THE GAY AND DOUGLAS LANE JOURNAL OF THE LEHIGH UNIVERSITY MARTINDALE CENTER STUDENT ASSOCIATES Volume 44 2026 Perspectives on Business and Economics CROATIA IN TRANSITION Perspectives on Business and Economics Volume 44 2026 INTRODUCTION Dario Zoric THE COMPLIANCE TRAP: CROATIA’S STALLED PATH TO SUSTAINABILITY Estefania Ravelo Reyna THE PERCEPTION GAP: JUDICIAL CORRUPTION AND INSTITUTIONAL DISTRUST IN CROATIA Sophia E. Taskov RURAL CROATIA’S GERIATRIC CARE GAP Laila S. Dages CONCENTRATED OWNERSHIP AND DEMOCRATIC ACCOUNTABILITY IN CROATIAN TELEVISION Aaron O. Williams LAYERED BUREAUCRACY AND THE STIFLING OF INNOVATION IN CROATIA Natalie R. Javitt FRAGMENTATION, TOURISM PRESSURE, AND EU POLICY: CHALLENGES IN CROATIA’S MUNICIPAL WASTE MANAGEMENT SYSTEM Olivia A. Lundquist TEMPORAL TENSIONS IN CROATIA’S MIGRATION POLICIES Elizabeth M. Wolfe FROM BREAKTHROUGH INNOVATION TO GENERIC DEPENDENCE: CROATIA’S PHARMACEUTICAL PARADOX Hashem Al Hattab ATTRACTING TOURISTS, DISPLACING HERITAGE: CROATIA’S POSTWAR RECOVERY IN DUBROVNIK Avery McGarry REVERSING CROATIA’S SPIRAL OF STEM DECLINE AND TOURISM DEPENDENCE Claire E. Wilson THE TRILEMMA IN CROATIA’S NATURAL GAS SECTOR Gideon Sobek INHERITED BANKING CAUTION AND CREDIT CONSTRAINTS FOR SMALL BUSINESSES IN CROATIA Joseph Gustav Maass
Volume 44 2026 CROATIA IN TRANSITION Perspectives on Business and Economics THE GAY AND DOUGLAS LANE JOURNAL OF THE LEHIGH UNIVERSITY MARTINDALE CENTER STUDENT ASSOCIATES Perspectives on Business and Economics is published by the Martindale Center for the Study of Private Enterprise Rauch Business Center, 621 Taylor St., Lehigh University, Bethlehem, PA 18015 DOI: 10.18275/pbe-v044 Todd A. Watkins, Ph.D. Editor Editorial Board Nevena T. Koukova, Ph.D. Andrew J. Ward, Ph.D. Alberto J. Lamadrid L., Ph.D. Richard N. Weisman, Ph.D. Catherine M. Ridings, Ph.D. George P. White, Ph.D.
Martindale Center Publications Periodicals • Perspectives on Business and Economics • Martindale Center Policy Briefs • Martindale Retrospectives • Martindale Discussion Paper Series ii Books • I.W. Lieberman, P. DiLeo, T.A. Watkins, and A. Kanze, eds., The Future of Microfinance (Brookings, 2020) • T.A. Watkins, Introduction to Microfinance (World Scientific, 2018) • J.R. Aronson, H.L. Parmet, and R.J. Thornton, eds., Variations in Economic Analysis (Springer, 2010) • T.A. Watkins and K. Hicks, eds., Moving Beyond Storytelling: Emerging Research in Microfinance (Emerald, 2009) • I.W. Lieberman and D.J. Kopf, eds., Privatization in Transition Economies: The Ongoing Story (Elsevier, 2008) • K. Fabian, ed., Globalization: Perspectives from Central and Eastern Europe (Elsevier, 2007) • J. Laible and H.J. Barkey, eds., European Responses to Globalization: Resistance, Adaptation and Alternatives (Elsevier, 2006) • V. Munley, R. Thornton, and J.R. Aronson, eds., The Irish Economy in Transition (Elsevier, 2002) • F. Gunter and C. Callahan, eds., Colombia: An Opening Economy (JAI, 1999) • D. Greenaway and J. Whalley, eds., “Symposium on Liberalisation and Adjustment in Latin America and Eastern Europe,” in The World Economy (Blackwell Publishers, 1994) • A. King, T. Hyclak, R. Thornton, and S. McMahon, eds., North American Health Policy in the 1990s (John Wiley & Sons, 1993) • A. O’Brien and R. Thornton, eds., The Economic Consequences of American Education (JAI, 1993) • A. Cohen and F. Gunter, eds., The Colombian Economy: Issues of Trade and Development (Westview Press, 1992) • D. Greenaway, R. Hine, A. O’Brien, and R. Thornton, eds., Global Protectionism (Macmillan, 1991) • E. Schwartz and G. Vasconcellos, eds., Restructuring the Thrift Industry: What Can We Learn from the British and Canadian Models? (1989) • D. Greenaway, T. Hyclak, and R. Thornton, eds., Economic Aspects of Regional Trading Arrangements (Wheatsheaf Press, 1989) • R. Thornton, T. Hyclak, and J. Aronson, eds., Canada at the Crossroads: Essays on Canadian Political Economy (JAI, 1988) • R. Thornton and J. Aronson, eds., Forging New Relationships among Business, Labor, and Government (JAI, 1986) • R. Thornton, ed., Schumpeter, Keynes, and Marx: A Centennial Celebration (1984) • R. Thornton, A. Ott, and J.R. Aronson, eds., Reindustrialization: Implications for U.S. Industrial Policy (JAI, 1984) For information on Martindale Center publications and past issues of Perspectives, visit business.lehigh.edu/centers/martindale-center/publications. DOI: 10.18275/pbe MARTINDALE CENTER FOR THE STUDY OF PRIVATE ENTERPRISE Center Staff Todd A. Watkins, Ph.D. Executive Director Andrew Ward, Ph.D. Associate Director Trisha S. Alexy Program Manager Melissa M. Gallagher Administrative Coordinator J. Richard Aronson, Ph.D. (1937–2023) Founding Director Founded in 1980 thanks to a generous endowment from Elizabeth Fairchild Martindale and Harry Turner Martindale '27, the Martindale Center for the Study of Private Enterprise is an interdisciplinary resource in the Lehigh University College of Business. The Center engages students, faculty, and the business and policy communities in active inquiry, tackling questions central to understanding and fostering sustainable private enterprises and inclusive economic systems throughout the world.
