OECD Product Market Regulation (PMR) Indicators: How does Croatia compare? ___________________________________________________________________________________ Competitive product markets foster economic growth and can improve the living standards of citizens. OECD’s Product Market Regulation Indicators assess the alignment of a country’s regulatory framework with internationally accepted best practices. The Economywide Indicator measures the distortions to competition that can be induced through the involvement of the State in the economy, as well as the barriers to entry and expansion faced by domestic and foreign firms in different sectors of the economy. This indicator is complemented by a set of Sector Indicators that measures regulatory barriers to competition at the level of specific network and service sectors.
Overall PMR Indicator Index scale 0 to 6
Croatia
1.43
OECD countries Average
1.38
5 Most competitionfriendly countries 5 Least competitionfriendly countries
1.00 1.82 0.0
2.0
4.0
6.0
Economy-wide PMR Indicators: a breakdown by major components Index scale 0 to 6 from most to least competition-friendly regulation
6
Croatia
OECD average
5 Most competition-friendly countries
5 Least competition-friendly countries
5 4 3 2 1 0 Public Ownership
Involvement in Business Operations
Simplification and Evaluation of Regulations
Admin. Burden on Start-ups
Barriers in Service Barriers to Trade & Network sectors and Investment
Note: All the averages include only OECD countries. Information refers to laws and regulation in force on 1 January 2019. Source: OECD 2018 PMR database.
ECONOMY-WIDE HIGHLIGHTS
Overall, regulatory barriers to competition in Croatia are slightly higher than the OECD average. Public ownership is more extensive than in most OECD countries, with the state owning some of the largest network operators, but the corporate governance of these state-owned enterprises is aligned with many key OECD best practices. Further, there is scope for making the interaction between policy-makers and interest groups more transparent and the administrative requirements necessary to start-up new firms could be simplified. In contrast, the rules regulating public procurement are close to the best performing OECD countries, and barriers to foreign trade and investments are low.
Economy-wide PMR indicators: a breakdown by sub-components Index scale 0 to 6 from most to least competition-friendly regulation Distortions Induced by State Involvement Simplification and Evaluation of Regulations
Complexity of Regulatory Procedures
6 5 4 3 2 1 0
Interaction with Interest Groups
Involvement in Business Operations
5 Least competition-friendly countries
Assessment of Impact on Competition
6 5 4 3 2 1 0
Price controls
Governance of SOEs
Direct Control
Scope of SOEs
Gov’t Involv. in Network Sectors
Public Ownership
6 5 4 3 2 1 0
5 Most competition-friendly countries
Public procurement
OECD average
Command & control regulation
Croatia
Barriers to Domestic and Foreign Entry
Barriers to Trade Facilitation
Barriers to Trade and Investment
Treatment of Foreign Suppliers
6 5 4 3 2 1 0
Tariff Barriers
Barriers in Service & Network sectors
5 Least competition-friendly countries
Barriers to FDI
6 5 4 3 2 1 0
5 Most competition-friendly countries
Barriers in Network sectors
Licenses and Permits
Admin. Burden on Start-ups
Admin. Requirements for Lim. Liab. Companies and Pers.Owned Enterp.
6 5 4 3 2 1 0
OECD average
Barriers in Services sectors
Croatia
Note: All the averages include only OECD countries. Information refers to laws and regulation in force on 1 January 2019. If the blue bar does not appear on the chart for a specific indicator, it means that its value is 0. Source: OECD 2018 PMR database.
SECTOR-SPECIFIC HIGHLIGHTS Overall, in Croatia there is scope for removing regulatory barriers to competition in the service and network industries. Public ownership of large network operators is still widespread and regulations in network industries could be better aligned with international best practice. Regulations in most professional services are in line with the OECD average, but lawyers and notaries still face considerable restrictions. In addition, the rules regulating the retail sales of medicines are restrictive when compared with many OECD countries.
Regulation in network and service sectors PMR Indicators for network sectors Index scale 0 to 6 from most to least competition-friendly regulation Croatia 5 Most competition-friendly countries
6
OECD average 5 Least competition-friendly countries
5 4 3 2 1 0 Electricity
Gas
Rail
Air
Energy
Road
Water
Fixed
Transport
Mobile
E-Communications
PMR Indicators for professional services* and retail distribution Index scale 0 to 6 from most to least competition-friendly regulation Croatia 5 Most competition-friendly countries
6
OECD average 5 Least competition-friendly countries
5 4
3 2 1
0 Lawyers
Notaries
Accountants
Architects
Professional services
Civil engineers
Real estate agents
Retail distribution
Retail sale of Medicines
Retail trade
* When comparing the indicators across countries, it should be kept in mind that the activities undertaken by specific professions may vary between countries. Note: All the averages include only OECD countries. Information refers to laws and regulation in force on 1 January 2019. If the blue bar does not appear on the chart for a specific indicator, it means that its value is 0. Source: OECD 2018 PMR database.
OVERALL ASSESSMENT
With regulatory barriers to competition that are higher than the OECD average in several areas, there is scope for improving product market regulation in Croatia.
Strengths
Challenges
The public procurement regulatory framework facilitates participation to public tenders for goods, services and public works. For instance, it is a mandatory requirement for all contracting authority to make all tender documents available online and free of charge and to allow firms to submit bids online for all tenders.
Croatia has a very competition-friendly regulatory setup in the mobile e-communications sector, as the extent of state ownership is limited, and regulation is close to the international best practice.
There are no rules regulating the interaction between policymakers and interest groups and ensuring transparency of lobbying activities. For example, there is no compulsory registration for interest groups in a public registry, and there is no obligation on public officials to identify the interest groups that they consult or meet with during the regulatory process.
The regulatory framework in the retail sale of medicines is very restrictive. For example, there are tight constraints on the number, location and ownership of pharmacies.
Lawyers and, even more so, notaries are more stringently regulated than in many OECD countries.
Further information
“What are the 2018 OECD PMR indicators?” PowerPoint presentation on OECD PMR website
Vitale, C., et al. (2020), "2018 Update of the OECD PMR Indicators and Database - Policy Insights for OECD and some non-OECD Countries", OECD Economics Department Working Papers
Please visit our website : http://oe.cd/pmr Contact us at: PMR2018@oecd.org