The Effects of the Euro Adoption in Croatia on International Trade and Foreign Direct Investments

Sa？etak This paper presents the results of selected empirical research on the euro's effect on trade, foreign direct investment, and tourism by giving a brief analytical overview of the developments in individual euro area countries, particularly newer member states and tourist destinations. Based on that, and taking into account Croatia's close ties to the euro area, we estimate that the introduction of the euro, due to lower transaction costs, easier price comparison, and currency risk reduction, might provide a small boost to Croatian trade in goods and services, particularly in tourism, and encourage foreign investment