iii Perspectives Perspectives on Business and Economics is the journal of the Martindale Student Associates Honors Program of the Martindale Center for the Study of Private Enterprise at Lehigh University. A faculty panel selects 12 of Lehigh’s finest undergraduates to become Martindale Student Associates. Each student undertakes research on an aspect of the economy and business environment of a foreign nation and prepares an article for publication. The country of focus changes year to year. The 30 students, faculty, and alumni on the Martindale Croatia trip, May 19–31, 2025, started in the capital Zagreb. Sessions included visits to Smion, with an overview of the entrepreneurial landscape in medical, green, and agricultural technologies; University of Zagreb for discussion of journalism, media development, free speech, and countering misinformation; World Wildlife Fund Adria on work to create a zero-carbon world and protect the environment and food systems; Ministry of Economy; Ministry of Science, Education, and Youth; PLIVA, both the largest pharmaceutical company and exporter in Croatia; ZEZ, a community green energy cooperative; Croatian Employers Association; and the car company RIMAC. At the Heart of Zagreb, the group experienced music, dance, and handicrafts. Next were Istria, the Pula Arena, and Krk island, including an olive oil tasting. A highlight was being in Rijeka the night its soccer team won the national championship. At PAR Business School, topics were women in leadership and the business of sports, and at the NGO Without Borders, the history of the community and border disputes. In Opatija, at the University of Rijeka Faculty of Tourism and Hospitality Management, the students heard about tourism and its carbon footprint. In Gospić, the host was Razvojni Centar-Licko Senjske Zupanije, a rural incubator for food projects. A discussion with the Ivo Pilar Institute of Social Sciences explored migration, rural youth, brain drain, and the intersection of politics and entrepreneurship. The group also visited the Nikola Tesla Memorial Center. In Split, the hotel was within the walls of the Diocletian Palace. Sessions were held at the Zupanjiski Digital Dalmatia Technopark on the ICT sector and the University of Split School of Medicine and Health Studies, regarding the health-care system. The journey finished in Dubrovnik, with a warm welcome from Mayor Mato Franković and tour of the seventh-century walled city. In Washington, D.C., March 2025, the cohort met with Pjer Šimunović, Croatian Ambassador to the US, at their Embassy. Then, the State Department reviewed US/Croatia diplomacy, led by Samuel Rotenberg, Regional Economic Officer, Western Balkans, Bureau of European and Eurasion Affairs, and Fred Bolageer, Foreign Service Officer, Croatia Desk. Special thanks The Martindale Center acknowledges the role played by alumni, parents, friends, and experts in the US and in Croatia who shared their time as advisors and speakers to help make the 2025–2026 program and volume 44 a success. Thanks to Dario Zoric, City of Bjelovar Senior Advisor, former COO of Smion, and Lehigh Global Village alumnus, for conducting sessions on the history of Croatia and on entrepreneurship; connections he made to speakers in country; and writing this volume’s introduction. Thanks to Nikolina Demark Rađenović, Project Manager, University of Rijeka Faculty of Medicine, for serving as tour guide in Rijeka, Istra, and Pula. The Center was thrilled to have guests accompanying the trip: Emma Banker '21 and Lina Oumera '21 from the Argentina cohort, who missed their field immersion during the pandemic; Martindale Canada alum and Lehigh Board of Trustees member Faith Glazier ('87 '19P) along with Rob Glazier ('85 '19P); and Lehigh College of Business Dean Manoj K. Malhotra and Maya Maholtra. Special thanks to the following, who shared connections for the semester sessions and in D.C. and Croatia: Hrvorje Benko '01 (Martindale Ireland), Scientist and Technology Executive, University of Washington; Damir Brčić, Digital Hub Director, Digital Dalmatia; Aleksandra Janjic, IRS; Gordana Nikolić, owner of PAR Business School; Anita Bušljeta Tonkovic, researcher, Ivo Pilar Institute of Social Sciences; Timothy White, US Chief Digital & Technology Officer, GSK; and two Global Village alumnae: Dunya Jezeraškić, Marketing and Communications, Rimac Group, and Marija (Bačić) Pajić, PR Associate, City of Dubrovnik.
iv The Martindale Student Associates thank Trisha S. Alexy for organizing the curriculum, itinerary, and topic speakers; faculty mentors Professors Koukova (for Taskov and Williams), Lamadrid (for Maass and Sobek), Ridings (for McGarry and Wolfe), Ward (for Lundquist and Ravelo Reyna), Weisman (for Al Hattab and Javitt), and White (for Dages and Wilson) for guidance on research and writing; and Professor Todd A. Watkins and Nancy Watkins for their editorial oversight. The students also thank the faculty partners for support and friendship throughout. On behalf of the Martindale community of students, alumni, faculty, staff, and friends, we express immense appreciation to Douglas Lane '67 and Gay Lane for their support of this journal. Todd A. Watkins, Ph.D., Editor Executive Director, Martindale Center The Martindale Center thanks alumni mentors who provided feedback on article drafts: Denise Aaron '92 Aaron K. Adams '20 Lauren Bloomstein Schlossberg '96 Kate Brown '24 Emma Chiusano '23 Brian Cunningham '10 David Dashifen Kees '02 '04G Michelle Davis '86 Tessa Dougan '24 Alicia Drummey '85 Susan Fox Tedford '88 Gustavo Grinsteins '18 Carolyn Shemwell Kaplan '02 '03G Nick Lynch '05 '07G David Morency '18 Marie Theresa O’Connor '91 Karen O’Donnell '99 Lisa M. Phillips '90 Augustine M. Ripa '04 Alexis Soulias '23 Danielle Spar '10 Andrew Tye '13 Helen Tynes '22 '23 Beth Vallen '13 M. Jeremy Walsh '08 '09G Jeffrey Wantman '00 The Martindale Center thanks these organizations: Chiavalon Olive Oil Museum of Broken Relationships Panturist by Arriva The Martindale Center thanks these individuals: John Ashbrook Kristina Babić Martina Balja Anja Bašić Ana Bedalov Melanija Bertak Ante Braović Damir Brčić Ivan Brlić David Burburan Anita Bušljeta Tonkovic Ida Čarnohorski Ana Ćosić Austin Derado Zoran Đogaš Josipa Dragičević Kora Dvorski Mario Friš Melani Furlan Marijana Grbeša Zenzerović Hrvoje Grofelnik Sonia Grotz Miro Hegedić Andrej Jelenković Adriana Jelušić Vjekoslav Jukić Anamarija Jurčev Savičević Natasha Kalauz Matia Krizmanić Jure Krstulović Yvonne Lee Vesna Lukanović Neda Lukić Dijana Mandić Loredana Maravić Mia Maslać Zvonimir Matutinović Damir Medved Davorka Medved Mile Milković Josip Musić Rea Nepravishta Angela Paleka Jennifer Parker Irena Peršić Živadinov Davor Pitting Lucija Priljević Goran Romek Mark Scott Sanja Sić Zagorščak Ivan Šikić Antoaneta Šimunović Ivona Stanić Filip Stipančić Alenka Šuljić Petrc Jan Surotchak Vito Turšić Izabela Vukosović
