Jan Stráský
2. Strengthening economic resilience through trade
Copy link to 2. Strengthening economic resilience through tradeAbstract
The highly open economy has weathered past external shocks relatively well but rising geopolitical tensions and a global shift towards trade restrictions are posing new challenges. In promoting adaptable supply chains, the objectives of efficiency and resilience need to be balanced, and the government should refrain from using distortive industrial policies. Potential supply disruptions could be alleviated by improving the national stockpiling system, involving more the private sector and increasing transparency. Lowering unnecessary barriers to trade in services and further reducing the regulatory restrictions on FDI could help reduce effective trade costs and deepen trade integration.
2.1. Slovenia’s highly open economy is vulnerable to external shocks
Copy link to 2.1. Slovenia’s highly open economy is vulnerable to external shocksThe economy is markedly more open to trade than the OECD Europe median and well-integrated into global value chains (Figure 2.1, panels A and D). This is largely due to strong trade linkages to the European Union. Participation in global value chains (GVCs) is above the EU average in manufacturing but relatively weak in knowledge-intensive services (IMAD, 2025[1]). Exports have been a key driver of economic success, increasing more than six-fold between 2000 and 2024. With a high trade share, Slovenia relies heavily on foreign demand and imports to sustain its economy (Figure 2.1, panel B). The strongest linkages are with proximate European countries, such as Germany, Italy and Switzerland, but also the United States and China (Figure 2.1, panel C).
Figure 2.1. Slovenia is highly open to foreign trade
Copy link to Figure 2.1. Slovenia is highly open to foreign trade
Note: OECD is an unweighted average across OECD countries while OECD-EU is an unweighted average across OECD EU member countries. Panel D, Backward participation is measured by foreign value-added share of gross exports. Forward participation is measured by domestic value-added share of foreign final demand.
Sources: OECD Economic Outlook: Statistics and Projections database; OECD Trade in Value Added (TiVA) database – 2025 edition; and OECD calculations.
Global trade restrictions have been rising. Global trade growth moderated in 2025, and higher tariffs have become increasingly visible in spending choices, business costs and consumer prices (OECD, 2025[2]). Moreover, Russia’s war of aggression against Ukraine and the energy crisis that followed, together with the evolving conflict in the Middle East, have put a high premium on economic resilience. If the current disruptions continue or trade protectionism rises further, a high degree of openness may expose Slovenia to disruptions in complex GVCs that can reinforce logistical, economic and policy risks (Crowe and Rawdanowicz, 2023[3]).
Reliance on foreign inputs, measured as a sector’s exposure to foreign supply disruptions based on the OECD’s Trade in Value Added (TiVA) data, is relatively high in Slovenia, particularly in the automotive, chemicals and mining industries. According to the foreign input reliance (FIR) indicator, Slovenian companies rely more on foreign inputs than the OECD average across most sectors (Figure 2.2, panel A). Inputs are mainly sourced from suppliers within the EU and the rest of Europe, but Asian countries are important in sectors such as chemicals, heterocyclic compounds for pharmaceuticals, textiles, information and communication technology (ICT) and optical products (Figure 2.2, panel B).
Figure 2.2. Reliance on foreign inputs is higher than the OECD average
Copy link to Figure 2.2. Reliance on foreign inputs is higher than the OECD average% of gross output, 2022
Note: Foreign input reliance (FIR) is measured as the ratio of foreign output used in domestic production to total domestic gross output. That value added from a specific partner country may be counted several times. For instance, suppose that a microchip from China is used as an input to the production of a rear-view mirror in Mexico, which is, in turn, sent for final assembly of a car to the United States. The Chinese value added embodied in the microchip will be counted twice in foreign output (FIR numerator): once when it crosses the border to Mexico, and once when it crosses the border to the United States. In other words, the numerator of the FIR (foreign output used in domestic production) increases with the length of the upstream value chain.
Source: OECD Gross output flows in global value chains database, https://www.oecd.org/en/data/datasets/gross-output-flows-in-global-value-chains.html.
Concentrated trade linkages may increase the probability of economic or other damages from shocks, including policy-induced shocks. Detailed and timely monitoring of trade concentration measures can help anticipate possible disruptions and lower trade dependency. Indeed, some geopolitical tensions and trade uncertainties are already being factored into private sector business decisions, as EU firms invest in diversifying supply import sources, digital tracking and the build-up of inventories (EIB, 2025[4]). In other sectors, including high value-added services, firms may employ other strategies, such as regionalisation or re-shoring (OECD, 2023[5]). However, the costs and benefits of such policies need to be carefully considered, as the evidence points to potentially high economic costs of de-risking and re-shoring (OECD, 2025[6]).
The Slovenian economy has been resilient amid recent external shocks, also due to its strong trade linkages to the EU and third countries with which free trade agreements (FTAs) are in place (Figure 2.3, panel A). Slovenia’s largest trading partner is the EU, and its large single market provides some protection against adverse global trade shocks. Foreign-owned companies generate more than half of total goods exports, while domestic firms in the travel, transport and construction sectors account for the majority of services exports (IMAD, 2025[1]). However, the geographical composition of trade has changed in recent years, as Slovenian companies diversified across countries and regions, mainly towards the European Free Trade Association (EFTA) countries and the rest of the world (Figure 2.3, panel B).
