The Slovenia Times

Is Slovenia's Gap Narrowing?



With the current levels of improvement in each of the three welfare components, the SEDS has given priority to reducing the economy's development gap, which should be achieved without increasing the relatively narrower gaps in social and environmental development. GDP Per Capita In Purchasing Power Standards Regarding GDP per capita, as measured by purchasing power, Eurostat published data for all countries for 2000 and 2001. The revised GDP per capita figures for 2000 put Slovenia in a group of countries achieving 50% - 75% of the EU average (Slovenia recorded 70% of the average) together with Greece and Portugal. As far as candidate countries are concerned, the gap between Cyprus and Slovenia narrowed markedly. Provisional figures for 2001 show that Slovenia improved its position, relative to the EU average, by three percentage points, overtook Greece, and drew very close to Portugal (a gap of one percentage point). In achieving 70% of the EU average, Slovenia remained in second place behind Cyprus, the best ranking candidate country (lagging behind by four percentage points) while eleven percentage points ahead of the third placed Czech Republic. Changes In The Economic Structure Positive shifts in the economic structure, as measured by the composition of GDP (which does not include all structural changes), were sustained in 2001. Slovenia's economic structure is gradually approaching the structure of advanced industrialized economies as the importance of agriculture and industry diminishes and the role of services grows. The fastest growing area of the economy is public services, suggesting that the public sector is growing too fast compared to the private sector. Wholesale and retail trade, hotels and restaurants, and transport are close to the EU average, while large gaps with the advanced economies are seen in business and financial services. Although the restructuring process continues in manufacturing, it is too slow, especially in technology-intensive industry. Economic Growth In 2001 and 2002, economic growth fell below the average of preceding years. This result was expected because of slower growth in both export markets and the economies of developed trading partners. In 2001 and 2002, economic growth in the EU and USA dropped considerably: in the EU from 3.4% in 2000 to 1.5% in 2001, and to 0.9 % in 2002 (preliminary data published in Eurostat); in the USA from 3.8% in 2000 to 0.3% in 2001. So far this year the USA has already seen its economic growth strengthen to 2.4%, but this improvement has not yet been reflected in the EU. The impact of subdued economic growth in Slovenia's developed trade partners was absorbed reasonably well because Slovenia managed to retain an above-average export growth rate to transition economies, as well as increasing its market shares in EU countries. This growth of market shares in the EU suggests possible positive developments in export competitiveness which, compared to other countries in transition, improved slowly in the previous year because of the belated implementation of structural reforms, thus preventing exports from growing faster and contributing more to economic growth. Manufacturing Restructuring All of the structural changes that the country underwent between 1995 and 2001 have resulted in the narrowing of Slovenian's gap with Austria, Italy, Belgium and Denmark, the four EU member states whose industrial structure is the most comparable with Slovenia. It is possible therefore to conclude that the structural changes in the period analysed were favourable. However, a question arises as to whether they were carried out at the right pace. Comparisons show that the intensity of restructuring in Slovenian manufacturing (the indicator of restructuring intensity for 1995 - 2000 was 1.51) was stronger than in 11 out of 13 EU members in the second half of the 1990s (more intensive changes were recorded in Finland 5.5 and Denmark 2.1) and slower than in three transition countries for which data is available (Hungary 3.7, Czech Republic 3.0, Slovakia 3.3). Slovenia's slower restructuring compared to some other countries in transition is usually explained by the fact that the Slovenian economy was relatively open to Western European markets before transition and was, as early as the beginning of the 1990s, structurally closer to Western European countries than other economies in transition. Changes Are Needed Despite this, Slovenia already lags behind several transition countries in terms of the share of technology-intensive industries. Intensive structural changes in the Hungarian and Finnish manufacturing sectors have revealed that in order to improve one's competitive edge, major changes are needed. These changes must be based on technological restructuring as well as large-scale investment in research and development, information and communication technologies and innovation. Moreover, a significant role should be attributed to knowledge-based services. Transition To Knowledge-Based Society In the field of education and training, quantitative shifts were seen in youth education, while adult education and lifelong learning made little progress. Although the adult population's education structure is improving, what remains critical is the low level of adult enrolment in education, the low percentage of people who have finished tertiary education, and the low level of functional literacy.


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