v THE MARTINDALE CENTER FOR THE STUDY OF PRIVATE ENTERPRISE RECOGNIZES AND THANKS THESE MAJOR CONTRIBUTORS FOR THEIR GENEROUS SUPPORT J. Richard Aronson '87PG '15GP (deceased) and Judith L. Aronson '80G '87PG '15GP Thomas A. Berglund '82 and Rosemarie Fiorilli '83 Alan S. Brodherson '86 Robert M. Cahill '84 '23P '23P and Mary Beth Cahill '23P '23P Brian P. Cunningham '09 '10 and Danielle M. Spar '10 Fairchild-Martindale Foundation Faith R. Glazier '87 '19P and Robert A. Weisstuch '85 '19P Jay H. Golding '67 and Susan Golding Stephen F. Goldmann '66 and Bette G. Goldmann Donald M. Gruhn '49 (deceased) and Judy Gruhn Leo Guthart Barry C. Harris '70 and Sandra Harris Peter F. Harter '90 and Shelby Harter David Heidecorn '78 '11P and Deborah S. Heidecorn '78 '11P Frederick H. Jamieson '74 and Jane P. Jamieson '75 Mark S. Kaufmann '53 (deceased) and Carole Kaufmann Edward R. Klein '67 '68G '01P and Rosalyn F. Klein '01P Michael D. Krauss '83 and Dara L. Krauss Jeffrey A. Laborsky '98 Melissa A. Rutigliano Laborsky '99 Douglas Lane '67 '90P and Gay Lane '90P Ira W. Lieberman '64 '94P and Phyllis Lieberman '94P (deceased) Roger S. Penske '59 '82P and Kathryn Penske William G. Pertusi '83 '14P and Rina S. Pertusi '85 '14P Rodolfo Segovia '89P '91P and Silvia Segovia '89P '91P Bruce M. Serchuk '89 and Anita Soucy Kanika P. Sethi Sarat Sethi '92 Steven R. Shoemate '85 Sidney J. Silver '57 '59G '81P '93P '17GP '18GP and Margaret Silver '81P '93P '17GP '18GP James B. Swenson '59 '15GP '17GP and Roberta H. Swenson '15GP '17GP Maria Evelina Taber '93 and Mark D. Taber Jeffrey Tarnoff '69 '00P (deceased) and Diane W. Tarnoff '00P Ferdinand Thun '56 (deceased) and Elizabeth M. Thun Jeffrey S. Wantman '00 and Sara Wantman Todd A. Watkins '15P '18P and Nancy B. Watkins '15P '18P Kenneth R. Woodcock '65 and Dorothy Woodcock Allen M. Yurko '73 and Gayle Yurko
vi THE MARTINDALE CENTER FOR THE STUDY OF PRIVATE ENTERPRISE THANKS THE FOLLOWING DONORS FOR THEIR VALUED SUPPORT (FY2022–FY2026) Luis A. Arcentales '99 '00G and Chenling Arcentales Bonor Ayambem '23 '25G Peter P. Baba '04G Melissa Barnaby '97 Richard W. Barsness and Dorothea L. Barsness Devon J. Battaglia '01 '03 and Irene K. LaBarca Battaglia '04 Elizabeth H. Beatty '84 '16P Hrvoje Benko '01 and Elizabeth L. Benko '01 Whitney L. Bernstein '15 '16G Christopher J. Berzin '10 Kenneth D. Blanchette '10 Margaret C. Buell '88 '93G '17P '19P and Stephen G. Buell '70 '71G '77G '17P '19P Rachel M. Buonasora '20 Thomas F. Burke, Jr. '93 and Sharon Burke John M. Burton '15P and Karen M. Burton '15P John A. Carr '22 Laura G. Chan-Danko '17 Helen M. Colosimo '03 Megan E. Colville '12 Christopher L. Croteau '92 and Lena Croteau Christopher J.L. Cunningham '03 and Lori A. Cunningham '03 '04G David Danko '17 Billie M. Davis '02 '03G Ian M. Davis '18 Alix E. Eggerding '04 and Matthew Eggerding Mohamed S. El-Aasser and Nora A. El-Aasser Bryce D. Erdman '23 Andrew C. Fiala '92 and Ehren Weidenkeller Kenneth P. Fischl '71 '01P and Marsha Fischl '01P Eric S. Fishbein '01 '02G Colin E. Gallagher '04 Katherine Glass-Hardenbergh '11 Steven M. Glassman '04 '05G Benjamin O. Golden '94 Milton H. Grannatt III '68 '69G '72G '75G and Patricia S. Grannatt '72G Nicholas J. Greybush '11 Gustavo Grinsteins Planchart '18 Shaan Gurnani '16 Lisa E. Heintzelman '15 Marie E. Helmold '81 Mary J. Hill (deceased) Logan A. Hodges '16 Christine M. Joachim '96 Andrew J. John '06 '07G and Soo Hooi Oh '06 '07 Carolyn Kaplan '02 '03G and Rudyard D. Kaplan '02 Andrew R. Lauden '93 and Trisha W. Lauden '93 Cynthia J. Learn '87 Howard T. Lieberman and Alice E. Lieberman Jenny Lin '21 Nicholas A. Lynch '05 '07G Veronica D. McKinny '18 Thomas R. Nelson '81 '13P and Katherine R. Nelson '13P Tina R. Niedzwiecki Peloquin '95 and Darrin Peloquin Alexander A. Niewiarowski '14 Marie T. O'Connor '91 Karen A. O'Donnell-VanderGoot '99 and Matt R. VanderGoot Raymond Ojserkis '91 Marc C. Palmer '10 Catherine Y. Preysner '16 Karen J. Richard '93 and Andrew D. Richard Shauna G. Richman '83 Catherine M. Ridings '18P '21P Daniel E. Rosenthal '92 '21P and Michelle H. Rosenthal '92 '21P James C. Rule, Jr. '11 and Michelle Spicer '12 '14G Kristin E. Sargent '02 Stuart D. Schnabolk '09 and Elizabeth L. Schnabolk '08 Sheila C. Schottland '05 and David Schottland Curtis S. Schuelein '81 Akhil Sethi '87 '23P and Sunanda Sharma Viraj Sethi '23 Tyler A. Sloan '15 Paul E. Smith '61 '62 '93P and Carol A. Smith '93P Cara E. Stawicki '05 '06G and Kyle R. Stawicki '05 J. Nicholas Strasser '01 and Rosanne Facchini Karen L. Stuckey '75 '10P and Henry W. Seduski, Jr. '10P
vii LEHIGH UNIVERSITY AFFILIATIONS KEY: 'Yr: Undergraduate degree year 'G: Graduate degree year 'P: Child’s undergraduate degree year 'PG: Child’s graduate degree year 'GP: Grandchild’s degree year Connie D. Svoboda '99 SueNee Tan '09 Tyler A. Tate '04 '05G Jon P. Van Order '94 Kathryn T. Walmsley '99 and Davis L. Walmsley '99 Christina Wang '16 Andrew J. Ward '22P and Sally L. Ward '22P Katherine L. Warren '02 and Michael S. Warren '02 Edmond A. Watters III '61 '66G '74G Richard N. Weisman '00P and Melody K. Weisman '81G '00P Caroline F. Weisstuch '19 George P. White '06P and Karen White '06P Beth M. Wilson '18P Catherine E. Withers '14 '15G
CROATIA IN TRANSITION Volume 44 2026 x INTRODUCTION DARIO ZORIC 1 THE COMPLIANCE TRAP: CROATIA’S STALLED PATH TO SUSTAINABILITY Croatia’s accession to the EU required adopting policy frameworks to meet European environmental standards. While successful in legal alignment, sustainability efforts remain constrained due to structural economic challenges, governmental distrust, and a persistent innovation gap. This article examines Croatia’s current “compliance trap” through the tourism and agriculture sectors, highlighting how limited capacity hinders progress. It argues that strengthening human capital and rebuilding institutional trust are essential for transitioning from compliance to leadership in sustainable governance. ESTEFANIA RAVELO REYNA 9 THE PERCEPTION GAP: JUDICIAL CORRUPTION AND INSTITUTIONAL DISTRUST IN CROATIA Croatia faces a hyperbolized trust deficit, where citizens’ perception of judicial corruption significantly exceeds their direct experience. This distrust is rooted in Yugoslav-era patronage (veze) and 1990s cronyism that have persisted through the EU-mandated reforms. High-profile scandals that involve grand corruption and systemic bias reinforce narratives of elite impunity, deter investment, and weaken social cohesion. To restore institutional legitimacy, Croatia must