ABSTRACT
The process of transition has a very strong influence on the unofficial economy and its relationship with the official one. This chapter focuses on the transitional state as a generator of motivation and barriers to unofficial economic activities. The main characteristic of the transitional process is the transformation of ownership, institutions and regulations. This means a thorough and fundamental redefinition of relations that exist between the state and the economy as well as between politics and civil society. The war in Croatia also played a significant role. It encouraged certain entrepreneurial activities to take place and profits to be made. It also led to a high tolerance level and/or the low resistance of institutions to their linking up with parallel trends of the peacetime economy. The Croatian entrepreneurial scene was formed at the crossroads of liberalization; privatization and war-entrepreneurship together gave rise to a wide range of actors whose success was based on rough breaking of laws and moral standards.
