1) Croatia experienced long-term economic decline between 1980-2013, with low growth, declining employment, and debt increases. Traditional industries like manufacturing declined while real estate and construction grew. 2) Weak institutions, a small domestic market after Yugoslavia's breakup, and a focus on locations rather than development hindered Croatia's economic transition. R&D investment and innovation were insufficient. 3) Recent EU policies promote smart, sustainable and inclusive growth through industrial modernization, boosting key technologies, and strengthening markets. Green growth aims to decouple economic growth from resource use and pollution.

2.  Socio economic determinants;
 Deindustrialisation;
 Possibility and improvement of alternative action;
 Green Industrial Policy in Croatia

3.  South European type of capitalism - competitiveness characterized by a low level of
quality based competition, little non-price coordination, as well as strong emphasis on
the importance of small firm (cf. Amable, 2003: 104-106);
Long term economic conditions
 Between 1980-2013 average annual growth average 0.2%; decline of employment -0,6;
 Distortion of relative prices in favor of non tradable sectors (construction and real estate),
which is a direct by-product of the real estate boom, has had stifling effects on export
performance in the period 1998 - 2013 (Tkalec, Vizek, 2014);
 Worsening terms of trade, decline of cost competitiveness in comparison to main foreign trade
parterns, influenced entry and exit in the national market;
 Debt increase of all agregates from 2000 – onwards;
 Protection of the property right is worse in comparison to the quality of other
institutional variables – e.g. quality of education, (World Economic Forum);
 The location model instead of a development model
(refeudalisation of socio economic conditions)
Focus on public investments
 Agriculture+Tourism+Road (motorway) construction+Ship building;

4. Structural conditions
 The size of the national markret diminished as result of the breakup of ex Yugloslavia;
 Continuing political restructuring (‛political party oligopol - HDZ – SDP)’ instead of
technological and technical reconstructuring within state owned enterprises;
 No success in starting a development agenda
 Separation of powers, (emphasis on the presidential functions during the nineties replaced by an
emphasis on executive power from 2000 onwards)
Economic conditions
 Liberalisation of good/service markets parallel with fixed foreign exchange rate as well
low technological development in the period; low import inflation facilitated strong
dependence on imports
Implications
 The concentration of power in the hands of a minority;
 Foreign direct investments dominantly in the service sector;
 Insufficient use of the result of the science sector, strengthening mental silos within
institutions;
 Weak structure changes in individual markets in comparison to the EU average slower entry
and exit from individual markets; emphasis on the competitiveness of the domestic market;
 Unsustainable socio economic framework - economic recession turning into depression!!

5.  In 2010, manufacturing firms accounted for 13.3% of GDP, (their
counterparts in the service sector 42.8%) vs. 2005: manufacturing firms
accounted for 14.6%, of GDP (41.4% in the service sector);
 Decline of the industrial production in 2012 - 8% reduction in comparison to
2005;
 Decline of the number of the employees in the period 2008-2012 (16.7%),
207.2 thousand employees in 2012; mainly in technologically less complex
industries;
 Decline of prices in the industrial sector over the last fifteen months;
 Decline of gross investments in fixed capital in 2012 (107.3 bilion kn) in
comparison to 2008. (171.6 bilion kn), similar to figures from 2004 (107,9
bilion kn);

6.  Considerable decline of share of Gross Expenditure on Research and
Development (GERD) in GDP in the last ten years (2004. 1.05% vs. 2012.
0.75%);
 Similar number of EPO applications on milion inhabitants in 2000. and
2011. (3.45). But in 2008. the number was 6.51 – Adaption of inventive
activities in period of crisis.
 In the period 2003.-2012, a decline of investments per employee,
expenditure per employee in science and education sector, increase of
wage expenditure parallel with increase of number of institutions (the
biomedicine sector is exception);
 In technical and nature sciences (focus on applied and development
projects), higher expenidture per employee, higher gross salary per
employee) in comparison to the other scientific disciplines;

