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The following OECD assessment and recommendations summarise chapter 4 of the Economic Survey of Slovenia published on 1 July 2009.
The overall business environment is good but could be improved by increasing the powers of the Competition Protection Office
Slovenia’s rapid catch-up owes much to a favourable business environment. Slovenia’s 2007 level of the OECD product market regulation index is much lower than those of neighbouring transition economies, being close to levels noted for more developed adjacent countries. Keener competition since EU accession has set the stage for the creation of large numbers of small and medium-sized enterprises. Nonetheless, foreign direct investment (FDI) inflows have remained low, pointing to a sub optimal transfer of best-practice knowledge. In key service sectors (retail sector, financial services, energy and telecommunications), low contestability linked to state involvement and strong market concentration may have deterred inward FDI.
Product market regulation indicator
Scale of indicators 0 6, from least to most restrictive, 20081
1. The OECD aggregate is an unweighted average of the data available (27 countries).
Source: OECD (2009), International Regulation database, www.oecd.org/eco/pmr.
In order to strengthen competition, the Competition Protection Office (CPO) should be separated from the Ministry of Economy, becoming an independent agency with its own budget. For this measure to be effective, the government will need to grant sufficient resources to the CPO so that it can fully operate without the administrative support of the Ministry of Economy. Another measure to enhance competition is to strengthen public procurement to rule out potential collusion among tenders, given that the total amount of public procurement per year plays a significant role for the Slovenian economy (almost 10% of GDP).
There is a need to reduce barriers to entrepreneurship and improve innovation policies
The life profile of companies in Slovenia points to a general lack of entrepreneurial dynamism, which has limited overall efficiency gains. Options to strengthen entrepreneurship include facilitating property registration and expanding the network of public/private business support centres. The quality of Slovenia’s future business environment depends, to a large extent, upon the introduction of an effective innovation policy, which could be supported by multi-purpose centres.
Enhanced business efficiency also demands improved governance of state-owned enterprises before eventual privatisation
As the efficiency of state-owned enterprises is low, privatisation should be resumed once the economic situation improves. In the meantime, the government should publish a list of state-owned companies and prepare a privatisation plan. The government should also explore ways to improve the management and governance of state companies. Involvement of the State or state-managed funds in company management, for example to use state-owned companies to support some sectors of the economy, should be avoided. In underperforming state-controlled companies, the government should implement strategic plans to raise productivity to levels observed in other EU countries. To this end, the government should ensure that competent supervisory boards appoint managers based only on expertise. The government has established an independent Council for Accreditation of Staff (CAS) of public companies which is a step in the right direction.
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The Policy Brief (pdf format) can be downloaded in English. It contains the OECD assessment and recommendations. (It can also be downloaded in Slovene, see link below, but does not contain all the charts available in the English version.)
Policy Brief v slovenščini je dostopen tudi v PDF formatu. Povzema oceno in priporočila OECD, ne zajema pa vseh grafov z zgornjih spletnih strani.
For further information please contact the Slovenia Desk at the OECD Economics Department at eco.survey@oecd.org.
The OECD Secretariat's report was prepared by Margit Molnar and Colin Forthun under the supervision of Pierre Beynet. Research assistance was provided by Desney Erb.
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