Micro Economic Croatia has been improving in terms of its gross domestic product for the last 5 years at an increasing rate. This change has been caused by a contribution of various sectors of the economy. According to Croatia’s chamber of the economy, the economy has had a positive reaction over the last 10 months this year. It’s projected to rise to levels as high as 4.6 percent. Actually, if it was not for the foreign trade deficit which is affecting the balance of payment negatively, the economy would have performed even better. (Jasna Belosevic-matc, 2006).GDP was affected positively during the first 10 months while industrial production shot up by 4.3%. This increased the level of exports and realized a positive change in the income flow of the county. In the tourism sector, the turnover set a history of 51,000,000 a record that has never been attained for the last 20 years. This was, however, unexpected by economists, considering the pace of growth since 2005, and the improvements made by the government on tourism; the pace was slow. They expected the tourism sector to grow by a larger figure. When valued in Euros the foreign revenue was expected to be around 6.2. Billion. According to figures reporting foreign trade, Croatia exports had increased to 47.3% and imports to 14.7. Even though this rate slowed down, the rate at which the trade deficit was moving up did not stop from increasing by 12 percent from 19% the previous year to reach 9.4 billion dollars. This makes imports, to be higher than exports a situation that is making Croatia Government work twice harder. The rise of the balance of payment deficit has resulted in a rise in the gross foreign debt. The country’s Gdp is, however, in a better position than the past 5 years, and with the continuing trend, the economy is expected to improve positively. (Redigeret 8 th Dec 2006). Post-communist economies have had a Soviet environment, this does not exclude Croatia. This is affecting the countries’ allocation of resources to a very large extent. Statically, the output statistics of post-communism countries are overestimated in many cases. (Khanin 1991) The fiscal deficit of 6.3% in 2003 has declined to 4.9%. In 2004 and 4.2% in 2005, in 2006 it went to rates as low as 3.3%. The government plans to cut the deficit to 2.8% and public debt to 48.7% by 2007 Graph showing GDP trend in Croatia. Post-Communism and War Among the countries facing the transition to post-communists is Croatia. The War itself caused massive immigration in the county. This time of shifting was marked by low labor productivity since labor as a factor of production was inactive. As a result, this caused low economic activity which in return caused a decrease in the country’s GDP following a rise in deficit financing as the country was forced to import a lot of commodities from outside including food. Citizenship was another issue that came as a result of post-communism. The issues ranged from what kind of citizenship rights were to be given to different people in the Croatian government. As a result people who were not given rights as they had expected, resulted to either moving or hitting back on the government. This caused the gov