The Role of Tourism in the National Economy of the Republic of Croatia

Tourism plays a very important role in the national economy of the Republic of Croatia due to a range of economic benefits including income growth, employment, capital investments, and fostering regional growth and development. One of the main objectives of macroeconomic policy in Croatia, as in other countries, is to maintain a balance of trade. However, Croatia constantly records deficit in foreign trade, and for many years, tourism has successfully mitigated the negative impact of Croatia's trade in goods with foreign countries. This paper aims to examine Croatia’s dependence on tourism in its trade balance and propose possible solutions for increasing the competitiveness of other economic sectors. Furthermore, this paper uses empirical research to confirm that dependence on tourism slows down the development of other economic sectors, which poses a threat to the sustainability of the country’s economic growth and development in the long run. Given the highly seasonal nature of Croatian tourism, this thesis proposes solutions for development of alternative income sources within the tourism sector, as well as for increasing the competitiveness of other economic sectors.