Marko Lukic May 10, 2013 GLOA 610-001 Research Paper

The Effects of Globalization On Democratic Consolidation And Development In the Former Yugoslavia

Abstract
The purpose of this paper is to successfully analyze the effects of globalization on democratic consolidation and economic development between two former Yugoslav republics; Croatia and Serbia. Globalization has shaped regional and national politics and economic structures in many different ways. In the case of the Balkans, different forms of globalization and transnationalism have existed throughout history, influencing different populations and cultures. This paper considers the positive and negative effects that globalization and economic integration have had on economic growth and stability, and explains how globalization has had different outcomes between two developing countries emerging from the ashes of civil war. Furthermore, an important thought to keep in mind while reading this paper is that the process of globalization is uneven and sometimes difficult to penetrate certain regions due to political or cultural implications. For the sake of this paper, I define globalization as not only a modern process, but also an historical one that has evolved throughout time due to constantly changing worldviews and ideologies.

Introduction
As the Berlin Wall came down in the late Twentieth Century many political and economic changes started to take place within Eastern Europe, specifically in the
1

Balkans. A region infamous for volatility and ethnic tension had reached a political and economic crossroads by the end of the 1980s, eventually fueling what would become the bloodiest war in Europe since World War II. Major transformations began to take place at this time, specifically in regards to politico-economic power and territorial organization of economic activity. Economic globalization and other forms of cultural transfusion have penetrated certain parts of the Balkans for years before the politically turbulent 1990s, eventually creating a shift towards Western ideology. The multi-ethnic republic of Yugoslavia began to fall apart in the early 1990s due to political and economic differences between each republic and its leaders. These differences eventually re-fueled ethnic tensions in the region by the use of nationalistic propaganda. The clash of ideals and future endeavors of a country entrenched in between the ideological divide of Socialism and Capitalism was heightened due to the political climate of the region at that time. Globalization and the diffusion of Western ideals eastward was a big reason why individuals in the former Yugoslavia began to change the way they thought about traditional political and economic structures. In addition to a gradual change in global ideology, the republics of Former Yugoslavia began to face high unemployment and other deleterious effects of a crumbling economy, initially due to foreign debt. Economic crisis had struck Yugoslavia in the early 1980s following President Titos death, redefining the way many people thought about socialism and protectionism. Free-market capitalism and privatization became popular topics for policy reforms amongst many of the republics, which came into direct conflict with the Yugoslav regime in Belgrade at the time. It wasnt long until full-fledged civil war broke out, becoming one of the worst humanitarian conflicts in European history. The quest of this paper is not only to examine how globalization affects development and democratization, but also to determine how the fragmentation of Yugoslavia fits within the greater global context of our modern era. The next two sections specifically focus on the former republics of Serbia and Croatia in order to determine their levels of economic, political, and social progress since independence. The next section will briefly go over the historical framework of regional and global forces in the Balkans in order to explain globalization, not only as a modern phenomenon, but

something that has existed throughout history, but in different, perhaps more primitive forms. The third section uses economic indicators from several categories to try and determine the positive and negative effects that both old and new globalization has had on democratic consolidation and economic development.

Background and Global Context

In order to better understand the effects of modern globalization on the former Yugoslav republics, a brief background of the country will be necessary in order to tie it together with the broader global context. On the first day of December of 1918 the Kingdom of Serbs, Croats and Slovenes was established, until twelve years later changing its name to the Kingdom of Yugoslavia. The idea behind its establishment was to create a multi-ethnic state of Southern Slavs in the Western Balkan Peninsula. In Serbo-Croatian (the predominant language of Yugoslavia), Yugoslavia literally means, Land of the South Slavs. After being conquered by several empires throughout the last 6 centuries, most notably the Ottomans and Austro-Hungarians, the Balkan Slavs finally had a unified state of their own. The kingdom was governed by the Serbian Karadjordjevic Dynasty, which ruled the Kingdom of Serbia before unifying with the Kingdom of Montenegro, and the former Austro-Hungarian territories of Vojvodina (present day Northern Serbia), Croatia, Bosnia, and Slovenia. Yugoslavia remained a monarchy until it became annexed by Nazi Germany in WWII, and then eventually regained its independence in 1945; this time as a communist republic. The communist Partisan army, consistent of nationalities from all over Yugoslavia, was the main catalyst for German defeat (Talbot 101). Their leader, General Josip Broz Tito, quickly became a national hero after his rebels defeated the Nazis and their Croatian fascist counterparts, the Ustashas. An important note to also keep in mind is that the Partisans were not only fighting the Ustashas and the Nazis, but the Serbian Chetniks as well, who were loyalists to the throne. The Chetniks fought against the Nazis in the beginning of the war, until they eventually began to collaborate with them in order to try and deter the Partisans from gaining further control over Yugoslavia. Titos communist rebels, however, were too

