nulti arak.qxd 22.3.2005 11:50 Page i CROATIAN ACCESSION TO THE EUROPEAN UNION Facing the Challenges of Negotiations Third volume nulti arak.qxd 22.3.2005 11:50 Page ii nulti arak.qxd 22.3.2005 11:50 Page iii CROATIAN ACCESSION TO THE EUROPEAN UNION Facing the Challenges of Negotiations Third volume Editor Katarina Ott Institute of Public Finance Friedrich Ebert Stiftung Zagreb, 2005 nulti arak.qxd 22.3.2005 11:50 Page iv Publishers Institute of Public Finance, Zagreb, Katanèiæeva 5 http://www.ijf.hr Friedrich Ebert Stiftung, Zagreb, Medvešèak 10 http://www.fes.hr For publishers Katarina Ott Rüdiger Pintar Editor Katarina Ott English translation Graham McMaster Cover design Vesna Ibrišimoviæ Copies 600 Design and Print Gipa d.o.o., Zagreb, Magazinska 11 CIP - Katalogizacija u publikaciji Nacionalna i sveuèilišna knjinica - Zagreb UDK 339.923(497.5:4-67 EU)(082) 061.1(4-67 EU:497.5)(082) CROATIAN accession to the European Union / editor Katarina Ott ; <English translation Graham McMaster>. - Zagreb : Institute of Public Finance : Friedrich Ebert Stiftung, 2004- . Izv. stv. nasl.: Pridruivanje Hrvatske Europskoj uniji. ISBN 953-6047-47-0 (Institut)(cjelina). - ISBN 953-7043-11-8 (Zaklada)(cjelina) Vol. 3: Facing the challenges of negotiations. - 2005. Izv. stv. nasl.: Ususret izazovima pregovora. - Kazalo ISBN 953-6047-58-6 (Institut). - ISBN 953-7043-17-7 (Zaklada) 1. Ott, Katarina I. Hrvatska -- Zemlje Europske unije -- Pridruivanje 450315030 nulti arak.qxd 22.3.2005 11:50 Page v CONTENTS Authors vii Foreword xiii Acknowledgements xiv Abbreviations xv 1. Croatia and the European Union: accession as transformation 1 Katarina Ott 2. What does an enlarged European Union mean for Croatia? 31 Ana-Maria Boromisa 3. Trade integration and Croatian accession to the European Union 61 Vedran Šošiæ and Boris Vujèiæ 4. Freedom of movement of workers in the enlarged European Union and its effect on Croatia 85 Mirta Kapural 5. How prepared is Croatia for a knowledge-based society? 109 Predrag Bejakoviæ 6. Evaluation of Croatian innovation capability 129 Zoran Aralica and Katarina Baèiæ nulti arak.qxd 22.3.2005 11:50 Page vi vi 7. Extended social Europe? Social policy, social inclusion and social dialogue in Croatia and the European Union 161 Paul Stubbs and Siniša Zrinšèak 8. Free movement of capital, the real estate market and tourism: a blessing or a curse for Croatia on its way to the European Union? 185 Dubravko Mihaljek 9. Accession to the European Union and physical (spatial) planning in Croatia 229 Jasenka Kranjèeviæ 10. How prepared is Croatia to access European Union regional policy funds? The case of Istria 249 Ines Kersan-Škabiæ Glossary 279 List of useful web addresses 292 Index 294 nulti arak.qxd 22.3.2005 11:50 Page vii vii AUTHORS Zoran Aralica, has been working for the Institute of Economics Za- greb, department for Interdisciplinary Research. He obtained a Master’s Degree at the Faculty of Economics, Zagreb in the field of Operational Research in 2004. Additionally, he attended the Amsterdam-Maastricht Summer University in August 2003 and the institutional economy workshop organized by Hertfordshire University in June 2004. He has been involved in projects of economic analysis, technological policy and energy. He is a member of the Croatian Association for Operational Research. The fields of his professional interest are industrial policy, technological policy and multivariate methods of statistics. Katarina Baèiæ, graduated in 1999, and took her MA in 2004, at the Faculty of Economics, University of Zagreb. During her undergradu- ate course she won the Dean’s Prize. Since 2000 she has worked in the Institute of Economics, Zagreb. She worked as junior assistant in the Department for Interdisciplinary Research, and after that as assistant in the Department for Business Cycles and Economic Forecasting. She is the author of scientific and technical papers in the fields of internation- al economics and economic forecasting. She participates in scientific projects from the field of her expert interests. Predrag Bejakoviæ, took his doctorate at the Economics Faculty in Zagreb, and now works in the Institute of Public Finance, Zagreb. He was a Kingdom of Denmark scholar in Copenhagen, a Fulbright schol- ar at the University of Wisconsin at Madison, and a British Council scholar at Essex and Bath universities. He has taken part in a number of projects, such as The Underground Economy, The Development of the Tax Administration and Pensions Reform and a Sustainable Budget of the Institute of Public Finance, and The Employment Policy Pro- gramme of the Croatian Government. He publishes in scientific and professional journals such as Financijske teorija i praksa and Èasopis za društvena istraivanja. He is co-author of a number of books from the areas of the economy, public finance and labour economics. Ana-Maria Boromisa, took her doctorate at the Economics Faculty in Zagreb, a master’s in European Studies, College of Europe, Natolin, nulti arak.qxd 22.3.2005 11:50 Page viii viii Poland and her first degree at the