE IMPACT OF FORESTRY AND WOOD INDUSTRY ON CROATIAN ECONOMY

Šumarstvo i drvna industrija su značajni za hrvatsko gospodarstvo. U ovom radu je kvantificirano njihovo značenje kroz input-output analizu. Kvantificirani su izravni i neizravni učinci koji nastaju kroz lance proizvodnje i potrošnje svih djelatnosti. Multiplikativni učinci proizvodnje u šumarstvu i drvnoj industriji u Hrvatskoj su značajni. Izračunati multiplikatori pomoću metode input-output analize pokazuju da je najveći multiplikator bruto proizvodnje u odjeljku 20 nacionalne klasifikacije djelatnosti prerada drva i proizvodi od drva i iznosi 1,94, što je najveći multiplikator u odnosu na sve ostale promatrane odjeljke. Potom slijede Šumarstvo, odjeljak 02 s 1,77 i proizvodnja namještaja, odjeljak 36, s multiplikatorom 1,76. Podjednaki zaključci vrijede i kod multiplikatora bruto dodane vrijednosti. Glede zaposlenosti, izravan učinak je najznačajniji kod proizvodnje namještaja 5,4. U cjelini gledano, tzv. drvni klaster ova tri odjeljka NKD-a u usporedbi s ostalim multiplikatorima za hrvatsko gospodarstvo imaju iznadprosječno velike vrijednosti. Međutim, njihovi učinci su rasprostranjeni izravno u okviru drvnog klastera, a manje kroz druge djelatnosti, te prevladavaju izravni učinci, dok su neizravni manje značajni. U usporedbi s drugim novim članicama EU, udio uvezenih inputa u šumarstvu i drvnoj industriji je manji. Glede raspodjele dodane vrijednosti, udio sredstava zaposlenih u Hrvatskoj je jako velik i iznosi oko 30,9% te najveći je među promatranom skupinom zemalja i najsličniji je strukturi slovenske drvne industrije. Visoku razinu troškova rada ne prati i podizanje tehnološke razine proizvodnje koje bi osiguralo rast konkurentnosti i rast udjela proizvoda veće dodane vrijednosti.Forestry and wood industry are important segments of the Croatian economy. Their importance in this article is quantified using the input-output analysis. Direct and indirect effects, appearing through production chains and intermediate consumption of other industries are assessed. Data shows that there are significant direct and indirect effects of forestry and wood industry. Estimated multipliers exhibit high values; especially the output multiplier in section 20 of NACE classification, namely Wood products, reaching the value of 1.94. This is the highest multiplier among all other industries. This is followed by Forestry, section 02 with the multiplier amounting to 1.77 and Furniture, section 36, with multiplier 1.76. The same conclusions are drawn regarding the gross value added multiplier. In terms of the employment multiplier, direct effect is highest in section Furniture, 5.4. Overall, wood cluster has an above average value of multiplier in comparison to other industries. However, effects are concentrated in the wood cluster itself, not scattered across the rest of the economy. It makes indirect effects less important for the rest of the Croatian economy. In comparison to other EU NMS, the share of imported inputs in Forestry and wood industry are rather small. As for the structure of value added in Croatia, the share of employee compensation is very high, amounting to 30.9%. It is the highest share among peer groups and is the most similar to the Slovenian wood industry share. High level of labor costs is not followed by deployment of progressive technologies in order to provide competitiveness gains and increase the share of high value added products in Forestry and wood industry

