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The Racan Government carried out a large number of structural reforms and with tourism as the main factor, the country emerged from recession in 2000. Due to overall increase in stability, the economic rating of the country improved and interest rates dropped. As a result of coalition politics and resistance from the unions and the public, many reforms are still overdue, esp. in the legal system.

Most economic indicators remained positive in this period, except for the external debt. The Croatian National Bank had to take steps to curb further growth of indebtedness of local banks with foreign banks (commonly the same foreign banks that own the local ones). The dollar debt figure is quite adversely affected by the EUR/USD ratio — over a third of the increase in debt since 2002 is due to currency value changes.

The Republic of Croatia is a crescent-shaped country in Europe bordering the Mediterranean, Central Europe and the Balkans. Its capital is Zagreb. In recent history, it was a republic in the SFR Yugoslavia, but it achieved independence in 1991. It is a candidate for membership of the European Union.

By orders of the king in 1553 and 1578, large areas of Croatia and Slavonia adjacent to the Ottoman Empire were carved out into the Military Frontier (Vojna Krajina) and ruled directly from Vienna's military headquarters. Due to the dangerous proximity to the Ottoman armies, the area became rather deserted, so Austria encouraged the settlement of Serbs, Germans, Hungarians, Czechs, Slovaks and Rusyns/Ukrainians and other Slavs in the Military Frontier, creating an ethnic patchwork.

The area known as Croatia today has been inhabited throughout the prehistoric period, ever since the Stone Age.

The country has experienced faster economic growth and has been preparing for membership in the European Union.

The Constitutional Court (Ustavni sud) of the Republic of Croatia decides on the constitutionality of laws and has the right to repeal a law it finds unconstitutional. It also can impeach the president. The body is made up of 13 judges on 8-year term. The president of the Constitutional Court is elected by the court for a 4-year term

Unemployment reached a peak of circa 22% in late 2002 due to many overdue bankruptcies. It has since been steadily decreasing, powered by growing industrial production and rising GDP rather than only seasonal changes (tourism). The GDP rose to the level it had in 1990 only 2003.

The Croatian Government (Vlada) is headed by the Prime minister who has 2 deputy prime ministers and 14 ministers in charge of particular sectors of activity. The executive branch is responsible for proposing legislation and a budget, executing the laws, and guiding the foreign and internal policies of the republic.

Despite the successful value-added tax program, planned privatization of state controlled businesses, and a revised budget with a 7% across that board cut in spending, the government still projected a $200 million deficit for 1999.

Croatia is situated between central, southern and eastern Europe. It has a rather peculiar shape that resembles a crescent or a horseshoe which helps account for its many neighbours: Slovenia, Hungary, Serbian part of Serbia and Montenegro, Bosnia and Herzegovina, Montenegrin part of Serbia and Montenegro, and Italy across the Adriatic. Its mainland territory is split in two non-contiguous parts by the short coastline of Bosnia and Herzegovina around Neum.

Following the Battle of Mohács, in 1527 some of the Croatian (and Hungarian) nobles supported Ivan Zapolja, while some preferred suzerainty to the Austrian king Ferdinand of Habsburg. The latter option prevailed by 1540, when Zapolja died.