Tomislav Radoš : An opportunity for industry growth with a green and digital economy

A combination of these transitions allows the Croatian industry to achieve greater productivity, innovation and sustainability.

The development of industry in Croatia plays a key role in its long-term sustainable development, which becomes even more important with the demographic challenges it faces, The Croatian Chamber of Economy Vice President for industry and sustainable development Tomislav Radoš told Diplomacy&Commerce. He reveals to us how far we have come in implementation of the Sustainable Business Strategy, as well as the perception of artificial intelligence and its use in the Croatian economy.

  1. As VP of CCE , you are in charge of the Industry and Sustainable Development Sector. How would you evaluate the existing industrial sector in the Republic of Croatia?

Industrial sector in the Republic of Croatia demonstrated stability and support for economic growth in 2023, with an estimated GDP growth of 2.6%. This year too, real GDP is predicted to increase by 2.6%, as a result of stronger domestic demand. The industry – where we are mainly referring to processing, manufacturing and high-tech activities, is generally more dynamic in terms of market and technology and it is more export-oriented. And export-oriented companies are characterized by more advanced characteristics and excellence compared to those focused only on the domestic market. On average, such businesses are more productive and profitable, and pay higher wages while operating with lower unit labor costs. The share of exporting companies in our industry is smaller than we would like, although their exports have a majority share in the country’s commodity export.

Today, we are aware that there are significant opportunities for the growth of industry in the Republic of Croatia through technological upgrading aligned with double transition towards green and digital economy. The integration of advanced technologies such as artificial intelligence, the Internet of Things and automation can improve production processes, optimize resources and reduce the negative impact on the environment.

Digitization also opens the door to new business models and markets and encourages the creation of high-quality jobs in multiple sectors. We are pleased by the fact that the IT sector, being a high-tech industry, has an increasingly significant share in Croatian GDP, which is now at the level of 5-7%, and it definitely assumes one of the more important roles in transforming the industry, especially those parts that we call “traditional”, such as wood, food or metal processing.


  1. How important it is to develop industry for the long-term and sustainable development of the country; what Croatia lacks in that segment, and what would you single out as positive examples?

Economy diversification through the strengthening of industrial base and creation of quality work places can promote the country’s prosperity. Key elements of this development include the transition to a smart, digital and green transformation of industry, which would improve productivity, innovation and competitiveness.

However, there are a number of challenges that can slow down the industry development, including a shortage of skilled labor due to an aging population and an outflow of young talent, and a lack of access to market financing for technology and green projects. European funds and cohesion funds, which until now have been important for encouraging development, could be reduced or changed, creating additional challenges in that development context.

Despite these challenges, there are examples of successful industries that show potential for further development. The IT industry, which is growing and creating new jobs, and pharmaceutical companies that have achieved significant success, are sources of optimism. Linking technological capital with traditional sectors such as agriculture and energy can encourage the modernization and development of those sectors. Also, the revitalization of former industries such as the metal processing, engineering and electrical industries can further diversify the economy and ensure long-term growth.

  1. After successful workshops European Sustainability Reporting Standards (ESRS), you also organized the ESG Academy workshop – Sustainable Business Strategy. What would you single out as the most important points of sustainable business?

Sustainability is becoming a key aspect of running a business, especially in the context of economic development, with growing demands not only from regulatory bodies, but also from investors, customers and potential employees who value the contribution to sustainability increasingly more. With the entry into force of the Directive on corporate sustainability reporting on January 1, 2024, new obligations have been imposed on companies, and awareness of the need to change business is growing. The integration of sustainability into business strategies and management processes becomes crucial, whereby the recognition and management of environmental, social and management criteria becomes imperative.

Transition to a more sustainable way of doing business requires a deeper integration of sustainability into business models and strategies, which brings long-term benefits despite the initial costs. Companies that adapt their operations to ESG standards quickly can expect competitive advantages, access to new markets and more favorable financing. HGK launched the ESG Academy to educate and empower companies in sustainable business. 17 workshops have already been held with more than 1,000 participants, and the first Croatian ESG rating was developed as a tool for assessing sustainable practices.