implement rigorous auditing, digital transparency, and independent civilian oversight. SOPHIA E. TASKOV 18 RURAL CROATIA’S GERIATRIC CARE GAP The geriatric population in rural Croatia faces a worsening health-care crisis. The increasingly aging population struggles to receive the adequate care they need to remain healthy. This article analyzes barriers to care including workforce emigration, inadequate training, uneven facility distribution, and insufficient funding. Possible solutions are proposed to improve health-care access, reduce caregiver burden, and enhance health outcomes for the elderly. Croatia must expand its network by collaborating with international health-care personnel and reassess funding allocations to provide care to older citizens in rural areas. LAILA S. DAGES 26 CONCENTRATED OWNERSHIP AND DEMOCRATIC ACCOUNTABILITY IN CROATIAN TELEVISION Croatia’s television broadcasting landscape is characterized by concentrated ownership and significant foreign control, both of which raise concerns about democratic accountability. Post-Yugoslav privatization aimed to promote media pluralism; however, it reconfigured prominent structural weaknesses in the system rather than solving them. This article assesses the vulnerabilities of Croatia’s contemporary media system, explores how these vulnerabilities significantly distort the media environment, and examines the implications for democratic accountability in Croatia. AARON O. WILLIAMS 35 LAYERED BUREAUCRACY AND THE STIFLING OF INNOVATION IN CROATIA Croatia’s many economic transitions have left the country laden with administrative obstacles. Each reform designed to help the economy through its changes has instead layered on preceding ones, creating numerous bureaucratic barriers to prospering entrepreneurship and innovation. This article details Croatia’s economy through phases of transition, from Yugoslav socialism to EU accession, and outlines present-day inefficiencies. It concludes with policy recommendations that could help the country develop a more effective innovation ecosystem. NATALIE R. JAVITT 43 FRAGMENTATION, TOURISM PRESSURE, AND EU POLICY: CHALLENGES IN CROATIA’S MUNICIPAL WASTE MANAGEMENT SYSTEM Croatia’s waste management system faces compounding pressures from rapid tourism growth and EU circular economy mandates, exposing the inefficiencies of its fragmented municipal governance viii
ix structure. Tourist arrivals have grown by 10-fold in recent decades, while EU accession has imposed strict recycling targets. This article examines the roots of Croatia’s decentralized waste governance, analyzes how tourism and fragmentation have stalled EU compliance, and recommends structural reforms to reduce municipal fragmentation and enable coordinated progress. OLIVIA A. LUNDQUIST 52 TEMPORAL TENSIONS IN CROATIA’S MIGRATION POLICIES Following its accession to the EU, Croatia experienced increases in emigration and immigration. These led to short-term policies that lacked lasting considerations for migration to Croatia. Recently, national demographic strategies were developed that outlined the country’s plan for migration going forward. These policies provide the opportunity for Croatia to position itself as a long-term destination rather than utilizing migration solely as a solution to structural labor market concerns. ELIZABETH M. WOLFE 61 FROM BREAKTHROUGH INNOVATION TO GENERIC DEPENDENCE: CROATIA’S PHARMACEUTICAL PARADOX Croatia has a strong history of pharmaceutical innovation, yet today it relies on imports for many essential medicines. This article looks at how changes in ownership, policy decisions, and regulations have weakened local research and shifted the industry toward generic drug production. By comparing Croatia to similar countries, the article suggests steps the country can take to rebuild advanced capabilities and strengthen its role in European life sciences through expansion of its pharmaceutical manufacturing capacity. HASHEM AL HATTAB 71 ATTRACTING TOURISTS, DISPLACING HERITAGE: CROATIA’S POSTWAR RECOVERY IN DUBROVNIK After the Homeland War ended in Croatia, the government turned its attention to rebuilding Croatia’s public-facing image—especially in locales such as Dubrovnik—to regain the economic stimulus of tourism. However, it failed to properly plan for the eventual overtourism, lacking strategies for heritage management, visitor limits, and community preservation. Inadequate war acknowledgments, coupled with the influx of tourism, have had an adverse effect on the area’s cultural heritage. AVERY MCGARRY 79 REVERSING CROATIA’S SPIRAL OF STEM DECLINE AND TOURISM DEPENDENCE Tourism plays a disproportionate role in Croatia’s economic success, putting the country at risk should tourism become less lucrative. Croatia has infrastructure and resources to expand its STEM sectors but is hindered by disjointed educational tracking, poor resource allocation, and brain drain. This analysis identifies the interactions between these elements and examines how they manifest as a negative feedback loop. Processes Croatia can alter to resolve the spiral and reinforce its national economy are recommended. CLAIRE E. WILSON 89 THE TRILEMMA IN CROATIA’S NATURAL GAS SECTOR Croatia’s new liquefied natural gas terminal has delivered security gains since 2021: eliminating Russian gas dependence, establishing Croatia as a regional energy exporter, and moderating electricity prices. However, accelerating gas investment and growing US dependency reveal conflict with binding EU climate commitments, and fugitive methane costs threaten welfare gains. Croatia’s singular focus on gas risks forfeiting its competitive edge as Europe decarbonizes. Early renewable investment and terminal conversion planning are essential to preserving long-term energy hub ambitions. GIDEON SOBEK INHERITED BANKING CAUTION AND CREDIT CONSTRAINTS FOR SMALL BUSINESSES IN CROATIA When the Croatian banking system emerged from Yugoslav-era social ownership, it inherited an environment of politically driven credit and minimal risk screening: major market economy hazards. This legacy persists in small and medium-sized enterprise finance, where leading banks are reluctant small-business lenders. This article argues that the eased collateral requirements and terms brought by EU-backed instruments reveal strong small and medium-sized enterprise demand for credit, identifying supply-side caution and regulation as the primary binding constraints. JOSEPH GUSTAV MAASS 101
