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Research :: Finished research :: 2001-2005
 
State aid in Croatia and EU

For: internal project of IPF
 
Project manager: Marina Kesner-Škreb, Institute of Public Finance


State or government aid to firms is one of the ways in which an interventionist policy is implemented. By signing the SAA Croatia has taken on certain obligations concerning the allocation and control of government aid. The objective of this project was to estimate, in line with EU methodology, the size and structure of government aid in Croatia and to compare it with aid that member countries allocate their firms (and the candidate countries as well). State aid in Croatia is much greater than is found in the EU. At the same time, Croatian gives much more support than the EU to individual sectors of the economy, particularly to transport, tourism and shipbuilding.  Incentives to research and development, to SMEs or to environmental conservation, the fundamental forms of horizontal aim, i.e., the kind of aid that is used by all firms and all sectors, and not only in selected sectors, are much smaller. Accordingly it is to be expected that during the process of harmonisation with the EU Croatia will have to reduce the size of government aid and gradually redirect it away from incentives given to selected sectors and towards the whole of the corporate sector via horizontal forms of government aid. At the same time, the transparency of the system for allocating and controlling government support needs enhancing.

The results of this project were published in the journal Financial Theory and Practice and in Newsletter, No. 10 (2003).

The project has started in 2003, and it will continue in 2004 and 2005.

 
 
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