strong to setback. In other words, this was a civil war that was caused and heavily influenced by external forces on both sides of an even larger global war (Anderson A12). In 1945, shortly after the war ended, the Federal Peoples Republic of Yugoslavia was established with Tito as its Prime Minister. Though Yugoslavia was technically a socialist country, it was ironically a pretty democratic and open state during Titos reign. Unlike most other communist states in east-central Europe, Yugoslavia was not aligned with the USSR and refused to follow the Soviets model of economic development. In a letter to Stalin, Tito wrote, We study and take as an example the Soviet system, but we are developing socialism in our country in somewhat different forms (Anderson A12). Tito essentially believed that the national interests of his country were not in unison with those of the Soviet-satellite nations. He was often described as a stubborn, yet courageous leader, and basically went on to create his own form of Socialism referred to as Titoism (Anderson A12). The term Titoism refers to the political belief, that in order to achieve ultimate communist goals, policies and practices of each country should be based on the conditions of that particular country, not by pattern sets in other countries. Tito believed that each country should pursue its own form of socialism that best suits each particular nation (Anderson A12). Tito often argued that Yugoslavia liberated itself from fascism with little direct support from the Soviets; therefore he didnt owe Stalin the type of homage that he demanded. This infuriated Stalin so much that by June of 1948 he decided to expel Yugoslavia from the COMINFORM (an international organization of communist states during the Cold War) on accusations of heresy. Tensions between the two leaders continued to grow until the situation nearly escalated into an armed conflict on the Hungarian border in 1949. This event was significant for the global development of socialism because it was the first major split between Communist states. Titos separation from the USSR however strengthened Yugoslavias relationship with the West, eventually enabling the country to obtain aid from the US and other anti-communist states (Anderson A12). Eventually after Stalin died in 1953, relations with the USSR slowly became more relaxed. Yugoslavia even eventually began receiving aid from COMECON, which was

essentially the Eastern Blocs version of the OECD at the time (Anderson A12). Tito, nonetheless, decided not to align himself with either Eastern or Western powers and instead played an integral role in the establishment of the Non-Aligned Movement. The Non-Aligned Movement was formed during the Cold War as an international organization of states that chose not to formally align themselves with or against any major power bloc (Non-Aligned Movement Website). During Titos era, Yugoslavians enjoyed unusually democratic policies and institutions for a communist country. For example, citizens and tourists were allowed to travel in and out of the country without visas, individuals were allowed to practice religion freely, and Tito frequently stressed the importance of ethnic equality among all Yugoslav nationalities. Western culture and media was also readily available, allowing the population to be more aware of events taking place in the outside world (Vaknin The Myths of Yugoslavia). Freedom of expression however, especially regarding nationalistic concerns, was severely restricted. Tito was very adamant against nationalism and prosecuted anyone who openly expressed loyalty to their ethnicity over their Yugoslav identity. He coined the term brotherhood and unity as the regimes slogan and used historical and political propaganda to promote the idea of multi-ethnic harmony. He viewed nationalism as a form of treason against the state, and any act against the state was considered an act of terrorism (Vaknin The Myths of Yugoslavia). Consequentially, social unrest was fairly prevalent and nationalist aspirations grew under the radar while Tito managed to somehow suppress any sort of major upheaval through the sheer power of his personality and unique style of governance. By the early 1970s, the fear of fragmentation was already a major concern for Tito. In response to this, he formed a new constitution in 1974 that granted limited autonomy to the regions of Kosovo and Vojvodina within Serbia. Serbia was the only republic in Yugoslavia that had to give up some of its territorial authority, which angered many nationalist Serbs (Vaknin The Myths of Yugoslavia). The fact that Tito was an ethnic Croatian did not help with approval among the Serbs who were already weary of his authority.

