Privatization and Restructuring in Croatia
After the first democratic elections in Croatia in spring 1990, the Communists lost power, and the new democratic government was sworn in on May 30, 1990. The goal of the new government was to introduce political and economic democracy immediately to Croatia; it defined economic democracy as the transformation from a socialist to a market economy because there is no economic democracy without a market economy. In August 1990, the Yugoslav Army interrupted the free circulation of goods and services in Croatia and declared all-out war against Croatia in summer 1991. The economic consequences of the Yugoslav Army's actions have been catastrophic. Of Croatia's 1.65 million employed persons in 1990, 550,000 were unemployed in 1994, according to unpublished statistics from the Statistical Office of Croatia. The nation's productive capacity was reduced by 45 percent, and over 2 million of its 4.76 million people qualified for welfare in 1994.
Most of the problems that Croatia has experienced with the transition to a market economy are common to all post-Communist countries. However, some problems are specific to Croatia, since it started the process of transition during the war, which made the process more complicated ( Babić, 1993). Thus, the restoration of peace is a necessary condition for continuing the transition and starting the process of development, but it is not the only one. After peace is achieved and the situation is stabilized, Croatia has to design a more efficient economic system. As von Hayek ( 1945) showed a long time ago, only through a market economy can the price system be used as a means of organizing the dissemination of information throughout the community and scarce resources be used efficiently. Therefore, Croatia intends to develop a market economy with the highest possible degree of competition.
The most urgent current need in Croatia is to set in motion the mechanisms