79 MARTINDALE CENTER FOR THE STUDY OF PRIVATE ENTERPRISE Reversing Croatia’s spiral of STEM decline and tourism dependence Claire E. Wilson 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. Introduction The Croatian economy is heavily reliant on service-based industries; for instance, tourism accounts for up to a quarter of Croatia’s GDP annually (Mikulić et al., 2023). Although not an immediate crisis, overreliance on tourism to drive overall growth is risky for several reasons, including changing global interests, regional conflicts, pandemics, economic downturns, and climate change. The moment Croatia experiences a crisis that restricts free tourist activity or exacerbates the detrimental effects of overtourism and climate change, the economy could begin to suffer (Mikac & Kravarščan, 2021). Croatia needs a sustainable set of thriving nonservice industries to propel the nation in the event of a collapse—a safety net that a robust science, technology, engineering, and mathematics (STEM) industry could provide. STEM industries, such as pharmaceuticals, information technologies, and renewables, complement tourism’s weaknesses: They operate year-round rather than seasonally and leverage infrastructure and skilled, higher-wage labor rather than coastal geography and a lower-wage workforce. However, STEM industries are not currently plentiful in the Croatian economy. This status is perpetuated by both the inconsistent state of Croatian STEM education, which gives its citizens insufficient preparation for career success (Organisation for Economic Co-operation and Development [OECD], 2025), and lack of a critical mass of STEM professionals feeding into STEM industries as a direct result of brain drain (Šlibar et al., 2023). Croatia’s weak STEM education and thin STEM job market reinforce each other in a negative feedback loop that simultaneously drives brain drain and the economy’s dependence on tourism. These detrimental phenomena could be jointly alleviated by improving the quality of education and refocusing government and foreign investment to increase STEM-related economic activity (Palijaš, 2024). Tourism in the Croatian economy Croatia boasts one of the fastest-growing economies among Central and Eastern European (CEE) nations (Ipsmiller & Dikova, 2021). The Croatian economy has grown substantially since EU accession in 2013 and at an above-average rate compared with other CEE nations and EU member states (U.S. Department of State, 2025a). In 2024, the economy grew by 3.8%, more than 1.1 percentage points above the EU average (Eurostat, 2025). Up to a quarter of Croatia’s GDP can be attributed to its tourism industry, the largest share in the EU (Mikac & Kravarščan, 2021), bringing in nearly €15 billion in revenue in 2024 (U.S. Department of State, 2025a). As Figure 1 shows, among CEE nations, tourism has a significantly greater effect on Croatia’s GDP than in other national economies (Share of Travel and Tourism…, 2025). Tourism emerged as a focal point of the Croatian economy after free movement across borders became commonplace with EU accession, intensified by adoption of the euro and the trend of increased tourism in European post-transition economies (Tkalec, 2024). Croatia’s tourism industry is lucrative, but its share in the national economy is disproportionate. As Croatia continues to invest more resources in tourism, foreign investors are deterred by the economy’s lack of diversification (U.S. Department of State, 2025a), thereby discouraging the very investment that could reduce that overreliance. doi:10.18275/pbe-v044-011
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