To this day, many claim that this was a ploy in order to weaken the Serbian republic because he feared the possibility of Serbian political dominance over Yugoslavia. This paranoia most likely stemmed from the fact that the Serbs were the former ruling class prior to Nazi occupation during WWII. In addition to this, the capital and largest city of Yugoslavia was in Serbia, which was the most populated republic of the country. His predictions became reality less than a decade after his death, following Slobodan Milosevics corrupt and violent rise to power in the late 1980s. After Titos death in 1980, it seemed as if the idea of brotherhood and unity, slowly began to fade away. Ethnic tensions grew throughout the 1980s until civil war erupted in 1991. The constitutional change in 1974 played a huge role in the eventual breakup of Yugoslavia. Other than giving Kosovo and Vojvodina more status, the main purpose of the constitution was to decentralize state power and expand representation of each republic and province. Each republic would eventually elect their own president and would have to work together in governing Yugoslavia. This led to a great conflict of interests between each republics leaders and ultimately helped refuel nationalistic sentiments (Vaknin The Myths of Yugoslavia). Yugoslavia was not only held together by Titos influential style of governance, but also by the money that he loaned from the West. Tito borrowed $20 billion from the US alone in order to finance Yugoslavias transition from a mostly agrarian society, to an industrial one. Yugoslavia was also one of the IMFs heaviest borrowers throughout the 1960s. When it became time for the IMF to call its loans, Yugoslavia was in deep economic crisis from borrowing so much, and couldnt pay back its debt (Vaknin The Myths of Yugoslavia). Before the 1974 constitution, federal money was redistributed equally throughout all the republics. Since money was shared equally among all the republics, there was little incentive to disengage. But with the increase in republican autonomy and decisionmaking, the more economically prosperous republics began to realize the structural imbalances of contributions versus rewards. This pitted the more wealthy republics, such as Croatia and Slovenia, against poorer ones like Macedonia, Serbia, and Montenegro. Unwilling to cough up any more money, Slovenia was the first to secede from Yugoslavia, followed by Croatia (Vaknin The Myths of Yugoslavia).

In 1990, following the fall of communism, the Slovenes and Croats sought to reform Yugoslavia by decentralizing even more power to the republics, but were unsuccessful. As a result, Slovenian and Croatian delegations left congress and the allYugoslav communist party began to disband. In the same year, each republic held multiparty elections. Milosevic heavily disagreed with the devolvement of federal authority and insisted on a policy of one person, one vote. Through doing this, Milosevic wanted to empower the majority population, the Serbs, and eventually become the next dictator of Yugoslavia. He was even able to strip Kosovo and Vojvodina of their autonomous rights that Tito granted them in 1974, which sparked fury throughout much of the country (Talbot 110). The government in Serbia became very dissatisfied with the democratization in both Slovenia and Croatia, and thus proposed different sanctions (e.g. Serbian customs tax) on Slovenian products (Talbot 112). Once Milosevics attempts of Serbian dominance became very transparent, the subsequent downfall of the last standing communist country in Eastern Europe was inevitable.

Effects of Globalization
After the war, each former republic was faced with the task of rebuilding their economy as newly independent nation-states, but the job seemed harder for some than others. Each country experienced a different level of globalization due to the political implications within their territories. Republics such as Slovenia and Croatia began their processes of liberalization before Serbia, giving them an advantage in achieving more mature levels of democracy, which has eventually led to greater economic development and stability. Therefore, not everyone has been able to benefit from globalization equally. Croatia and Slovenia, were able to develop their economies much faster and more effectively than Serbia due to their swift reintegration into the world community. Serbia suffered from political and economic isolation throughout most of the 1990s, which delayed its process of growth and modernization (Lazic & Cvejic 9-10). Croatia and Slovenia on the other hand, were able to democratize their societies much quicker and thus transition into the new world economy, creating a more stable environment for employment and income (Kurze 1).

