The rapid growth after independence stopped in 2008 as the global crisis exposed important structural weaknesses. Large state involvement and rigid labour and product markets lowered productivity.
Important reforms have been implemented which raised credibility of Slovenia in the financial markets and boosted confidence. But economic recovery has been sluggish, many people are unemployed and living standards still remain below the pre-crisis levels.
The slowdown in productivity growth over the past decade underscores the idea that as economies converge toward the global technological frontier, the ability to capitalise on new innovations developed at frontier becomes more important.
This paper first decomposes labour productivity growth over 2000-11 into a within-industry, a shift and a cross effect in a number of countries and compares China with other countries over this period. This shift-share analysis also allows a comparison of within-sector productivity gains across a large number of sectors and countries.
Regional inequality in Slovakia is among the highest in the OECD and is increasing. The main reason for regional disparity is the combination of low economic growth and job creation in the eastern and central part of the country and insufficient labour mobility to the west, in particular by low-skilled workers.