"Integrating Croatia to the EU" - A Study on Trade Specialisation and FDI-

Abstract: The purpose of this thesis is to examine the effects of European integration on trade specialisation and FDI in Croatia during 1992-2002. On the basis of trade patterns, revealed comparative advantage are calculated by Balassa’s method. Further the inflow of FDI is examined to analyse if these are to be found in activities with comparative advantages or elsewhere. The analysis shows that exports have not changed much over time whereas imports have increased significantly. Croatia’s exports mainly consist of low-cost, labour-intensive and resource-based goods whereas skills and technology exports are underrepresented. According to calculations, commodities with the strongest revealed comparative advantage have not strengthened trade patterns significantly nor experienced expressively high inflow of FDI. Instead the majority of FDI can be found in the sectors of Telecommunications, Banking and Pharmaceutical products.