After conducting research, I have found that the historical implications of imperialism and globalization have played a huge role in shaping each republics process of development and reintegration. Each empire that had conquered and divided the Balkans for any extensive amount of time impacted each territorys culture and social structures in many different ways. Eastern and Western influences on the region have created a fundamental divergence of ideologies and global perspectives of politics and economics. Parts of Serbia for example, were under direct Ottoman rule for almost 600 years, while Croatia was a part of the Italian state of Venice and Austria-Hungary throughout most of the same time. The differences caused by each domain are still visible through culture, language, food, architecture, etc. An important point of this paper worth underlining is that throughout history these global implications have done much more than just effect things like culture, but have also affected the likelihood of democratic consolidation and economic stability. The remainder of this section will be dedicated towards explaining how and why different forms of globalization have affected these outcomes. My variables are: early forms of globalization (e.g. imperialism and blatant cultural dominance), and modern forms of globalization (e.g. growth in influence of international organizations and the increasing fluidity of the transfusion of goods and services, as well as cultural factors such as, ideas, norms, and customs). External forces have the potential to influence issues such as governance and identity politics, and that, as a result can directly affect levels of democratization and economic stability. Political science professor Arnauld Kurze of George Mason University puts issues of globalization and democratic consolidation in the Former Yugoslavia into perspective in his paper, State, Society, and Globalization in the Balkans. He finds that statecentrism and weak state structures have slowed down the democratization process and produce economic instability and insecurity. In one of his research papers from 2009, he compares the democratization process between the countries of Former Yugoslavia that have typically struggled to maintain stability, and those who have been somewhat successful in doing so (Kurze 15). In his paper, Kurze underlines the significance of globalization and transitional politics for democratic institutionalization. He analyzes the specific cases of Bosnia &

Herzegovina (BiH), Kosovo, The Former Yugoslav Republic of Macedonia (FYROM), and Serbia, and finds that their development paths deeply contrast that of Croatia and Slovenia. The latter, he claims, fit into the general prognostics of democratization theory models when looking at their transition and state consolidation patterns. The former on the other hand, he recognizes have had many more difficulties with transition and consolidation (Kurze 1). By analyzing globalization within a historical context, it becomes much easier to understand the various levels of democratization and development of each republic after the civil war in the 1990s. The previous section of this paper mapped out the necessary historical background in order to explain democratic consolidation and development in the particular cases of Croatia and Serbia.

I. Croatia: International Integration and Economic Growth Out of all three of these cases, Croatia has certainly made the most progress since independence. On July 1, 2013, Croatia will officially become a member of the EU, marking almost twenty years of economic and social progress. GDP grew at a consistent 4-5% annual rate before the global crisis between 2000 and 2007. During this period, incomes doubled and economic and social opportunities dramatically improved. However, now with the global economic crisis well into its fifth year, Croatia will face challenges for economic growth. The countrys main focuses are on completing its structural reform agenda, promoting private sector growth, and efficient budget allocation in order to ensure that investments continue to support growth and protect the vulnerable. The government is also working on increasing its competitiveness to be able to compete in the large and high-demanding EU market (The World Bank News & Broadcast). Globalization has obviously had many positive effects on Croatia. The reasons for its success is because of Croatias openness to structural adjustment and willingness to reduce public sector spending, and encourage private sector growth instead. Economic growth in 2000 was led by a rebound in tourism and credit-driven consumer spending. In the same period, inflation was under control and the currency remained relatively stable as well (CIA worldfactbook).

According to The World Banks data report on Croatia, in 2011 it had a total annual GDP of $62.49 billion. With a population of about 4.5 million, that means its GDP per capita was right at around $14,000 in 2011. The World Bank classifies Croatia as a high income, non-OECD country (World Bank Data Report). However, there is a discrepancy in data regarding real GDP between The World Bank and CIA. According to the CIA World Factbook, Croatias overall GDP was $80.59 billion with a GDP per capita of $18,300 in 2011. In 2012, GDP was $79.14 billion and GDP per capita was $18,100. As far as the incongruence in data between the two organizations, a possible explanation might be that the World Banks figures are an incomplete or quarterly measure of GDP for the year 2011. This is a viable assumption because it is $20 billion less than the CIAs number. Assuming that the CIAs calculations are accurate, Croatia is 74th out of 229 countries in terms of GDP per capita (CIA worldfactbook). However, when considering possible weaknesses of globalization, one may easily come to the conclusion that, Croatias increased openness has made it more susceptible it to market vulnerabilities at a time of global economic recession. There is no doubt that the current global recession has had seriously negative effects on the Countrys economy. After years of healthy growth rates in the early 2000s due to free-market reforms and other structural adjustments, 2008 set a bit of a bleaker tone. In 2012, Croatia experienced a negative GDP growth rate of -1.8% after experiencing no growth at all in the previous year. Unemployment rose from 17.9% to 20.4% between 2011 and 2012, and as of 2011 the official percentage of the population living below the poverty line is 21.1% (CIA worldfactbook). According to The World Bank, this percentage of extreme poverty has increased from 11.4% in 2004 (World Bank Data Report). These grim statistical reports collected over the last two or three years paint a greyer picture of the case of Croatia than I initially suspected. It seems as though Croatia started to develop quickly compared to its former Yugoslavian counterparts, but has been unable to sustain its development through turbulent global economic conditions. There has been fear among some political scientists and economists that Croatia will slowly begin to revert back to more protectionist policies by increasing its state capacity in order to try and offset the negative effects of the current crisis. In 2012 the government raised