GROWTH, INTERNATIONAL TRADE AND OPENNESS OF ECONOMY

Pregled empirijskih rezultata studija o međuovisnosti međunarodne trgovine, brzine gospodarskog rasta i otvorenosti gospodarstva ukazuje da, neovisno o korištenim indikatorima otvorenosti gospodarstva i metodološkom pristupu, u većini slučajeva postoji uska korelacija između brzine gospodarstva i metodološkom pristupu, u većini slučajeva postoji uska korelacija između brzine gospodarskoga rasta i stupnja otvorenosti gospodarstva. Autori posebno naglašavaju da i svi parametri ekonomske politike moraju biti postavljeni takoda vode ostvarenju toga cilja, a ne da budu kontradiktorni.A survey of empirical results of studies on interdependence of international trade, economic growth rate and openess of economy suggests that in most cases, independently upon used indicators of openness of economy and methodological approach, exists close correlation between economic growth rate and level of openness of economy. This is empirically established fact, but researchers are still faced with the problem of establishing exact mechanisms by which the process of faster openness of economy and more considerable integrational division of labor influences faster economic growth. Majority of researchers points out the correlation of phenomenon of openness and transfer of technology and knowledge, thus the conclusion is that beneficial effects of openness of economy are received through technology and knowledge transfer, what secures quality improvement of domestic technological structure. That is an usual scenario in “normal” circumstances. But the cases of particular unsuccessful openness in Latin-American countries testify that in certain circumstances, in spite of openness of country and due to economic policy, it does not occur technology and knowledge transfer, but only extremely high balance of payments deficit which soon threatens the whole economic program. In other words the scenario of existence of beneficial effects of fast openness towards world and the use of allbeneficions through growing productivity, has real prospects only if all other parameters of economic policy are adjusted in a way that they aspire to realization of the same goal. However contradictions can appear, thus there are always researchers who conclude that fast openness towards the world itself is not sufficiently explored, it is dangerous and similar, and they are trying to find out many arguments which will contribute to infant industry scenario. It simultaneously follows from this fact the main attitude concerning possible doubts about growth liberalization and necessity of domestic industry protection in the Republic of Croatia. More comprehensive liberalization and integration into world trade capital and goods flows is not only necessity for a small country like Croatia, but also a process which already in a short term, and especially in a long one, brings to country huge profits with growing productivity. It should be repeated that all other parameters of economic policy should not be contradictory, but they must be established in such a way that they lead to realization of this goal. Especially mentioned should be here fiscal policy, monetary policy and wage policy, and entire economic and institutionally legal frame in general, which must aspire to promotion of transparency and efficiency on the whole. Experience confirms that in most cases, the arguments of domestic industry protection which were so frequent in past, and which appear nowadays in transitional countries due to the problem in there structuring process of economy, are the wrong way of deliberation of the way of integration into international goods and capital trends. Here should not be confused the concepts of protection of domestic industry and active industrial policy which each particular country conducts in a less or more explicit way, just because of alleviation and acceleration of technology and knowledge transfer from abroad, as well as production of the same at home. Perhaps it is not needless to remember the old truth in new environment like the transitional one

RESEARCH AND DEVELOPMENT OF CAR DESIGN

U članku se analizira odnos između dizajna i aerodinamičnosti automobila, te kako se dizajneri nose s ovim izazovom. Automobili nisu samo sredstva prijevoza nego i predmet osobnosti, zato se percepcija kupca mora rano uklopiti u proces oblikovanja karoserije. Razvoj dizajna novog vozila, kreće od percepcije kupaca, zatim slijedi proces dizajniranja te na kraju validacija. Dizajnom se mora pogoditi tržište odnosno regionalni ukus, koji određuje identitet i prepoznatljivost vozila. Istraživanje osobnosti izbora dizajna automobila na studentskoj muškoj i ženskoj populaciji govori da je dizajn najmanje jednako odlučujući čimbenik izbora vozila kao i njegove performanse. Činjenica je da su tehnički koncepti automobila sve sličniji u svim segmentima, stoga je dizajn više nego ikad prije sredstvo pomoću kojeg se razlikuju jedni od drugih. Stoga je moderni dizajn automobila uvjetovan ljepotom, komforom i sigurnošću vožnje, koje sve više dolazi do izražaja. Na kraju, dizajn vozila je prijelomna točka od koje ovisi tržišni uspjeh.The article analyses the relationship between design and aerodynamics of the car, and how the designers handle this challenge. Cars are not just a means of transport but also a subject of personality; therefore, the customer\u27s perception must be incorporated early into the body shaping process. The design development of a new vehicle is based on customer perception, followed by the design process and fi nally validation. The design must be guided by the market or regional taste, which determines the identity and distinctiveness of the vehicle. Research on the personality of car design choices on the male and female student population indicates that the design is at least as decisive a factor of vehicle choice as is its performance. The fact is that the technical concepts of cars are ever more similar in all segments, thus the design is more than ever a means of diff erentiation from each other. Consequently, modern car design is conditioned by beauty, comfort and safety of driving, which is becoming increasingly apparent. In the end, the vehicle design is the crucial point determining its market success

