Croatia should become the Texas of Europe

Rate this Entry

If Croatia makes the right changes to the fundamentals of the legislative and economic landscape Croatia could become the "Texas of Europe". Croatia could become the go to destination for companies that want to set up European headquarters.

Croatian politicians talk of various projects that will stimulate the Croatian economy.
  • Las Vegas on the Adriatic (Istra area) - gambling and entertainment
  • Florida on the Adriatic (Split area) - retirement and medical services
  • Miami on the Adriatic (Dubrovnik area) - trendy hotspot

Yes, these projects sound attractive and I support them, but what Croatia needs is something bigger to fix the fundamental problems of the economy, government and society.

Croatia should become the TEXAS OF EUROPE

What can we learn from Texas? In the US, there are many companies that are moving their head offices from California to Texas because tax levels are lower, the costs of doing business are lower, the bureaucratic regulations are lower and the cost of living for employees is lower. Recently, Toyota moved to Plano Texas from Torrance, California.

State rankings - Chief Executive - CNBC - Area Development

More about Texas

Being business friendly

If you develop a business friendly environment businesses will come to you without the need for you to go out and entice businesses to come. According to the Forbes article, "Texas Gov. Rick Perry apparently didn’t even have to make a recruiting trip to southern California to get Toyota to do this (move to Texas)."

To be business friendly, you need to understand the needs of business. One of the fundamentals of business is fierce competition. Companies can compete on;
  • innovation = being first to market with new product
  • quality = making a product that is better than any other
  • price = making a product that is cheaper than others

How will your national environment help business compete in any of these three critical areas? According to some analysis, manufacturing in the USA can be quite competitive with China - China vs. the U.S.: It's Just as Cheap to Make Goods in the USA. If we understand all the components required for manufacturing and business as a whole Croatia too can be competitive.

Decreasing costs

Don't forget to understand why companies are leaving California.
Companies do not incur huge relocation costs without a reason.

For Croatia to become the Texas of Europe we need to do the following:
  • Improve and protect rule of law and property rights
  • Create and efficient and effective judicial system
  • Decrease the bureaucracy and inane regulations
  • Decrease corruption and nepotism

Corporate taxes at 20% are not too bad, but all other taxes are horrendous. High employment taxes, high value added taxes and high fuel taxes all make it very expensive to do business in Croatia.

Increasing value

These issues above will improve the stability of business and decrease the costs of doing business BUT the cost of business is not the only consideration because VALUE is more important than cost. If productivity is high and if you can get other intangibles in Croatia that you can't elsewhere then companies will be willing to pay a little more for the greater value.

Business does not thrive just by doing things well but by continually finding ways of doing doing thing in a better way. To increase the productivity of business we need to change the mindset of people. Croatians are well educated and have great skillsets but Croats rank very low in Europe in the mindset of innovation.

Innovation in Europe

An example of the intangibles that attract business is innovation. The EU report Innovation Union Scoreboard 2014 ranks Croatia very low. With this low innovation mindset there is no way that Croatia can succeed in the modern world economy.

Not everything is bad in Croatia.
We can see that Croatia has the type of people required for innovation.

Croatia's biggest problem is the system - a result of a bad government...
... a government which is not a partner to business.

Also, lets not forget that we can't think of in a Euro-centric perspective since business is global. We have to be competitive in a global perspective.

In business, the key to success is to develop products and services that people want to buy. If you have a great product people will want to buy what you are providing - you will not to work hard to sell.

Updated 4th-May-2014 at 06:03 PM by Željko Zidarić



  1. Željko Zidarić avatar

    Learning how to improve innovation by understanding how it was measured