10

additional revenues through more stringent tax collection and by raising the Added Value Tax (CIA worldfactbook).

II. Serbia: Sanctions and Mismanagement and the Process of Reintegration Although atrocities were committed by all sides during the war, Serbia was viewed by the West as the aggressor in the whole situation mostly because of Milosevics corrupt proliferation of power. Consequentially, the Serbian population had to suffer through tough political and economic sanctions throughout most of the 1990s and early 2000s. Milosevic-era mismanagement of the economy, toppled by severe government corruption and international sanctions have deterred Serbia from democratizing and liberalizing its economy. This explains the present difficulties that Serbia faces today with its economic development and stability. Due to the conflict in Kosovo towards the end of the 1990s, the EU imposed economic sanctions on Serbia, such as freezing funds and investments, blocking foreign trade, and banning international flights. Though these sanctions were intended to put pressure on the authoritarian regime, the main victim was the civilian Serbian population (Kurze 18). The sanctions devastated Serbian industries, destroyed its export markets, and caused severe shortages of resources, such as imported goods and raw materials (American University Serbian Sanctions Case). The negative macroeconomic effects that sanctions had in Serbia during this time are reflected by massive reduction in output and retail sales. In 1993, Serbias industrial output decreased by 40%, and retail sales dropped by 70%. Sequentially, about 60% of the industrial labor force was laid off due to the drastic decline in sales. A prime example of this would be when the Yugo Motor Companys Zastava plant had to shut down and lay off all of its 15,000 employees (American University Serbian Sanctions Case). It is pretty difficult to find or calculate any definitive figures of unemployment during Serbias period of isolation, but some estimates claim that levels reached as far as 45-50%. As a result of such a lack of available jobs, the Serbian underground economy has expanded to fill the void of income and production. This has inevitably increased crime and the trafficking of illicit goods. Activities such as the proliferation of local mafias that skim retail and production, crooked banking, sale of war booty, etc., are said

11

to account for some 40% of economic activity. According to a 1993 estimate, the total value of transactions in the black market surpassed that of the legitimate market (Hardt & Kaufman 658). Milosevic-era mismanagement of the economy, along with bad governance and corruption, crippled Serbia for a very long time. Although circumstances have begun to improve since Milosevic was ousted from power in 2001, Serbia still struggles to maintain economic stability and steady growth. Milosevic was arrested by Serbian security forces on charges of corruption and abuse of power. He was turned over to The Hague and officially charged with crimes against humanity and other war crimes including genocide. He ended up dying of a heart attack in his cell in 2006. Since 2001, Serbia has officially begun its process of democratization but is still burdened with lack of transparency and high government corruption. Nevertheless, significant steps towards stabilization and market reform have finally started to push Serbia in the right direction. Around this time, Serbia also began to reintegrate with the international community by rejoining the IMF, World Bank, and European Bank for Reconstruction and Development (EBRD). Progress has been made in trade liberalization and privatization, however, many of the larger enterprises such as power utilities, telecommunications company, natural gas company, national air carrier, and others, still remain under state control (CIA worldfactbook). Serbia has also started making strides towards EU membership by signing a Stabilization and Association Agreement with Brussels in 2008. An Interim Trade Agreement was signed and implemented in 2010, and in 2012 Serbia gained candidate status for the first time. Since then, the Serbian government has also begun advanced negotiations with the WTO in hopes of joining the organization one day. This will be integral in promoting free trade reforms (CIA worldfactbook). Despite trade liberalization and reintegration with the international community, high unemployment and stagnant household incomes are still very prevalent political and economic issues. In 2012, GDP growth rates declined by 2%, following a 1.6% growth rate in 2011 (CIA worldfactbook). According to the World Bank, Serbias overall GDP was only $45.82 billion in 2011. With a population of 7.3 million, this means GDP per capita is about $6,300, which is dismally low (World Bank Data Report). However, as

