Croatia is currently 61% economically free. There is no country with more than 90%. Therefore, Croatia’s competitive gap is much more than 39% deficit in economic freedom. Croatia’s challenge is to compete with much better countries of Central Eastern Europe.
We sometimes hear that the only type of liberalism we need today is “political liberalism” while classical liberal ideas in the economy can be neglected. The view that we need only political freedom, without a broad range of economic freedoms, is not isolated and requires a response.
The experience of dealing with Russia over the past 200 years has taught us that the only thing Russia respects is power; and we will only have power if we stay close to our friends. However, soon thereafter any such pragmatism was once again forgotten and we now continue living with our illusions as if nothing has happened.
The story of Singapore does not match the usual idea of combining democracy and the market economy. While in the developed countries of the West, democracy has been threatening the functioning of the market economy, Singapore and its authoritarian regime has maintained the status of the easiest country to do business in.
Continual restriction of economic and civil liberties may have fatal consequences. Even though we can freely choose to live in an unfree society, we have to be aware of the price we will eventually pay for it.
Nevertheless, there is substantial evidence that properly constructed federalism could boost essential elements of economic freedom and, therefore, contribute to positive economic development.