Figure 2.3. The EU is Slovenia’s largest trading partner, particularly in services
Copy link to Figure 2.3. The EU is Slovenia’s largest trading partner, particularly in services
Note: EFTA (European Free Trade Association) includes Iceland, Norway and Switzerland, while FTA (Free Trade Agreements, bilateral) includes those negotiated by the EU with Canada, Chile, Colombia, Ecuador, the United Kingdom, Japan, Korea, Mexico, New Zealand, Peru, Singapore and Viet Nam.
Source: UN Comtrade database; and OECD calculations.
Slovenian companies have successfully reduced many risky dependencies, but high concentration of some imports remains a concern. The average level of import concentration, as measured by the Herfindahl-Hirschman Index (HHI), has fallen by 11% since 2002 and has decreased for both low and high concentration products (Figure 2.4, panels A and B). In some sub-sectors, such as lithium-ion battery components, rare-earth permanent magnets and photovoltaics, more than 60% of imports come from China. However, the share of products imported to Slovenia that may be at risk of supply disruption – defined as products with an import HHI above 0.4, for which Slovenia is a net importer and the global HHI is also above 0.4 – tends to be reduced by more than 50% after two years following the disruption, more quickly than in the four proximate countries, Austria, Germany, Italy and Switzerland (Figure 2.4, panel D). This points to the private sector’s ability to reduce dependencies by diversifying suppliers, adapting production processes and innovating.
Figure 2.4. Companies have reduced some import dependencies
Copy link to Figure 2.4. Companies have reduced some import dependencies
Note: The average level of import concentration is measured by the Herfindahl Hirschman Index (HHI). Panel A shows the change in the average HHI for Slovenia imports over time, indexed to 0 in 2002. Panel B shows the import HHI in 2023 compared to earlier periods over the distribution of the HHI. Panel C shows the time evolution of products that are at risk of disruption (defined by Lukaszuk and Ferreira as import HHI >0.4, global export HHI > 0.4 and imports>exports). The y-axis shows the average % change in the products that passed the filter (between 2002 and 2018, for five consecutive years) and are considered at risk of disruption. Four neighbours refer to Austria, Germany, Italy and Switzerland.
Source: CEPII; and OECD calculations.
To help alleviate risks linked to structural changes within the automotive sector, which accounted for 20% of Slovenian goods exports in 2024, the government is supporting a comprehensive restructuring of the sector towards green mobility. Up to EUR 200 million in subsidies will be allocated between 2023 and 2027 to projects such as novel battery technologies, drive systems for electric vehicles and utilisation of lightweight materials. The support for high value-added production is similar to support in other countries, but further private investment is likely to be needed. The government is also supporting the participation of companies in cross-border Important Projects of Common European Interest (IPCEI), financed from the Recovery and Resilience Facility and cohesion policy funds. For example, the IPCEI project aimed at building hydrogen production capacities will also support the use of hydrogen in industry and transport. Finally, the government is helping companies find new trade opportunities through its internationalisation strategy (Box 2.1) and the Slovenian Development Bank prepares a EUR 500 million fund that will provide loans supporting internationally active firms hit by global cyclical shocks.
Box 2.1. The Slovenian Internationalisation Strategy 2021-2026
Copy link to Box 2.1. The Slovenian Internationalisation Strategy 2021-2026In addition to lowering domestic barriers, policy can facilitate trade diversification by providing information and support in identifying and entering new markets. While openness and geographical diversification in GVCs can offer important options for adjusting to disruptions, it also involves costs for firms that reassess their sourcing and location strategies (Thakur-Weigold and Miroudot, 2024[7]). The Programme Promoting Investment and the Internationalisation of the Slovenian Economy until 2026 adopted in 2021 outlines a strategy centred on trade specialisation and provides a list of priority industrial sectors and markets for both exports and foreign direct investment (Ministry of Economy, 2021[8]). This strategic approach to identifying new markets and niche orientations aims at strengthening the export base by helping SMEs to access international markets and supporting long-term export transformation, while also outlining a strategy for attracting inward FDI based on a set of economic incentives and tax relief measures.
The internationalisation strategy is underpinned by an ecosystem of both public and private stakeholders and effective economic diplomacy. Business associations, such as SPIRIT and the Chamber of Commerce and Industry, provide training to exporters and information about doing business abroad, while the government organises business delegations, sectoral missions, and international promotion activities, such as trade fairs participation. About EUR 23 million has been allocated to finance the internationalisation strategy, which may not be sufficient to implement all the measures.
Source: (OECD, 2025[6]) and Ministry of Economy (2021[8])
However, to promote agile and adaptable supply chains, the objectives of sustainability, efficiency and resilience need to be balanced (OECD, 2025[6]). For example, when designing resilient supply chains, firms need to weigh the costs of redundancy against efficiency. Similarly, the government should avoid using distortive industrial policies. Participation in a costly and ineffective subsidy race could result in overcapacity and ultimately undermine support for open trade and impair international co-operation (OECD, 2024[9]).