Beyond the Christian Doctrine: Austrian Catechism in Croatian Literary Culture in the 18th Century and Kant’s Enlightenment Thought

Hrvatska je književna kultura u 18. stoljeću obilježena stilskim pluralizmom, s tim da se najčešće ističe njezin prosvjetiteljski karakter s naglašenom didaktičkom (odgojnom, moralističkom, katoličkom) i utilitarističkom dimenzijom. Austrijski katekizam temeljna je knjiga školskog vjeronauka od 1777. do 1847. godine u cijeloj Habsburškoj Monarhiji te ima važnu ulogu u odgoju djece, ali i cijele obitelji, odnosno društvene zajednice u duhu jozefinističke politike. Navedena tematika razmatra se u perspektivi Immanuela Kanta kojemu je bilo važno istaknuti opasnosti u koje fetišizacija crkvenih normi može voditi te razviti kritičke momente slobode i odgoja. Izostanak prosvjetiteljstva u hrvatskim zemljama Habsburške Monarhije kompleksno je uvjetovan: od religijskog otpora promjenama u društvenom i političkom smislu, do zaostalosti i neobrazovanosti velikog dijela stanovništva, što je odgovaralo hrvatskom plemstvu i kleru.Croatian literary culture of the 18th century is marked by stylistic pluralism, considering that its Enlightenment character and its didactic (educational, moralistic and Catholic) and utilitaristic dimensions are emphasized the most. Austrian catechism was the fundamental book of school religious education from 1777 until 1847 in the whole Habsburg Monarchy, and it played an important role in the upbringing of children, but also of the entire family and social community in the spirit of Josephine politics. This topic is viewed from the perspective of Immanuel Kant who found it important to emphasise the dangers to which the fetishisation of ecclesiastical norms can lead to, i.e. to hinder the development of critical moments of liberty and upbringing. The absence of Enlightenment period in Croatian countries of the Habsburg Monarchy is complexly conditioned: from religious resistance and changes in a social and political sense to stagnancy and lack of education of a large part of the population, altogether favourable to the Croatian nobility and clergy

QUARTERLY GDP ESTIMATE OF THE REPUBLIC OF CROATIA FROM THE FIRST QUARTER OF 1994 TO THE FOURTH QUARTER OF 1996 - EXPENDITURE APPROACH

U ovom radu autori su prikazali metodološke osnove za obračun kategorija bruto domaćeg proizvoda prema rashodovnom pristupu u skladu s međunarodnim preporukama prikazanima u SNA 1993. i ESA 1995. Također je prikazan i metodološki pristup kojim se pri obračunu godišnjeg i tromjesečnog BDP koristi Državni zavod za statistiku RH i kompatibilnost teoretski preporučene i empirijski primijenjene metode obračuna, i to za razdoblje 1994.-1999. Postojanje takve serije uveliko obogaćuje oskudne statističke izvore u Republici Hrvatskoj i pruža mogućnost za bolju analizu gospodarske stvarnosti i za modeliranje ekonomskih pojava.The paper shows methodological bases for accounting of gross domestic product categories according to expenditure approach harmonized with international references shown in SNA 1993 and ESA 1995. It is also shown methodological approach used in annual and quarterly GDP accounting by the State Bureau of Statistics of the Republic of Croatia and compatibility of theoretically suggested and empirically applied accounting method.The State Bureau of Statistics controls quarterly gross domestic product accounting according to expenditure approach for the period 1997-2000 and annual data are available for the period 1994-1998. The purpose of this paper is development estimate of quarterly gross domestic product according to main components of aggregate demand for the period 1994-1999. The existence of such series greatly enriches inadequate statistical sources in the Republic of Croatia and offers the possibility for better analysis of economic reality and modelling of economic occurences. The applied method for coordination of of ficialannual and estimated quarterly data is the Bassie method. The period before 1997 is characterized by inadequacy of availability and quality of data sources. These problems determine in advance quality and received development estimates of quarterly GDP. Weconsider that credibilty of received series is sufficient and a number of observations after coordination of quarterly and annual data sufficient, to use these series in majority of statistical and econometric programmes