Inclusion of all sectors is key to the successful integration of ESG criteria, therefore we launched the Executive Leadership Program, specially adapted for company management, gathering managers and decision makers from leading Croatian companies and organizations. This comprehensive approach ensures that sustainability is not just about meeting regulatory requirements, but becomes a core business value that enables the creation of positive impact on society and the environment.

  1. The Croatian Chamber of Commerce conducted research on the perception of artificial intelligence (AI) and its use in the Croatian economy. What are the results and who was the target group of the research?

The research analyzing the perception and use of AI in the Croatian economy included 342 companies of different sizes, with micro-enterprises making up the largest part of the sample. It was conducted in all counties, with an emphasis on the City of Zagreb, and the majority of respondents came from IT and communications sector, the processing industry, and professional, scientific and technical activities.

Despite a general sense of uncertainty and concern in the society, 70 percent of businesses express optimism and curiosity about AI. However, more than two-thirds of companies do not have a clear AI implementation strategy, and lack of knowledge stands out as the main obstacle. Despite this, 82% of businesses expect significant financial benefits from AI.

Artificial intelligence is already used in 50% of analyzed companies, with the most common areas of application being data analytics, chatbots or virtual assistants, and process automation. Respondents see the greatest potential of AI in the automation of repetitive tasks, improvement of business processes and more effective decision-making, which indicates the perception of AI as a tool for increasing efficiency and productivity. Ethical aspects of AI development were also highlighted as extremely important, indicating a growing awareness of potential risks and challenges that come from the safe use of artificial intelligence.

  1. How much do these results help you create programs and activities in the future and what can you expect in this regard? What are your plans in the coming period?

Introducing AI into an organization is more than just technological readiness. It requires the creation of a culture that encourages innovation, the development of skills and talents, and strategic planning that actively recognizes and addresses ethical and socio-economic implications. Similar to global trends, Croatian companies face challenges in this transformation process. Successful implementation of AI requires compensation for the lack of required skills and recognizing the key role of strategic planning in ensuring alignment with business goals and achieving maximum benefits.

The lack of knowledge and skills has been identified as the main challenge in the application of AI, whereby only 5% of companies in Croatia regularly conduct training on AI in business. In order to remove this obstacle, it is important to intensify educational programs that will not only ensure the adoption of new skills, but will also educate employees about the advantages and limitations of artificial intelligence and its ethical and social implications.

In this sense, the Croatian Chamber of Commerce (HGK) is launching an AI academy whose first strategic workshop will start in mid-March, and it will be followed by sectoral workshops on the application of AI in industry, tourism, law and healthcare.

  1. Where and how do you see the Croatian economy in 10 years? What should “worry” us, and where do we see our chance?

Although it can be said at any time that the next 10 years are important for our economy, it is very important to know and be aware of this today for several reasons. Primarily, there is the transformation of global value chains through an almost continuous change of geostrategic factors, to which answers and tactics for sustainability and resilience need to be found. On the other hand, the number of working-age population started to decrease and this trend will continue. And the third important aspect is the digital and green transformation, where technological and low-carbon innovations and trends are significantly accelerating on a global level. Croatia must not allow itself the potential risk of sleeping through and not reacting to these factors.

The chance for Croatian industry certainly lies primarily in the fastest and targeted adoption of new and higher technologies. How else to survive considering the above? On the other hand, they would have to finally create an identity for the Croatian industry, as we have for sports or tourism, which cannot seem to be created. We have the newly adopted Smart Specialization Strategy until 2029, and seven industries such as health, energy, security, mobility, food and wood industry, and IT are highlighted in it, and they are already deeply woven into our economic blood. There is also the Plan for Industrial Transition, which is closely based on the policy of smart specialization and it directs even more the regional development in industrial niches specific to individual regions.

I would rather end with what we should be concerned about and what we should be aware of. This means that the damage will be difficult to repair in terms of catching up in regards to competitiveness if we do not manage to gather and direct all the forces in industry and politics in the next 10 years or so into what we have identified and initiated. It certainly goes without saying that we are continuously improving it and that we are determined to keep that optimal course through the stormy geopolitical and economic (stormy) times ahead of us.