12

mentioned before, this is probably because The World Banks report is an incomplete or quarterly figure of GDP. The CIA World Factbook records Serbias GDP from 2011 at $80.04 billion dollars with a GDP per capita of $10,600. In 2012, the GDP was $78.43 billion, and GDP per capita was $10,500. Nevertheless, these figures are still astoundingly very low for a European country, ranking Serbia 115th out of 229 countries in terms of GDP per capita (CIA worldfactbook). Unemployment levels decreased from 23.7% to 22.4% between 2011 and 2012 (CIA worldfactbook). According to The World Bank and CIA, 9.2% of Serbias population lived below the poverty line in 2010, which increased from 6.9% in 2009.

III. Croatia vs. Serbia: Explanations for Incompatible Growth According to all the data collected, Croatia is overall performing a little bit better than Serbia. Croatia, for example, has average GDP per capita levels of about $8,000 higher than that of Serbias, which means household incomes in Croatia are much higher. Other indications, however, imply that both economies are currently struggling. Unemployment is one of the main concerns for the two countries, both experiencing levels of joblessness over 20%. The most shocking comparison of data is the percentage of Croatias and Serbias population considered to be living under extreme poverty. Having traveled to Serbia and Croatia every summer since I was a child, and witnessing both countries poverty first hand, I conclude that Serbias estimates are extremely inaccurate. I believe that the population living under the poverty line in Serbia is actually much higher than that recorded, and instead is considerably higher than the number of people living in poverty in Croatia. If 21.1% of the Croatian population is extremely poor, then a rough estimate for Serbias poverty is probably more realistically at around 25-26%. Limited transparency on behalf of Serbias government is probably why such figures can be altered so easily and seem less grim than they actually are. Serbia is still struggling with fixing its image on a global scale after the bloody 1990s. Even though it has left its authoritarian past and introduced democracy, the government is still burdened with fighting corruption and organized crime that has transcended from the Milosevic-era. Throughout recent history, nationalism has been a

13

big problem in Serbia, hindering globalization, democratization, and economic growth. Kurze describes nationalism as a nemesis for democracy and democratic consolidation. He says, the historical context, political institutions, and international affairs have changed, and in the case of the Balkans, nationalism generated conflict, rather than unify different ethnic groups in the region (Kurze 8). When reflecting on the historical implications of the region, it becomes easier to understand how nationalism has negatively effected democratic consolidation. Kurze is absolutely correct when stating that nationalism has been a nemesis for democracy because it has allowed authoritarian regimes to gain influence and increase its territorial dominance over other populations. In the case of the Balkans, nationalism has also led to isolationism and hindered the capability of globalization to reap benefits on its inhabitants. This sort of nationalist political dominance dates back to the Ottoman and AustroHungarian Empires, which were the catalysts of the rise of Balkan nationalism. During Ottoman dominance, ethnic Serbs were often subjugated and mistreated by Turkish authorities, which had a great demoralizing effect on most of the population. Serbs constantly had to deal with racist and blatantly prejudiced policies that favored Muslims over Christians. This eventually helped fuel Serbian ethnocentrism and hatred towards any sort of external political dominance. Once the Kingdom of Serbia gained its independence from the Ottomans in the late 19th century, it began to regain many of its lost territories. At this time, the Karadjordjevic Dynasty had already started developing the vision of a Greater Serbia, which eventually helped spark the First World War. After World War I, the Serbs ruled the Kingdom of Yugoslavia until communism eventually took over and attempted to create an equalized style of governance amongst all of the republics ethnicities. This worked during Titos reign but fell apart after his death due to the accumulation of foreign debt that left Yugoslavias economy severely crippled. A devastated economy, and lack of a strong political backbone that kept Yugoslavia together so long, eventually created a politically unstable environment. Political volatility pitted nationalities against nationalities, neighbors against neighbors, and brothers against brothers.