PERSONAL CINSUMPTION MODELLING IN THE REPUBLIC OF CROATIA BY USING THE ERROR CORRECTION MODEL

Autori u radu prikazuju modeliranje osobne potrošnje u Hrvatskoj metodom korigiranih grešaka – ECM (Error Correction Model). Prikazano je razdoblje od 1970. do 2002. godine, što čini dovoljno dugu vremensku seriju za izvođenje pouzdanih zaključaka o ponašanju sektora kućanstava. EC model ima svoje standardne nezavisne varijable: konstantu, kratkoročnu komponentu (tekući dohodak), pomaknutu (lagiranu) u vremenu dugoročnu komponentu (kointegraciju dohotka i potrošnje). Pored standardnih sastavnica signifi kantnom se u određivanju dinamike osobne potrošnje pokazuje i varijabla postojanja kreditnih ograničenja za sektor kućanstava. Procijenjeni parametri su očekivanog predznaka i signifikantni, s veoma dobrim statističkim svojstvima (veliki i značajni empirijski t omjer i F statistika, odsutnost pogrešne specifikacije funkcije, nepostojanje autokorelacije i heteroskedastičnosti i posjeduju svojstvo stabilnosti). Na osnovi EC modela autori na kraju rada daju projekciju osobne potrošnje u stalnim i tekućim cijenama za 2003. godinu.In this paper the authors presented a personal consumption modelling for Croatia by using the Error Correction Model. Time period considered stretches from 1970-2002, providing workable time series data and therefore derivation of reliable conclusions on household sector behavior. EC model has standard set of independent variables: constant, i.e. short-term component (current income), i.e. lagged long-term component (cointegration of income and consumption). Besides these standard components for modelling personal consumption dynamics, the existence of credit constraints for household sector also appeared to be significant. Estimated parameters have expected sign and are significant, with satisfying statistical properties (significant t and F statistics, absence of personal consumption function misspecification, absence of autocorrelation and heteroscedasticity, and stability of parameters). At the end of the paper the authors provided personal consumption forecast in current and constant prices for 2003 based on the EC model

AREAS OF SPECIAL STATE CONCERN IN CROATIA- REGIONAL DEVELOPMENT DIFFERENCES AND THE DEMOGRAPHIC AND EDUCATIONAL CHARACTERISTICS