Introduction It was a true privilege to welcome the Lehigh University Martindale Center for the Study of Private Enterprise representatives to Croatia during their 2025 research program. Returning to work once again with Lehigh as a proud Global Village for Future Leaders of Business and Industry alumnus (2011) made this experience especially meaningful. It was a privilege to reconnect with the faculty and staff who make the Martindale program so impactful and to meet another outstanding group of talented, curious, and highly engaged students. Over the past 15 years, my relationship with Lehigh has extended far beyond my time as a Global Village student. Through many years of continued collaboration, the Lehigh campus has truly become my second home. My study at Lehigh followed by many years of working with the university on the campus gave me a deep understanding of what makes the Martindale program unique: Students are not simply visitors; they are researchers, eager to engage with people, ask thoughtful questions, and better understand the forces shaping a country’s future. With that perspective in mind, I helped provide content and connections for the program and field immersion that gave students meaningful access to Croatia’s institutions, businesses, and innovators. During their journey from Zagreb to Dubrovnik, they met with government leaders, the Ministry of Economy, innovation agencies, universities, technology and production parks, entrepreneurs, and companies representing a wide range of industries. My hope was that these conversations would allow them to experience Croatia well beyond its remarkable natural beauty and rich history, encountering a country increasingly defined by innovation, resilience, entrepreneurship, and international collaboration. Croatia is often recognized for its stunning coastline, cultural heritage, and tourism but is also a country undergoing an economic and technological transformation. As a member of both the Schengen Area and the eurozone, Croatia is strengthening its position within the EU while investing in digitalization, advanced manufacturing, renewable energy, life sciences, and research-driven entrepreneurship. Across the country, a new generation of innovators is building globally competitive companies while preserving the values and traditions that make Croatia unique. The research presented in this volume reflects the curiosity, dedication, and depth of analysis that define the Martindale program. The students explored topics central to Croatia’s continued development, examining opportunities and challenges across the economy, technology, sustainability, public policy, education, health care, and society. Their work demonstrates not only careful research but also a genuine effort to understand Croatia through conversations with the people shaping its future. What impressed me most during their visit was the students’ willingness to listen, ask the right questions, and engage thoughtfully with every person they met. Whether speaking with government officials, university researchers, startup founders, business leaders, or locals, they approached every discussion with intellectual curiosity and an openness to different perspectives. Those qualities produced insightful analyses and thoughtful recommendations that I hope will contribute to future dialogue between Croatia and the US. Lehigh University has long demonstrated the value of immersive international learning through the Martindale program and other global learning initiatives. As a Lehigh Global Village alumnus and through many years of working with the university, I have seen firsthand how these experiences shape future leaders by encouraging critical thinking, cross-cultural understanding, and lifelong relationships. It was an honor to help create an environment where the students could fully engage with Croatia, its institutions, and its people. I sincerely hope this journey marks only the beginning of the students’ connection with Croatia. May they return often—as researchers, business partners, policymakers, investors, or simply as friends—and continue strengthening the lasting relationship between Croatia, Lehigh University, and the US for many years to come. Dario Zoric, Global Village '11 Senior Advisor, City of Bjelovar Former COO, Smion x doi:10.18275/pbe-v044-001
1 MARTINDALE CENTER FOR THE STUDY OF PRIVATE ENTERPRISE The compliance trap: Croatia’s stalled path to sustainability Estefania Ravelo Reyna Croatia’s accession to the EU required adopting policy frameworks to meet European environmental standards. While successful in legal alignment, sustainability efforts remain constrained due to structural economic challenges, governmental distrust, and a persistent innovation gap. This article examines Croatia’s current “compliance trap” through the tourism and agriculture sectors, highlighting how limited capacity hinders progress. It argues that strengthening human capital and rebuilding institutional trust are essential for transitioning from compliance to leadership in sustainable governance. Introduction Croatia’s accession to the EU in 2013 marked a transformative departure from a post-Yugoslav, centralized government model toward a system defined by the EU acquis—the comprehensive body of EU laws, regulations, and standards that all member states must adopt and enforce. This integration deepened with Croatia’s entry into the eurozone and Schengen Area in 2023, reinforcing economic and regulatory alignment with EU institutions. This broader transformation, known as Europeanization, required the incorporation of EU cultural, political, and economic norms into domestic structures and policies to ensure compliance. Within this framework, emphasis was placed on the EU environmental acquis regarding environmental protection and sustainable resource management. A primary outcome of this shift was Croatia’s leading participation in Natura 2000, the largest coordinated network of protected areas (European Environment Agency, 2023), which all member states must implement. However, this rapid legislative alignment has created tension between high-level sustainability mandates and the nation’s heavy dependence on resource-intensive agriculture and tourism. Although Croatia has successfully incorporated EU benchmarks into its legal framework, the transition to a green economy remains stalled by structural economic constraints, institutional distrust, and a persistent innovation gap. This article argues that Croatia’s current model is characterized by compliance rather than proactive sustainability. To move beyond this “compliance trap,” the state must address the disconnect between the existing environmental policies and efficiency in local implementation by developing human capital and governmental trust nationwide and fostering domestic innovation in sustainability initiatives. Croatia’s EU policy transfer The EU’s approach to environmental protection is characterized by policy