Testing the growth links of emerging economies: Croatia in a growing world economy

Thomas Ziesemer


We estimate a dynamic simultaneous equation model for 16 variables of the Croatian economy in order to test the links of growth with education, R&D, trade, savings and FDI. In order to motivate the choice of variables we review the related theories of growth and look at the relevant data. Permanent shocks increasing the intercepts of the equations for education, R&D, trade, savings and FDI show that most of growth links work well in Croatia, but they also enhance foreign imbalances. Policies to balance the two aspects are briefly discussed.

JEL codes: F43, O11, O19, O41, O47

Keywords: Growth, open economy, education, R&D, Croatia