Konzistentna i učinkovita politika uravnoteženog regionalnog razvitka izuzetno je važna za dalji razvitak Hrvatske. Sadašnju situaciju karakterizira veoma visoka razina koncentracije ukupne gospodarske aktivnosti u Gradu Zagrebu (30% ukupnog bruto domaćeg proizvoda). U područjima posebne države skrbi (PPDS) živi 15,3% stanovništva Hrvatske. Demografske i obrazovne karakteristike PPDS izrazito su nepovoljne, premda raznolike, ovisno o pojedinim skupinama PPDS. Analiza korelacije rangova (Spearmanov koefi cijent) pokazuje postojanje slabe korelacije između udjela stanovništva koje živi u PPDS pojedinih županija i razine razvijenosti županija mjerene bruto domaćim proizvodom po stanovniku godine 2001. To ukazuje na pojavu sve značajnijih odstupanja stvarne ekonomske snage nekih područja od potrebe njihova uvrštavanja u PPDS. Posebno je to izraženo u pojedinim županijama, u kojima prevladavaju PPDS tzv. prve i druge skupine. Kod PPDS tzv. treće skupine nema takvih odstupanja, pa stoga valja očekivati da će se u nadolazećem razdoblju cjelokupan sustav kriterija za određivanje PPDS morati sve više približavati jasnim kriterijima treće skupine. To su kriteriji ekonomske razvijenosti, demografski kriterij i kriterij intenziteta strukturnih prilagodbi.A coherent and effective policy of balanced regional development is of vital importance for future growth of Croatia. Current situation is characterised by a very high concentration of economic activity in the City of Zagreb, accounting for 30% of total GDP figure. Areas of Special State Concern (ASSC) represent 15,3% of the total population in Croatia. Demographic and educational characteristics of these areas vary, but are overall of unsatisfactory standard, largely depending on the group within the ASSC. Correlation rank analysis (Spearman’s coefficient) indicates a weak correlation between the population size of the ASSC in different counties and the level of development of these counties, measured by GDP per capita in 2001. This signifi es the appearance of a major gap between the real economic strength of certain areas and the justifi cation of their ASSC classifi cation. This is especially evident in the counties containing areas of the so called first and second group. Areas of the third group do not demonstrate such discrepancies, and it can be therefore expected, that in the future the ASSC criteria will have to adapt to the clear criteria structure of the third group. These criteria are economic development, demographic considerations and the intensity of structural adjustments

MAKROEKONOMSKA OBILJEŽJA, TRGOVINA I KONKURENTNOST ZEMALJA JUGOISTOČNE EUROPE

The purpose of this paper is to analyze macroeconomic performance of the selected South-east European (SEE) countries reflected by GDP growth, inflation, unemployment and overall economic competitiveness and especially to asses the impact of global crisis on domestic economies. As a key aspect of overall competitiveness, changes in the trade patterns of selected South-east European countries are also analyzed. The period from 2000 to 2008 can be characterized as successful for South-east European countries due to the narrowing development gap in comparison to EU countries, but the recent global economic crisis had a strong negative impact on this region. However, due to domestic absorption growth and export of services, Albanian economy was growing even in 2009, a period when most European countries recorded significant drops in economic activity. On the other hand, the highest negative growth rates were recorded in Croatia and Montenegro. In all countries the global economic crisis resulted in decreasing comparative advantages and export competitiveness in most export products. Most of the observed countries have complementary export structures. This kind of situation offers the possibilities of strengthening the mutual economic cooperation and joint efforts on the international markets especially in the circumstances of the global economic crisis.Svrha je ovoga rada analizirati makroekonomska obilježja odabranih zemalja jugoistočne Europe promatrajući rast BDP-a, inflaciju, nezaposlenost i ukupnu gospodarsku konkurentnost s posebnim naglaskom na učinak globalne gospodarske krize. Kao ključni aspekt ukupne konkurentnosti, analizirane su promjene u strukturama međunarodne trgovine odabranih zemalja jugoistočne Europe. Razdoblje od 2000. do 2008. je bilo uspješno za zemlje jugoistočne Europe zbog smanjenja jaza u razini gospodarskog razvoja u odnosu na zemlje EU, ali globalna je gospodarska kriza imala negativne učinke na zemlje regije. Unatoč tome, u 2009. kada je većina europskih zemalja zabilježila značajan pad gospodarske aktivnosti, gospodarstvo Albanije je zabilježilo rast i to zbog povećane domaće potražnje i izvoza usluga. S druge strane najveće su negativne stope promjene BDP-a zabilježile Hrvatska i Crna Gora. U svim je zemljama globalna gospodarska kriza rezultirala smanjenjem komparativnih prednosti i izvozne konkurentnosti u većini izvoznih proizvoda. Većina promatranih zemalja ima komplementarne izvozne strukture. Takva situacija, posebno u uvjetima globalne gospodarske krize, nudi mogućnosti jačanja uzajamne gospodarske suradnje i zajedničkih nastupa na međunarodnim tržištima