14

Eventually after communism fell apart in Eastern Europe, so did Yugoslavia. The global demise of communism had withering effects on the region, but it eventually broke down the shackles of socialism and protectionism in Yugoslavia, allowing for more innovative and liberal thinking to take place. Croatia and Slovenia, historically being influenced by more Western forces, strongly lobbied in favor of a democratic confederation after the Berlin Wall came down. This was strongly opposed by Serbia, who had been dominated by a less democratic empire throughout much of its existence, and wanted to increase authoritarian power once Milosevic became leader. Political and economic differences spurred ethnic animosity and nationalism, which was fueled by each republics propaganda at the time.

Concluding Thoughts
First off, we must remember that globalization is inevitable and an uneven and sometimes unfair process. Political and cultural implications, such as nationalism, stand in the way of globalization and as a result directly effect democratic consolidation and economic development. When looking at all of these factors through a historical timeline, it becomes much easier to understand their effects as well. Croatia, being more exposed to Western and democratic culture as early as the 16th century, has predisposed its population towards the likelihood of accepting modern globalization and managing it in a way that would benefit its economy. Serbia on the other hand, being occupied by the Ottomans, who were much less democratic in terms of governance, subjugated the population for almost 600 years, creating a hotbed for eventual nationalism. Once Serbia gained its independence from the Ottomans, it slowly began to try and increase its dominance in the Balkans. The fall of communism and the global ideological shift towards capitalism sparked willingness for political change within the former Yugoslavia. Some newly independent countries became more successful than others, such as Slovenia and Croatia, while others like Serbia and Montenegro have been burdened with economic maladies. Croatia, however, is not a success story yet and has many economic, political, as well as social issues to work out before it can rightfully deserve that title. Since the 2007

15

recession, Croatia has suffered economically after a seven-year period of growth. This is due to the dependency and vulnerability of a free market system. Sometimes global factors and their regional or local outcomes are inevitable, but with strong, reliable, and non-corrupt institutions in place, it is possible to remain resilient against such maladies. Croatia and Serbias governments are still working towards sustainable economic development and will have a long way to go before becoming success stories. However, considering the recentness of the wars and the amount of progress they have made due to the positive effects of globalization, such as economic reform and reintegration into the international community, they are most certainly on the right path.

16

References:
Talbot, Karen. "The Real Reasons for War In Yugoslavia: Backing up Globalization with Military Might." Social Justice. 27.4 (2000): 94-116. Print.

Anderson, Raymond. "Giant Among Communists Governed Like a Monarch." New York Times [New York City, NY] 05 May 1980, n. pag. Web. 10 May. 2013.

"Non-Aligned Movement: Background Information." NAM Main Website. Non-Aligned Movement, 21 Sep 2001. Web. <http://www.nam.gov.za/background/background.htm>.

Vaknin, Sam. "The Myths of Yugoslavia - Part II." Malignant Self Love. (2000): n. page. Print. <http://samvak.tripod.com/pp50.html>.

Lazic, Mladen, and Slobodan Cvejic. "Working Class in Post-Socialist Transformation: Serbia and Croatia Compared." Corvinus Journal of Sociology and Social Policy. 1.1 (2010): 3-29. Print.

Kurze, Arnauld. "State, Society, and Globalization in the Balkans: Problems of Democratic Consolidation in Bosnia and Herzegovina, Kosovo, the Former Yugoslav Republic of Macedonia, and Serbia." Center for Global Studies, George Mason University. (2009): 1-26. Print.

"Croatia: Preparing for EU Membership." World Bank News & Broadcast. The World Bank, n.d. Web. <http://siteresources.worldbank.org/ECAEXT/Resources/050112_croatia.pdf>.

"Europe: Croatia." The CIA World Factbook. Central Intelligence Agency, n.d. Web. <https://www.cia.gov/library/publications/the-world-factbook/geos/hr.html>.

17

"Europe: Serbia." The CIA World Factbook. Central Intelligence Agency, n.d. Web. <https://www.cia.gov/library/publications/the-world-factbook/geos/ri.html>.

"Data: Croatia." The World Bank Working for a World Free of Poverty. The World Bank, n.d. Web. <http://data.worldbank.org/country/croatia

"Serbia Sanctions Case." american.edu. American University. Web. <http://www1.american.edu/ted/serbsanc.htm>.

Hardt, John, and Richard Kaufman. "Crime and Underground Economy." East Central European Economies in Transition. (1995): 658-661. Print.

18