This paper will explain the concept of privatization, which is defined in different ways. One of them says that the privatization of one of the most important transition Economic and political changes allowing greater market efficiency companies through private property. Also, privatization constitutes a waiver of ownership of enterprises, land and other property of the state. Privatization and competition are complementary, which means that it is necessary for the success of privatization and the existence of competition in the market. Thesis consists of several large-scale units. The first two units of work as an introduction to the methodology which will be referred to as the base will define and explore the work and which methods were used when writing diploma thesis. For ease of operation, the next part explains the concept and theory of privatization, and after it comes a whole on the development and the process of privatization in Republic of Croatia which will display the official start of privatization, goals, stage, models, specificity, degree and effects of privatization and the costs and consequences . Followed by an exploration of privatization through theoretical and empirical approach to research, then briefly about the law of transformation and privatization. Furthermore, in the seventh overall will show some concrete examples of privatization in Croatia and at the end will be adopted all the conclusions resulting analysis and research in the thesis, which will be placed at the beginning of hypotheses accepted or rejected.