2018 Product Market Regulation Country Note : Croatia

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OECD Product Market Regulation (PMR) Indicators: How does Croatia compare? ___________________________________________________________________________________ Competitive product markets foster economic growth and can improve the living standards of citizens. OECD’s Product Market Regulation Indicators assess the alignment of a country’s regulatory framework with internationally accepted best practices. The Economywide Indicator measures the distortions to competition that can be induced through the involvement of the State in the economy, as well as the barriers to entry and expansion faced by domestic and foreign firms in different sectors of the economy. This indicator is complemented by a set of Sector Indicators that measures regulatory barriers to competition at the level of specific network and service sectors.

Overall PMR Indicator Index scale 0 to 6

Croatia

1.43

OECD countries Average

1.38

5 Most competitionfriendly countries 5 Least competitionfriendly countries

1.00 1.82 0.0

2.0

4.0

6.0

Economy-wide PMR Indicators: a breakdown by major components Index scale 0 to 6 from most to least competition-friendly regulation

6

Croatia

OECD average

5 Most competition-friendly countries

5 Least competition-friendly countries

5 4 3 2 1 0 Public Ownership

Involvement in Business Operations

Simplification and Evaluation of Regulations

Admin. Burden on Start-ups

Barriers in Service Barriers to Trade & Network sectors and Investment

Note: All the averages include only OECD countries. Information refers to laws and regulation in force on 1 January 2019. Source: OECD 2018 PMR database.


ECONOMY-WIDE HIGHLIGHTS

Overall, regulatory barriers to competition in Croatia are slightly higher than the OECD average. Public ownership is more extensive than in most OECD countries, with the state owning some of the largest network operators, but the corporate governance of these state-owned enterprises is aligned with many key OECD best practices. Further, there is scope for making the interaction between policy-makers and interest groups more transparent and the administrative requirements necessary to start-up new firms could be simplified. In contrast, the rules regulating public procurement are close to the best performing OECD countries, and barriers to foreign trade and investments are low.

Economy-wide PMR indicators: a breakdown by sub-components Index scale 0 to 6 from most to least competition-friendly regulation Distortions Induced by State Involvement Simplification and Evaluation of Regulations

Complexity of Regulatory Procedures

6 5 4 3 2 1 0

Interaction with Interest Groups

Involvement in Business Operations

5 Least competition-friendly countries

Assessment of Impact on Competition

6 5 4 3 2 1 0

Price controls

Governance of SOEs

Direct Control

Scope of SOEs

Gov’t Involv. in Network Sectors

Public Ownership

6 5 4 3 2 1 0

5 Most competition-friendly countries

Public procurement

OECD average

Command & control regulation

Croatia

Barriers to Domestic and Foreign Entry

Barriers to Trade Facilitation

Barriers to Trade and Investment

Treatment of Foreign Suppliers

6 5 4 3 2 1 0

Tariff Barriers

Barriers in Service & Network sectors

5 Least competition-friendly countries

Barriers to FDI

6 5 4 3 2 1 0

5 Most competition-friendly countries

Barriers in Network sectors

Licenses and Permits

Admin. Burden on Start-ups

Admin. Requirements for Lim. Liab. Companies and Pers.Owned Enterp.

6 5 4 3 2 1 0

OECD average

Barriers in Services sectors

Croatia

Note: All the averages include only OECD countries. Information refers to laws and regulation in force on 1 January 2019. If the blue bar does not appear on the chart for a specific indicator, it means that its value is 0. Source: OECD 2018 PMR database.


SECTOR-SPECIFIC HIGHLIGHTS Overall, in Croatia there is scope for removing regulatory barriers to competition in the service and network industries. Public ownership of large network operators is still widespread and regulations in network industries could be better aligned with international best practice. Regulations in most professional services are in line with the OECD average, but lawyers and notaries still face considerable restrictions. In addition, the rules regulating the retail sales of medicines are restrictive when compared with many OECD countries.

Regulation in network and service sectors PMR Indicators for network sectors Index scale 0 to 6 from most to least competition-friendly regulation Croatia 5 Most competition-friendly countries

6

OECD average 5 Least competition-friendly countries

5 4 3 2 1 0 Electricity

Gas

Rail

Air

Energy

Road

Water

Fixed

Transport

Mobile

E-Communications

PMR Indicators for professional services* and retail distribution Index scale 0 to 6 from most to least competition-friendly regulation Croatia 5 Most competition-friendly countries

6

OECD average 5 Least competition-friendly countries

5 4

3 2 1

0 Lawyers

Notaries

Accountants

Architects

Professional services

Civil engineers

Real estate agents

Retail distribution

Retail sale of Medicines

Retail trade

* When comparing the indicators across countries, it should be kept in mind that the activities undertaken by specific professions may vary between countries. Note: All the averages include only OECD countries. Information refers to laws and regulation in force on 1 January 2019. If the blue bar does not appear on the chart for a specific indicator, it means that its value is 0. Source: OECD 2018 PMR database.


OVERALL ASSESSMENT

With regulatory barriers to competition that are higher than the OECD average in several areas, there is scope for improving product market regulation in Croatia.

Strengths

Challenges

The public procurement regulatory framework facilitates participation to public tenders for goods, services and public works. For instance, it is a mandatory requirement for all contracting authority to make all tender documents available online and free of charge and to allow firms to submit bids online for all tenders.

Croatia has a very competition-friendly regulatory setup in the mobile e-communications sector, as the extent of state ownership is limited, and regulation is close to the international best practice.

There are no rules regulating the interaction between policymakers and interest groups and ensuring transparency of lobbying activities. For example, there is no compulsory registration for interest groups in a public registry, and there is no obligation on public officials to identify the interest groups that they consult or meet with during the regulatory process.

The regulatory framework in the retail sale of medicines is very restrictive. For example, there are tight constraints on the number, location and ownership of pharmacies.

Lawyers and, even more so, notaries are more stringently regulated than in many OECD countries.

Further information 

“What are the 2018 OECD PMR indicators?” PowerPoint presentation on OECD PMR website

Vitale, C., et al. (2020), "2018 Update of the OECD PMR Indicators and Database - Policy Insights for OECD and some non-OECD Countries", OECD Economics Department Working Papers

Please visit our website : http://oe.cd/pmr Contact us at: PMR2018@oecd.org