At a club level there’s no contest - our domestic leagues are usually ranked higher in the UEFA coefficient than Croatia’s and traditionally we’ve had greater success in Europe. We are at a slight disadvantage re our restricted ability to field emigre players (ie had Eduardo Da Silva signed for, say, Dundee United rather than Dynamo Zagreb he would not have been eligible for Scotland so easily) but I do not believe this has impacted us significantly. Though we are losing players to Ireland due to stupid self-inflicted eligibility rules at schools level - James McCarthy and Aiden McGeady opting to play for Ireland still saddens me to this day.
I've heard talk of poorer countries turning out better players because at a crucial age (14-18) when you're choosing to commit to professional football you're basically choosing between rolling the dice at a professional career in football, or a more realistic longer term career through learning a trade or heading to university. And in this situation, it could be that the risk/reward is higher in somewhere like Croatia, Brazil or Argentina. But this doesn't explain why other small high-income countries like Denmark, Sweden, Belgium, Switzerland are routinely competing at a higher level than we are.
If I was a director at the Scottish Football Association I’d be closely studying what these countries are doing differently because there’s something we are desperately missing. I have my thoughts, but I'm just another armchair analyst with no power so it makes little sense to share them :)