7. Country Key Research and
Technology
Organisation
(RTO)
Characteristics
Germany’s
innovation model
Frauhofer Focus on incremenatal innovation, countinous improving of the
business models. Strong manufacturing sector in the national
economy;
Taiwan’s
innovation model
ITRI The emphasis on technological intermediation (i.e. recognition
of technological opportunities in the world and their
commercialization in Taiwan); It relies on external scientific
inputs and domestic SME sector (semiconductor industry);
Britain’s innovation
model
TWI Reliance on basic research; weaker industrial base in comparison
with the leading EU countries (a strong heritage of the 19th
century), Reducing importance of the science from 20st century
until now result of weaking the industrial sector;
Austrian innovation
model
Austrian
Institute of
Technology
Balance between basic and applied research, Austrian Institute of
Technology - a key institution (the founders of Federation of
Austrian Industrialists and the Ministry of Transport, Innovation
and Technology) (Key areas Energy, Mobility, Health and
Environment, General and individual safety, health and
environment and innovation system)
Turkish model TUBITAK A strong dedication to state funding, the high involvement of
staff trained abroad; Significant focus on the defense industry;
Tendency towards applicability of their activities;

8.  Monotechnological institutions (majority state owned);
 Several institutions founded and developed by foreign
supranational organisations (e.g. the World Bank
programmes) – strong reliance on non technological
services (from 2000-2013);
 Weak recognition of these institutions as initiators of
relevant socio-economic activities and processes;
 Weak interaction in the relationship between state
sector – business sector- science and research sector;

9. Fresh Ideas within
initiatives
Objectives
An industrial policy for the
globalisation era (2010)
Communication from the
Commission
1) Bringing together a
horizontal basis and sectoral
application; 2) Consideration
of whole value and supply
chain; 3) Monitoring of
industrial policy and
performance
A) Improving framework conditions for industry;
B) Strengthening the Single Market; C) A new
industrial innovation policy; D) Capitalising on
globalisation; E) Promoting industrial modernisation;
F) Specific topics – Space, Sustainable mobility;
Societal challenges; Energy Intensive Industries
Europe 2020: A European
Strategy for Smart,
Sustainable and Inclusive
Growth
1) Smart Growth
2) Sustainable Growth
3) Inclusive Growth
A) 75% of the population aged 20-64 should be
employed; B) 3% of th EU GDP should be invested in
R&D; C) The 20/20/20 targets in terms of reduction
of greenhouse gas emissions, renewable energy
production and energy efficiency; D) The share of
school dropout should be under 10% and at least 40
percent of the population between the ages of 30 and
34 should have a degree or diploma; E) 20 million
fewer people should be living below the poverty line;
Industrial Policy flagship
initiative - a Stronger
European Industry for
Growth and Economic
Recovery - Industrial Policy
(2012) Communication
from the Commission
1) Priority actions - boost
productivity, growth and job
creation 2) Working across all
EU policies to maximise
synergies and have best
possible impact 3) A new way
of making industrial policy -
open partnership
Sustainable industrial production in the EU (Increase
share of industry from its current level of around
16% of GDP to as much as 20% by 2020) Investments
in specific areas a) KET markets, improving
production technology for clean technology, b)
Strengthening the internal market (eg. Patent
protection in the EU), c) Access to finance and capital
markets; D) Human capital (job creation, predicting
changes in the labor market in the future)
Renaissance of
Industry for
Sustainable Europe
(RISE) (The concept)
1) an innovation, efficiency and sustainable
technology offensive to modernise our industrial base
and increase our core strengths; 2) Higher level of
investments into R&D and Innovation; 3) Complete
the internal market; 4) skills and labour force for the
next industrial revolution

10. Assumptions
 Decline of authoritative (repressive) actions by the government;
 Improving terms of trade products (connected with low entry rate and drop
rate);
 Internal and external debts (deleveraging and debt repayment plan );
 Fiscal Policy (anti-ciclycal framework);
 Monetary Policy (anti-ciclycal and indepedent);
 Science policy (better use of science research results);
Objectives
 Reindustrialization as foundation of socio economic development;
 Development policy in the context of global challenges;

