Croatia is ranked 63rd of 141 economies in the Global Competitiveness Report 2019, published by the World Economic Forum, which is five places better than last year, the National Competitiveness Council (NVK) said on Wednesday.
Croatia's latest ranking is the biggest improvement recorded by a country, the NVK says.
"Croatia owes the significant improvement of its ranking primarily to macroeconomic stability and the quality of infrastructure. The government's consistent efforts to maintain fiscal discipline, deal with outstanding problems and absorb EU funds have resulted in the country's greater competitiveness. I believe this will encourage our society to further implement structural changes and improve regulatory frameworks, thus contributing to the well-being of Croatian citizens," NVK chair Ivica Mudrinic said.
Croatia made the most progress in macroeconomic stability, where it ranks 43rd, which is a leap of 63 places compared to 2018. Compared to last year, it also ranks better in infrastructure (32nd), health (47th) and labour market (94th).
On the other hand, compared with 2018, the country fares worse in the following categories: institutions (77th), ICT application (60th), skills (69th), product market (86th), financial system (63rd), business dynamic (101st) and innovation capacity (73rd).
Croatia's competitive advantages are the inflation rate (1st), a high degree of electrification (2nd), trade barriers (6th), quality of roads (13th), workers' rights (14th), etc.
As in previous years, the country fares worst in the efficiency of its courts in dealing with disputes (140th), government overregulation (139th), the efficiency of the courts in contesting regulations (138th), the ease of employment of foreign labour (137th), taking business risks (137th), the government's focus on the future (137th), finding qualified labour (137th), hiring and firing (136th), etc.
The world's most competitive country this year is Singapore, followed by the United States, Hong Kong, the Netherlands, Switzerland, Japan, Germany, Sweden, the United Kingdom and Denmark.
The survey covers 99% of the global GDP and 94% of the world population.
Of the countries that are comparable to Croatia, the Czech Republic fares the best, ranking 32nd, Slovenia is 35th, and Poland is 37th.
Ahead of Croatia are also Slovakia (42nd), Hungary (47th), Bulgaria (49th), Romania (52nd) and Greece (59th), while Serbia, Montenegro and Albania fare worse, ranking 72nd, 73rd and 81st respectively.
The methodology used to make the ranking also measures how far a country is from the ideal situation, with grades ranging from 0 to 100. Compared to 2018, Croatia has improved its grade by 1.8 points and now stands at 61.9, meaning that it is 38.1 points far from the ideal situation.
The report shows that by removing administrative barriers, creating an atmosphere of legal security and reducing the tax burden on entrepreneurs the government can improve the business and investment climate. To strengthen the innovation ecosystem, government policies must encourage the transfer of technologies and knowledge by developing the research and education system to strengthen the economy's technological readiness to apply new knowledge in creating innovative products and services, the NVK says in its statement.
It also singles out the four main recommendations from this year's report - increasing competitiveness is of great importance to improve the standard of living; global economies are not ready for a future drop in productivity; policy makers must turn to other policies rather than the monetary policy to enhance investments and incentives for the revival of productivity growth; striking a balance between technological integration and investment in human capital will be crucial for increasing productivity.