(
second from left) in 1990 The privatization process in the
former Yugoslavia was initiated during the government of Yugoslav Prime Minister
Ante Marković. In 1990 he introduced a privatization program, with newly passed federal laws on privatization allowing company management boards to initiate privatization, mainly through internal share-holding schemes, initially not tradeable in the stock exchange. This meant that the law put an emphasis on "insider" privatization to company workers and managers, to whom the shares could be offered at a discount. Yugoslav authorities used the term "property transformation" when referring to the process of transforming public ownership into private hands. These new laws in Croatia and Slovenia were interpreted as tacit nationalization, a tendency of both governments to first re-nationalize public property in order to later proceed with privatization. At the time Croatia gained independence,
its economy, as well as the whole
Yugoslav economy, was in the middle of recession. As a result of the
1991–95 war, infrastructure sustained massive damage, especially the revenue-rich tourism industry. Privatization and transformation from a
planned economy to a
market economy was thus slow and unsteady. During the rule of the
Croatian Democratic Union (HDZ), Croatia initiated its privatization program in 1992 when companies began arranging sales of shares to their employees. Privatization revenues and two thirds of unsold shares were then transferred to the Development Fund, while the remainder of unsold shares was transferred to the Pension Fund and the Disability Insurance Fund, both controlled by the state. Privatization often involved appointing new managers close to HDZ, or even the party's leading members, a trend which discouraged foreign investors. all of which were common to reforms that took place in most post-communist
transition economies. (
left), in 2004 Primary method of privatization in Croatia was
management employee buyouts, while the secondary method used was
voucher privatization. In 1991 the
private sector's share of GDP was 25 percent, and its share of employed workforce was 22 percent. The method of privatization contributed to the increase of state ownership because unsold shares were transferred to state funds. In 1999 the private sector's share in GDP reached 60 percent, which was significantly lower compared to other former socialist countries. The government retained 1-30% shareholdings in privatised firms in 33,4% of firms, and above 30% in 7,6% firms, much higher than other countries. In 1995 a Ministry of Privatization was established with Ivan Penić as its first minister. Croatian president
Franjo Tuđman was also a target of critics and allegations of
nepotism and the likelihood that he personally profited. An alleged statement about 200 wealthy families that would manage Croatian economy is at times attributed to him, although others note that there is no evidence that Tuđman ever said that. The privatization of large government-owned companies was practically halted during the war and in the years immediately following the conclusion of peace. As of 2000, roughly 70 percent of Croatia's major companies were still state-owned, including water, electricity, oil, transportation, telecommunications, and tourism. == Economic impact ==