regulations, with an emphasis on individual member states’ abilities to achieve environmental objectives through reliable enforcement mechanisms, ensuring the participation of government authorities, industry leaders, farmers, and citizens alongside the support of EU institutions and resources (Alibašić & Atkinson, 2023). Prior to EU accession, the European Commission deemed Croatia’s environmental governance incompatible with EU standards. This status was a product of its post-Yugoslav model, characterized by strong centralization and an underdeveloped civil society. Environmental initiatives and tasks were spread across multiple entities, leading to fragmented efforts to sustainably manage the natural environment. The government lacked resources, a fully developed legislative framework, and the technical expertise necessary for effective policy implementation (Taylor, 2015). Croatia’s Europeanization began during accession negotiations, leading to the adoption and integration of EU norms, policies, and frameworks into domestic governance. To meet candidacy requirements, Croatia undertook extensive reforms, aligning national legislation with EU priorities and investing in institutional restructuring. These efforts were supported by EU financial and technical assistance, enabling a rapid and comprehensive policy transfer (Kay, 2014). Accession required full adoption of the EU environmental acquis (Alibašić & Atkinson, 2023), comprising over 200 legal acts covering environmental protection, climate change, and sustainable development. Croatia implemented key regulatory frameworks governing biodiversity conservation, water quality, and pollution control, under the Endoi:10.18275/pbe-v044-002
2 PERSPECTIVES ON BUSINESS AND ECONOMICS | VOL 44 | 2026 vironment Action Programmes and the Common Agricultural Policy instruments. One of the most significant outcomes of this alignment was the expansion of protected areas under the Natura 2000 network, increasing coverage from approximately 9% to nearly 40% of Croatia’s land and 10% of its marine waters (European Environment Agency, n.d.; Kay, 2014). This framework introduced new guidelines for environmental monitoring and reporting and sustainable land use (European Environment Agency, 2023). Croatia established legal frameworks to support the implementation of EU environmental policy, including the Environmental Protection Act (2013). In parallel, the European Environment Agency provided institutional and technical support for the implementation, enforcement, and data-driven monitoring of EU environmental law at a national level (Alibašić & Atkinson, 2023). Environmental actions are further supported by the EU Cohesion Policy funds and the European Agricultural Fund for Rural Development, which finance conservation planning and resource management efforts (Radovic, 2023). Despite this comprehensive integration of EU standards, environmental policy implementation operates through a system in which responsibilities are distributed across multiple ministries. Environmental protection, agricultural management, and resource use are managed by separate entities with overlapping mandates and, as a result, enforcement remains fragmented. The benefits and constraints of Croatia’s regulatory alignment and the subsequent environmental outcomes are examined in the following sections. Environmental conservation outcomes in Croatia Croatia’s adoption of EU environmental governance frameworks has shifted national approaches to biodiversity protection and natural resource conservation, including designating and monitoring protected areas. As discussed previously, Croatia significantly expanded its protection network for land and marine ecosystems. However, the transition from regulatory alignment to ecological impact remains uneven. Although conservation planning and monitoring have improved, outcomes suggest Croatia has struggled in translating legal frameworks into lasting environmental improvements. EU accession strengthened Croatia’s biodiversity conservation efforts through the implementation of the Birds and Habitats Directives, introducing structured systems for species protection, habitat designation, and environmental monitoring (European Commission, 2026a, 2026b). Croatia improved its management of protected areas, supporting the recovery of certain endangered species, including large carnivores and migratory birds, under the Ministry of Economy and Sustainable Development and the Ministry of Agriculture, Forestry and Fisheries (Pečurlić et al., 2025; Radovic, 2023). Despite these advances, biodiversity outcomes remain limited. Under Article 17 of the Habitats Directive, Croatia’s 2013–2018 report classified only 7% of assessed species as having a favorable conservation status, while 47% had unknown status, with 24% classified as poor and 22% as bad (Radovic, 2023). These findings highlight data gaps and limitations in Croatia’s monitoring capacity, constraining the effectiveness of conservation measures. Marine and coastal ecosystems illustrate similar patterns. Alignment with EU frameworks, such as the Marine Strategy Framework Directive (European Commission, n.d.) and the Water Framework Directive (European Commission, 2026c), has strengthened monitoring of biodiversity, water quality, and pollution levels in various ecosystems, including the Adriatic Sea. However, repercussions of tourism, coastal development, marine litter, and invasive species continue to threaten marine ecosystems (United Nations Environment Programme…., 2021). These trends indicate a gap between strong regulatory frameworks for biodiversity and ecosystem protection outcomes. Economic implications for tourism and agriculture Croatia’s compliance with EU environmental standards extends beyond conservation. Economic feasibility remains a central consideration when adopting policies. The European Green Deal provides a comprehensive framework for transitioning to a sustainable, circular economy aimed at reducing environmental harm while promoting economic growth (Boromisa et al., 2024). Yet the cost of protection is significant. Natura 2000 alone will cost €588 million over 2021–2027 (Ministry of Economy and Sustainable Development, 2022). Croatia’s GDP grew 6.7% from 2014 to 2017; nevertheless, the country still faces challenges in global competitiveness (Denona Bogović & Sverko, 2020). The push for a green economy adds to Croatia’s compliance burden, requiring alignment between environmental efforts and economic prosperity. This section examines how objectives shaped by the EU environmental acquis affect two major sectors—agriculture and tourism—assessing the effectiveness of Croatia’s green agenda in the face of rapid development.