11.  The emergence of new concepts and visions on the socio
economic scene (eg. Energy Transition, Development of
optical networks in Croatia)
 City as a policy subject (reindustrialization) associated with
the construction of adequate (smart) infrastructure,
strengthening of mechanisms for socio-economic effects on
subnational and supranational levels;
 National priorities in the social sectors (eg. Sciences) must
reflect the criteria of equal access to social infrastructure;
 In terms of new industrial policy
◦ a) Searching for niche markets - competition based products
(social market chains creating new value added)
◦ b) Understanding material resources and energy prices, which
have an impact on the final price of products;

12. Green Growth -Trajectory of economic development that fully internalizes
environmental costs (related to climate change) and sustainable use of non-renewable
resources (Rodrik, 2013);
Technological revolution within a green growth paradigm – based on
interrelated set of new technologies, industries and infrastructural networks
develop in intense feedback, providing market and suppliers (Mazzucato,
Perez, 2014);
Deficiency –
The technological convergence is not out of charge (e.g. fragmentation of the
telecommunications network (natural monopoly), in hands of private sector is inefficient The
Guardian 11 August - 2014), direction is become socio political choice (Perez, 2013)
‘Green directive’- ready-made route that will make the multiple possible directions result
to questionable innovative products and service
Challenges
 Socio political transitions
 Optimal production practice instead of mass production
 Who will participate in a new socio economic structures (type of
ownership)

13. Challenges
1) Decouple economic growth from resource use and pollution;
2) Provide more value with less environmental impact and
better economic efficiency;
 Greeing of Industries
Resource of productivity;
Pollution Prevention;
Safe Chemical Management;
 Creating of green Industries
Environmental Technologies;
Environmental Services;

14. Challenge Priniciple
Environmental
challenges
To limit global warming to 2°C, humanity needs to
reduce half its total amount of greenhouse gases
(GHG) emissions by 50% by 2050
Fix to market failure
based on mainstream
economy - State as
market-fixing spender
Maximisation profit
1) Positive externalities (not fully captured by the
original investors)
2) GHG (Greenhouse gas - are mispriced )
Mission Oriented
Financing Innovation
(Mazzucato, 2013)
– State as lead market
creating investors
Maximisation of private profit by state incentives
1) High-risk, capital-intensive investments (e.g.
Lenovo in China, 2) Iphone, Tesla cars in the USA)

15. Sector Examples
Energy sector The Energy Law (OG 120/12)
The Electricity Market Act (OG 22/13)
National renewable energy action plans (2014-2016)
Equipment Purchasing
(e.g electrical car)
The Law on Energy Efficiency (OG 152/08, 55/12, 101/13, 153/13, 14/14
Options Involve Actors
An Integrated Framework for Supporting the
Greeing of Industries,
Governance and Institutional
Capacity
Government
Countinuing activities in the field of enabling
environment
Enabling Condititons, Acts and
Regulations
Government
Instruments Mixes to Support the Greeing of
Industries
Various Policy Instruments,
Information
Government
Harnessing Environmental Technologies Enabling conditions, Various
Policy Instruments, Industry
Engagement, Voluntary Action
Government and
Industry
Industry Led Initiatives Voluntary Action by Industry Industry

16. Systematic acting only makes sense if there are objective
circumstances, the threats that endanger its action (cf. Podunavac,
Keane, Sparks, 2010: 26);
Planning and implementing activities preceded by the analysis of
its compatibility with socio-economic framework
 Policy Planning Issues;
 Policy Implementation and monitoring issues;
 Policy Evaluation issues;
An Initialising phase - e.g. Aralica, Botrić, (2013) Evaluation of R&D Tax Incentives
Scheme in Croatia;
The policy analysis in Croatia focused on the functioning of governmental
bodies instead of policy efficiency analysis (cf. Petak, Petek, 2009)

17.  Institutional arrangements in the future are a key
determinants of green industrial policy
development in Croatia;
 Better institutional linkages between areas of
activity (eg. Industry associated with the impact
on social sectors eg. Environment);
 Effective links between supranational
mechanisms (eg. EIF, ESF) national policy
priorities;
 Regional cooperation as mechanism of
promoting Green Industrial Policy ?