Thursday, July 15, 2010

It doesn't pay to be highly-skilled in Croatia

Croatia has a thriving tourist and service sector orientated economy, with the service/tertiary sector accounting for 73,6% percent of GDP. Croatia is a Mecca for tourists, with approximately 11 million visits per year (I think I saw half of them on the one mile strip of beach in Makarska). With a relatively weak currency, Croatia enjoys being within close range of many European countries with a strong economies, wealth, and a stronger currency (the euro) to spend.

According to one seemingly well educated historian and author whom I spoke to (Adriana - our landlord in Dubrovnik), highly skilled Croats are faced with a dilemma whereby they are able to command a higher wage by either (a) electing to work in the tourism sector rather than (or in addition to) utilising their skill set and qualifications or (b) pursuing their chosen professions outside of Croatia. Specifically, despite supporting her own sons in their academic endeavours (one of whom is a medicinal scientist, and the other is a industrial engineer), Adriana suggested in dismay that as long as they remain in Croatia, they would be better off forgoing their chosen professions and buying an apartment to lease in Dubrovnik, or at least let an apartment as a means of contributing to their incomes.

Low wages in the highly-skilled employment sector would presumably lead to a ‘brain drain’ from the Croatian economy, and a diversion of local resources in the economy towards the lucrative tourism sector. While this may represent an efficient outcome for the economy, the social and cultural impacts within Croatia are less clear.

Is this such a bad thing? It is normal to see specialization across geographical areas within an economy. For example, Queenstown in NZ or Killarney in Ireland are tourism hotbeds within which the majority of land, labour and capital are diverted towards the tourism sector. Most would agree that building an industrial complex or computer software manufacturer on the main street of either town would not be a good way to use the space, nor the resources. Similarly, we would not expect significant investment in leisure hotels and tourist infrastructure in Dublin’s industrial areas. We might view Queenstown or Killarney as a localised microcosm (within NZ and Ireland respectively) of what Croatia has become in the European context.

Geographic specialisation has big impacts across the globe: you only need to look at the volumes of Kiwis and Irish who grow up in a rural setting (primary sector domains) and then want to pursue professional careers, and so move to urban centres. This is why Dublin is full of country folk who weren’t interested in taking over the family farm, but instead move to Dublin, pick up a degree in IT at UCD then start new life in Dundrum commuting to Sandyford for work every day.

Maybe the social impacts of this geographic specialisation can be best measured by visiting Rody Bolands on a Saturday night and asking the folks who have made the move. Or maybe the impacts would be better measured by visiting any one of the multitudes of rural pubs across Island and speaking to the families that were left behind.

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