3 MARTINDALE CENTER FOR THE STUDY OF PRIVATE ENTERPRISE Barriers to agricultural sustainability In Croatia, protection and conservation of the natural environment often are framed not as domestically driven goals but as conditions of EU membership. Environmental standards are viewed through their economic implications: how they affect growth, compliance costs, and eligibility for EU subsidies (Pečurlić et al., 2025). Framing environmental policy as a financial tool can help promote biodiversity protection, inclusive farmer funding, and widespread clean agricultural practices. But the focus on income ultimately limits the sector’s ability to pursue longterm environmental transformation. Although agriculture plays a larger economic role in Croatia than in many other member states, the sector lags in productivity and competitiveness relative to the EU average, inhibiting environmental investments. Agriculture contributes 3.3% to the GDP, compared to 1.7% across the EU, and 6.2% to employment versus 4.5% in the EU. However, the sector is characterized by small farm sizes, low-value crops, and limited R&D investment, all of which constrain productivity and competitiveness (Boromisa et al., 2024). Nearly 70% of Croatia’s farms cover less than 5 hectares, limiting production capacity and access to equipment (Boromisa et al., 2024; Hadelan et al., 2022). Land fragmentation, characterized by small and disconnected farm parcels, hinders efficiency and restricts ecological practices that integrate land management and investment. Larger farms are more willing to participate in such initiatives, while smaller farms, representing the majority, perceive them as economic risks and a burden on their limited production capacity (Pečurlić et al., 2025). Croatia’s integration into the Common Agricultural Policy framework facilitates farm modernization, financial support, and long-term development. This initiative aims to equip family farms to be adaptable, resilient, and market focused. Under that policy, member states implement Rural Development Programmes in accordance with their specific socioeconomic and environmental needs. These programs prioritize sustainability: At least 30% of public expenditure must fund climate action and environmental sustainability efforts, through agri-environment-climate measures, organic farming, and land management within the Natura 2000 network (European Commission, 2022; Pečurlić et al., 2025). Because participation mandates that farmers comply with complex regulatory and reporting procedures tied to environmental performance, EU compliance is framed as a burden rather than an opportunity for sustainable growth of the sector (Pečurlić et al., 2025). Implementing EU environmental practices like sustainable land and water management and reductions in agricultural pollution requires structural changes beyond legislative compliance; it necessitates a shift in how environmental policy is understood. Current initiatives have expanded support for farm operations and established accountability mechanisms. Yet they maintain relatively low thresholds, pointing to an ongoing need for stronger regulations and enforcement that prioritize sustainability as a main driver of the sector’s long-term success. Tourism’s sustainability dilemma Tourism is a vital pillar of Croatia’s economy, shaping national policy, employment, and standards of living. The sector accounts for 20%–25% of GDP, making Croatia one of the most tourism-dependent countries in Europe (Buturac & Rasic, 2024). This reliance increases vulnerability to external shocks, whereby the rapid expansion of a dominant, non-tradable sector attracts labor and investment away from tradable industries, in particular manufacturing, weakening long-term economic diversification (Beg & Basarac Sertić, 2020; Brahmbhatt et al., 2010). The COVID-19 pandemic exposed this vulnerability, with tourism disruptions contributing to an economic decline of almost 9%. This dependence introduces significant environmental and economic pressures. The sector is characterized by intense labor demands, strong seasonality, relatively low wages, and workforce competition from the influx of foreign labor (Bolfek et al., 2025; Denona Bogović & Sverko, 2020). Tourist areas become ghost towns outside the summer months. Croatia is also experiencing overtourism; in 2024, the country hosted 18.3 million tourists, significantly surpassing its population of almost 4 million (Buturac & Rasic, 2024) and placing significant strain on infrastructure, natural resources, and local communities. Increased waste generation, water and energy consumption, and habitat degradation have become major concerns, especially in coastal regions (Bolfek et al., 2025). In protected areas, rising visitor numbers create a 45% greater likelihood of environmental threats (Mileusnić Škrtić et al., 2024). These pressures carry significant economic costs: In 2018, a peak tourism year, the cost of environmental degradation related to tourism was estimated at €55M, or 0.6% of tourism-generated GDP (World Bank, 2021). Costs are expected to increase substantially
4 PERSPECTIVES ON BUSINESS AND ECONOMICS | VOL 44 | 2026 given that in 2025 Croatia recorded more than 21.8 million tourist arrivals (Croatian National Tourist Board, 2026), nearly 15% higher than in 2018. To remain competitive while addressing these pressures, Croatia has opted to develop sustainable tourism models, efforts facilitated by EU frameworks (Bolfek et al., 2025; Pantovic et al., 2023). The National Recovery and Resilience Plan and the 2030 Sustainable Tourism Development Strategy aim to promote environmentally responsible tourism, improve resource management, and encourage more balanced regional and seasonal distribution (Bolfek et al., 2025; European Commission, 2021). Nonetheless, tourism continues to grow rapidly. Without careful management, Croatia could mirror trends in Spain, where widespread, unregulated tourism has contributed to housing shortages, environmental degradation, and public backlash against tourism, prompting cities like Barcelona to impose restrictions on short-term rentals and visitor capacity. Croatia is already experiencing similar stresses, most evident in the coastal destinations of Dubrovnik and Split (Bolfek et al., 2025; Macias, 2024). Moving to sustainable tourism calls for more than restricting tourist access to coastal areas or adding ecolodges; it demands a coordinated, interagency approach. Both providers and visitors are increasingly aware of these dangers and rethinking traditional vacation models (Pantovic et al., 2023). Some regions are already exploring limited and heavily monitored tourism in protected areas such as the Deliblato Sands Special Nature Reserve in Northern Serbia or adopting car-free models that collaborate with and benefit local communities (Croatian National Tourist Board, 2025; Trišić et al., 2023). Even so, these initiatives represent only first steps in national transformation. Even as Croatia has established the necessary policy frameworks and started integrating innovative solutions, their effectiveness depends on how they are implemented in practice, as explored in the next section. Drivers of Croatia’s compliance trap Croatia’s limited progress toward sustainability is not the result of insufficient policy adoption but of structural constraints that hinder effective implementation. As illustrated in Table 1, a divergence exists between high levels of formal compliance and limited ecological outcomes. This persistent gap defines Croatia’s compliance trap, in which policies are adopted and reported but not translated into measurable environmental improvements. *Pre-accession biodiversity estimates are not directly comparable to post-accession figures due to limited monitoring coverage and the absence of standardized EU reporting requirements prior to accession. †Data are from 2006 and include vascular plants and vertebrate/invertebrate fauna. Sources: aEuropean