The Slovenia Times

2016 FDI Summit Conclusions



The themes of the seventh FDI Summit, a major international executive-level business conference focusing on domestic and foreign direct investment, organised by The Slovenia Times and the Faculty of Economics, were: talent, competitiveness, and prosperity.

"Where does talent come from, how is it transformed into competitive products, and under what conditions do competitive products translate into "sustainable prosperity"-that is, stable and equitable economic growth?" was the main question addressed by the keynote speaker, Professor William Lazonick, University of Massachusetts Lowell (USA) and visiting Professor and Honorary Doctor of the University in Ljubljana. In his lecture, Professor Lazonick, the winner of the prestigious 2014 HBR McKinsey Award, provided some answers to these issues through what he called 'the theory of innovative enterprise'. This perspective is very different from that of conventional free-market economists. He is an economist, but one who argues that, in a prosperous economy, "well-developed markets in land, labour, finance and products are outcomes, not causes, of the wealth of nations ", and that "markets must be regulated or they will undermine the competitiveness of business organisations and the prosperity of nations". The innovative enterprise is a social organisation that shapes market forces to generate the high-quality, low-cost products that make it competitive and contribute to national prosperity. How prosperous and competitive is Slovenia?

What makes Slovenia one of the Europe's most prosperous nations?

The answer to which all participants waited so passionately was given by Alexandra Mousavizadeh, Director, Global Property Index, The Legatum Institute, a UK based, international think tank and educational charity focused on understanding and measuring prosperity. Her keynote speech 'Prosperity - Between Wealth and Wellbeing' revealed the latest annual Global Prosperity Index, a survey that over the past decade has ranked the most prosperous countries in the world, covering 149 nations, of which 16 are in Central and Eastern Europe. The Prosperity Index provides insight into why some countries have seen their prosperity rise, why some have seen it fall, and why some have stagnated.

"In the 2016 rankings, Slovenia was 20th on the world prosperity scale, meaning that Slovenia is one of Europe's most prosperous nations, helped along by the best natural environment of any nation on earth," stressed Mrs. Mousavizadeh in presenting the latest index findings. The Index combines both objective and subjective data, measuring not only how prosperous a country is, but, how prosperous its citizens feel. "Slovenia is 21st in prosperity from the 149 countries covered, despite having the 35th lowest level of wealth. Along with Austria, Slovenia is one of the only CEE countries that meaningfully over-delivers prosperity. Slovenia outperforms all other countries with the same/similar level of wealth," said Mrs. Mousavizadeh, who added that: "Slovenes wishing to raise their prosperity do not necessarily have to marry a billionaire president, they can simply stay in Slovenia! So, what is behind Slovenia's success? Slovenia's best performance is in the Natural Environment sub-index where, for the fifth year running, it ranks first. Slovenia's Social Capital sub-index which measures the strength of personal relationships, social network support, social norms and civic participation in a country, scores above the EU and OECD averages. "Slovenia is ranked second best performing country in the EU, behind Ireland, when it comes to citizens volunteering in organisations on a regular basis," stressed Mrs Mousavizadeh. Slovenian social capital, a powerful driver of prosperity delivery, is so high due to high levels of social network support and civic participation. It outperforms its neighbours in most social capital metrics. Slovenia also ranks in the global Top 20 for Personal Freedom, six places above the USA. It has a diverse free press and there is widespread tolerance for immigrants, people of ethnic minorities and the LGBT community.

Slovenia needs a better business environment
However, not everything operates so smoothly. Slovenia was hit hard by the financial crisis of 2008 and GDP per capita declined by 8.6% in 2009, so it is not surprising that Slovenia has seen a decline in its Economic Quality over the past decade. There is a higher rate of unemployment, though this peaked at 10.2% in 2013 and dropped to 9.5% in recent years. Although Slovenia's Economic Quality is higher than its CEE neighbours, its recovery from the crisis has been much slower. Ranked 60th, Slovenia's worst performance comes in the Business Environment sub-index, though good progress has been made over the past decade. Slovenia's labour market is inflexible and its financial services unaffordable. Slovenia has been criticised for being slow at introducing reforms to boost competitiveness. "While redundancy costs have been reduced, the labour market remains among the least flexible in the EU," commented Mrs. Mousavisadeh.

Between competitiveness and talent
The FDI Summit also presented three panel discussions focused on the magnets for foreign investors: Talent, Prosperity and Competitiveness. Dr Jure Stojan and Tine Kračun from The Institute for Strategic Solutions, Slovenia, led the discussion about the importance of a stable business environment, along with Imre Balogh, CEO of DUTB (Bank Assets Management Company), Slovenia and Branislav Vujovič, New Frontier Group, Austria, who claimed that Slovenia has great potential, but sometimes thinks about itself too much. "We are facing digital transformation so you have to open your mind."

A panel discussion devoted to the importance of talent was introduced by Dr Andreja Kodrin, Strategist and 2015/2016 Advisor and Expert Cabinet Member to EU Commissioner Violeta Bulc, who stressed that: "Young people are the most authentic source for creating a sustainable future with inspired and disruptive ideas - and Slovenia certainly has the potential to be a talent hub." Her inspirational lecture was followed by a panel, efficiently led by Marko Mlakar, Director and Partner, Amrop Adria. Mr Mlakar raised the question of whether Slovenian companies can make intriguing job offers for students who graduate from the world's top business schools, such as Harvard, Oxford, Ivey or Insead. Matej Potokar, Microsoft Western Europe, replied: "The whole planet is a global village because technology enables you to connect the dots. The value of the new world is all about people, about talent." Mr Mlakar invited the panelists to comment on the following paradox - how is it that the Slovenian educational system is well invested and yet faces a significant mismatch with the needs of the local economy. Dr Maja Makovec Brenčič, Minister for Education, Science and Sport, observed that, on the one side Slovenia is achieving top results in education - for example, Slovenians are top in physics, maths, natural sciences and reading literacy is improving but many, including teachers, question whether the system is good. "The main question is how well knowledge is transferred. The Minister believes that Slovenia has enough knowledge but questions if we are able to use it efficiently?"

The closing remarks of the Summit were presented by Sonja Šmuc, Managing Director, The Managers' Association of Slovenia, and long-time BBC journalist and Director of Communications at the Legatum Institute, Giles Dilnot. They agreed that prosperity, competitiveness and talent are decisive factors for foreign investment and Slovenes need to change their attitude towards these drivers, bearing in mind that: a company cannot be competitive in the global economy without talent and no country can be prosperous without companies that are competitive.


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