Electrical Engineering Faculty in Zagreb. Since 2001 she has been a member of the Croatian Energy Regulatory Council, where she is currently employed. Previously she worked in the Institute for International Relations in Zagreb, and has continued working on its research projects. She has written several arti- cles published in Croatian and foreign publications. Research interests: the enlargement of the EU to the states of CEE, particularly the eco- nomic criteria for accession, sectoral reform in the applicant states and the possible effects of the enlargement of the EU to the states of SEE. Mirta Kapural, 1998 graduated from the Faculty of Law in Zagreb (awarded the Chancellor's Prize). In 1999 she completed a master’s in Contemporary European Studies at the University of Sussex, UK. From 1999-2001 she worked in the Ministry of European Integration, Department for Legal Adjustment. She also worked as a trainee in the European Commission, Brussels (September 2000 to March 2001) in DG Environment, dealing with enlargement issues. Between August and October 2001 she was Governmental Representative in the UN Office for Human Rights in Geneva. From September 2001 until September 2004 she was employed in the Governmental Office for Human Rights on international co-operation with the EU and UN. Currently she works as a legal adviser in the Croatian Competition Agency, anti-trust divi- sion. Professional interests: EU competition law and trade law, enlarge- ment and external relations of the EU, free movement of persons in the EU, constitution of the EU, human rights. Ines Kersan-Škabiæ, took her first degree at the Dr. Mijo Mirkoviæ Faculty of Economics and Tourism Pula, master’s degree in 1997 and doctoral degree in 2002 at the Faculty of Econimics, University of Zagreb. She is currently working as assistant professor for the course International Economics at the Dr. Mijo Mirkoviæ Faculty of Economics and Tourism in Pula. She also teaches the course European Economic Integration, which she introduced into the curriculum and syllabus. She is the author of several papers about EU enlargement. Research interests: processes and economic effects of the EU enlarge- ment, the relationship between the EU and Croatia, EU trade policy, EU regional policy, competitiveness of the Croatian economy. She has been a member of the Council for European Integration of the County of Istria since 2004. nulti arak.qxd 22.3.2005 11:50 Page ix ix Jasenka Kranjèeviæ, graduated from the Zagreb Faculty of Architecture at which she also earned her master's degree. She is employed at the Ministry of Environmental Protection, Physical Planning and Construction. She has published several scientific papers in the field of physical planning. She was scholar of the Government of the Republic of Austria in 1992 and 1995. She contributed to the development of the Croatian Bibliographic Lexicon of Miroslav Krlea Lexicographic Institute, Zagreb and Saur allgemeines Künstlerlexikon (München – Leipzig). She has delivered papers at several internation- al and domestic conferences on rural areas. Within the Working Community of Danube Regions (ARGE Donauländer – Ministry of Environmental Protection, Physical Planning and Construction), in the period 2001-2002, she was leader for Croatia of the international proj- ect EDP – Datenkatalog (electronic data processing). Dubravko Mihaljek, is a Senior Economist at the Bank for Inter- national Settlements in Basel, Switzerland. He analyses global finan- cial markets and macroeconomic developments and policies in the emerging market economies in Asia, Latin America and Central and Eastern Europe. He was an economist at the IMF in Washington from 1990-99 (Fiscal Affairs, European and Asian Departments). He had degrees in economics from the Universities of Zagreb (1981), Minnesota (MA, 1986) and Pittsburgh (PhD, 1990). Authored over 80 papers in macroeconomics, monetary and exchange rate economics, fiscal theory and policy, EU enlargement, economic development and banking. He referees for several professional economics journals. Katarina Ott, is director of the Institute of Public Finance, editor of the journal Financijska teorija i praksa, trustee of the Prof. Dr. Marijan Hanekoviæ Foundation, and associate professor at the Faculty of Economics and the Faculty of Science – Mathematics, at the University of Zagreb. She heads projects and publishes papers in the wider area of public sector economics. Her main area of interest is the relationship between the government and the economy, above all the underground economy, the budget, public sector reform, local finances, EU acces- sion and in particular public sector transparency, government account- ability and citizen participation. Rüdiger Pintar, studied economics and sociology at the universities of Cologne and Munich, and graduated in 1969 at the University of nulti arak.qxd 22.3.2005 11:50 Page x x Cologne. He was employed at an institute for social research at the same university, dealing with research on occupational retraining programmes and the labour market.