Environment Agency, 2025; bBiodiversity Information System for Europe, n.d.; cMinistry of Environmental Nature and Protection, 2014; dState Institute for Nature Protection, Ministry of Culture, Republic of Croatia, 2006. Table 1 Croatia’s formal compliance versus outcomes Indicator Pre–EU accession* Post–EU accession* What it shows Protected land (%) 12.3 (2012)a 38.2b Rapid legislative alignment with EU conservation requirements Natura 2000 sites 0 783b Formal compliance driven by EU accession Protected marine area (%) ~2c 9.5b Expansion of marine conservation in alignment with Natura 2000 Species with favorable status (%) ~40†,d 7.14b Improved reporting reveals conservation challenges Species with poor/bad status (%) ~43†,d ~46b Persistent threats to biodiversity despite policy compliance Species with unknown status (%) ~17†,d ~47b Limited monitoring capacity due to structural constraints Indicator Pre–EU accession* Post–EU accession* What it shows Protected land (%) 12.3 (2012)a 38.2b Rapid legislative alignment with EU conservation requirements Natura 2000 sites 0 783b Formal compliance driven by EU accession Protected marine area (%) ~2c 9.5b Expansion of marine conservation in alignment with Natura 2000 Species with favorable status (%) ~40†,d 7.14b Improved reporting reveals conservation challenges Species with poor/bad status (%) ~43†,d ~46b Persistent threats to biodiversity despite policy compliance Species with unknown status (%) ~17†,d ~47b Limited monitoring capacity due to structural constraints Indicator Pre–EU accession* Post–EU accession* What it shows Protected land (%) 12.3 (2012)a 38.2b Rapid legislative alignment with EU conservation requirements Natura 2000 sites 0 783b Formal compliance driven by EU accession Protected marine area (%) ~2c 9.5b Expansion of marine conservation in alignment with Natura 2000 Species with favorable status (%) ~40†,d 7.14b Improved reporting reveals conservation challenges Species with poor/bad status (%) ~43†,d ~46b Persistent threats to biodiversity despite policy compliance Species with unknown status (%) ~17†,d ~47b Limited monitoring capacity due to structural constraints Indicator Pre–EU accession* Post–EU accession* What it shows Protected land (%) 12.3 (2012)a 38.2b Rapid legislative alignment with EU conservation requirements Natura 2000 sites 0 783b Formal compliance driven by EU accession Protected marine area (%) ~2c 9.5b Expansion of marine conservation in alignment with Natura 2000 Species with favorable status (%) ~40†,d 7.14b Improved reporting reveals conservation challenges Species with poor/bad status (%) ~43†,d ~46b Persistent threats to biodiversity despite policy compliance Species with unknown status (%) ~17†,d ~47b Limited monitoring capacity due to structural constraints Improved reporting reveals conservation challenges
5 MARTINDALE CENTER FOR THE STUDY OF PRIVATE ENTERPRISE Institutional fragmentation and the enforcement gap A central driver of this gap is the fragmentation of environmental governance across multiple institutions. Responsibilities for environmental protection, agricultural management, and resource use are divided across ministries with overlapping mandates, for instance, the Ministry of Agriculture, Forestry and Fisheries and the Ministry of Environmental Protection and Green Transition. This multi-actor structure has expanded participation among stakeholders, but the coordination of many parties has introduced challenges regarding accountability, transparency, and capacity, as it diffuses responsibility for outcomes. These weaknesses are reflected in public perception: In 2023, 96% of Croatians perceived corruption as a major national issue (Eurobarometer, 2023), reinforcing distrust of the institutions responsible for environmental management. In practice, no single institution holds full accountability for implementation of the EU environmental framework, a weakness of forest governance under the EU Timber Regulation. Although Croatia has formally aligned with the EU, assessments reveal deficiencies in transparency, limited compliance checks, and weak sanctioning mechanisms. As of 2021, the country had yet to adopt documentation that effectively enforces the prohibition of illegal logging, with researchers unclear as to whether anyone had ever paid a fine for this misdemeanor. In fact, Hvatske šume, the state-owned enterprise in charge of managing all public forests, has been repeatedly linked to large-scale deforestation and remains dominant in the timber market (Radosavljević et al., 2021). Similarly, Croatia’s implementation of the EU Environmental Impact Assessment Directive suffers from limited public access to information and weak sanctioning and oversight, according to an assessment by the European Network of Environmental Law Organizations (Justice and Environment, 2023). These institutional gaps extend across multiple sectors. Following EU accession, most protected areas became privately owned, granting individual landowners and organizations, rather than government officials, the primary responsibility for managing land and complying with EU environmental standards (Kay, 2014). Croatian farmers already struggled with insufficient infrastructure, lack of funding, and labor shortages. Now, they must not only farm sustainably but also conduct ecological monitoring, manage land to support biodiversity, and submit complex EU environmental reports to qualify for subsidies (Boromisa et al., 2024). For many, notably small-scale producers, these obligations introduce significant administrative and financial burdens, often without sufficient technical support (Pečurlić et al., 2025). Ultimately, environmental compliance becomes procedure-based rather than a tool for improved sustainability. Stakeholders meet requirements to access subsidies and avoid penalties, but lack of coordination and enforcement ultimately stalls progress. Fragmented governance thus leads to uneven policy implementation, inefficient monitoring, and unclear accountability. Innovation and capacity constraints Beyond governance challenges, Croatia’s ability to implement EU frameworks is limited by structural weaknesses in innovation and economic capacity. Croatia’s global rankings have improved recently; at the same time, they reveal fundamental weaknesses: a lack of innovation and low business sophistication. The Global Innovation Index indicates a modest rise from 44th place in 2023 to 40th in 2025, with the country remaining in the lower half of global rankings, scoring lowest in market and business sophistication, highlighting ongoing structural challenges (World Intellectual Property Organization, 2025). The national government had adopted advanced EU frameworks, Natura 2000 and the Tourism Act, but the domestic economy, in particular agriculture and tourism, lacks collaborative networks, knowledge-intensive employment, formal training, research and development, and intellectual property generation (World Intellectual…, 2025). In addition to these innovation gaps, Croatia suffers from significant regional inequalities that continue to widen despite government efforts. Coastal regions experience acute overtourism, with unemployment under 8%; at the same time, inland regions face stagnation and depopulation, with unemployment reaching 15% in 2024 (Croatian Bureau of Statistics, 2026). This divergence leads to an inefficient use of resources, abandonment of rural areas, and a poor quality of life in less developed areas (Denona Bogović & Sverko, 2020). These disparities have direct implications for environmental management. Rural and inland regions, where Croatia’s protected land is concentrated, lack the human capital and governmental capacity for sustainable land management. Coastal regions receive a disproportionate share of resources as they deal with tourism pressures, leaving inland regions under-resourced. Without addressing the regional divide by
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