Croatia’s GDP contracted by c.12% between 2008 and 2014 as a result of the global crisis, but since 2015 the recovery has seen GDP growth rates of c. 2.5-3% p.a. and improvements in the labour market. Unemployment rates remain above the EU average however and regional disparities in GDP per capita are significant - in 2015, GDP per capita ranged from 107 % of the EU average in Zagreb to 32 % in Virovitica-Podravina county. 

Both World Bank and WEF Global Competitiveness rankings show significant recent improvement in terms of doing business in Croatia following reforms to simplify the business environment. Small and Medium-sized Enterprises (SME) productivity remains low however, as does the ability of Croatian SMEs to internationalise. Research and Development (R&D) intensity rates were 0.86 % of GDP in 2017, with business R&D representing about half of the figure, and hence low in comparison with the EU average. The country is a moderate innovator, with the main challenges identified including the tax regime, the lack of early stage financing, and the business environment. Structural issues such as skill gaps, the high presence of the state in the economy and excessive market regulation persist.

Croatia has one of the highest numbers of tertiary education institutions per capita in the EU and above average numbers of doctorate graduates, with excellence niches in Information and Communications Technology (ICT), biomedical and natural sciences. A lack of coordination, management and reform in research and innovation policies and institutions as well as low levels of science-business cooperation negatively affects the quality of public research and acts as a barrier to innovation. 

Development of the national S3 in Croatia came at a time of intensive national reform and policy change following accession to the EU. The first step in the entrepreneurial discovery process was the establishment of twelve competitiveness clusters in specific sectors of the Croatian economy (food, wood, pharmacy, textiles, construction, electronics, machinery, defence, ICT, chemicals, maritime industry and creative services). A S3-Interministerial Steering Group (ISG) and S3-Interministerial Working Group (IWG) represent all relevant government institutions and are facilitated by a Partnership Consultation Group (PCG), an inter-ministerial National Innovation Council and Thematic Innovation