Bruno Škrinjarić and Dr Vedran Recher from the Institute of Economics, Zagreb prepared a policy brief on productivity of enterprises and the intensity of market forces in Croatia.
Key messages of the policy brief are:
- Labour productivity (LP) was stable in pre-crisis period before plummeting in 2009 after which is constantly lower by about 20 percent compared to pre-crisis figures
- Large enterprises and/or exporters recorded highest growth of LP, TFP and also capital productivity (CP), with the latter measure displaying the greatest volatility
- Private enterprises are characterized by most dynamic change in unit labor cost (ULC) and CP while state-owned enterprises (SOEs) are quite rigid in this regard
- There are no significant differences among different Croatian regions or sectors in these productivity metrics
- Croatian economy is characterized by less intense market dynamism that cannot adequately contribute to increased innovation and faster growth, both of the corporate sector and the overall economy
- Market dynamism (measured by market entry and exit) is the highest for the enterprises focused solely on domestic production and sales
- TFP change in whole economy was very turbulent with negative trend in crisis period (2009-2015), but this returned to pre-crisis growth rate in 2016
- Throughout the analysis, positive contribution of net entry to the overall TFP change was sufficient enough to offset the decline in the TFP of the enterprises remaining on the market.
Full report is available here.