2.2. Addressing supply disruptions by building up strategic reserves
Copy link to 2.2. Addressing supply disruptions by building up strategic reservesCo-ordination between the government and the private sector is key for building resilient supply chains. As firms have direct control over sourcing strategies, inventory management and distribution networks, aligning the efforts of firms and the government, for example through public-private partnerships involving various stakeholders, could help establish integrated forms of emergency preparedness (OECD, 2025[6]). The use of private sector expertise, for example in preparation of long-term plans, and resources, including storage and ownership of stocks, as in Finland or Switzerland, could be considered (Box 2.2) ; it also guarantees detailed knowledge about sectors and products and facilitates contacts with companies that might be affected.
The Covid-19 pandemic raised interest in stockpiling goods for emergencies, both in the public sector and among companies. Like many other OECD countries, Slovenia has a well-established system of strategic reserves management, centred around a specialised non-profit public entity and aiming at providing basic goods for the population when regular supply is not possible. State commodity reserves and emergency reserves of crude oil and petroleum products are maintained by the Agency for Commodity Reserves (ZRSBR) based on a five-year programme approved by the government. The programme specifying the categories and minimum quantities of goods to be held in stock is prepared by the Ministry of the Economy together with the ZRSBR and the line ministries responsible for agriculture, health, defence and other critical risk areas, with a view to global security risks and the possibilities for storage and maintenance of the reserves. Line ministries may consult relevant stakeholders, including private companies. The ZRSBR is a public economic institution, bound by the public procurement law. Hence, the strategic reserves are in state ownership, although non-oil reserves are often stored and managed by private contractors.
Box 2.2. National stockpiling systems in selected OECD countries
Copy link to Box 2.2. National stockpiling systems in selected OECD countriesThe National Emergency Supply Agency in Finland
Finland operates a national stockpiling system of essential goods through its National Emergency Supply Agency (NESA), which is an organisation operating under the Ministry of Economic Affairs and Employment. In cooperation with other authorities and the private sector, the NESA ensures the continuity of the critical societal functions during crises and disruptions. Its activities are regulated by two legal texts: The Act on the Measures Necessary to Secure Security of Supply (1390/1992) and the Government Decree on the National Emergency Supply (1048/2018).
NESA is tasked with planning and operative measures related to developing and maintaining security of supply. Several tools are available to the authority, such as stockpiling of essential goods and medical equipment, or laws and regulations that require operators to ensure the continuity of their critical processes amid disruptions and emergencies. Emergency stockpiles of for example medical equipment and fuels are held by relevant companies but are mandated by NESA.
The Swiss Federal Office for Economic Supply and the decentralised stockpiling system
In Switzerland, the Swiss Federal Office for Economic Supply (FONES) is responsible for ensuring the nation’s economic supply in the event of severe shortages, based on a mechanism of private-public sector cooperation. The list of products included in the stockpiling system is proposed by private sector experts and approved by the Federal Council. The organisation of the stockpiling of the listed products is supervised by FONES and implemented by the private sector. About 300 firms participate; the compulsory stock that they assorted does not belong to the federal government; it remains the property of the companies (decentralised stockpiling). The list of stockpiled items and their quantity is continuously reviewed by FONES together with federal and cantonal governments as well as companies. Although heightened trade tensions may call for larger inventories, the current stockpiles can already maintain the country’s demand for three to four months in case of a complete disruption of imports.
The tasks of FONES are broadly categorized into two phases: prevention and intervention. During the prevention phase, the focus is on enhancing the resilience of private supply processes to curtail the need for government intervention. For instance, the organisation promotes dialogue among stakeholders to alleviate potential shortages. Simultaneously, measures are put in place for the intervention phase. The degree of intervention varies based on the severity of the shortages.
Source: OECD (2024[9]).
The types and quantities of goods defined in the five-year programme and stored as state commodity reserves are classified information. Moreover, since annual reports of the Commodity Reserves Agency contain data on stock levels, they are also classified. However, this is not the case in other OECD countries, such as Finland or Switzerland, where the strategy documents and annual reports are published, albeit sometimes with a delay, in line with the OECD Recommendation of the Governance of Critical Risks to ensure transparency and accountability in risk-related decision-making and continuously learn from experience and science (Box 2.3). Furthermore, the OECD Recommendations emphasise the need for complementing the core system with a flexible regulatory regime and emergency framework (OECD, 2014[10]).
Box 2.3. The OECD Recommendation on the Governance of Critical Risks
Copy link to Box 2.3. The OECD Recommendation on the Governance of Critical RisksThe OECD Recommendation on the Governance of Critical Risks recognises the escalating damages that occur due to extreme events and for economies that are dependent on global value chains. The Recommendation proposes actions that governments can take at all levels of government, in collaboration with the private sector and with each other, to better assess, prevent, respond to and recover from the effects of extreme events, as well as take measures to build resilience to rebound from unanticipated events.
Identification and assessment of risks, taking interlinkages and knock-on effects into account. This helps set priorities and inform allocation of resources.
More investment in risk prevention and mitigation such as investments in protective infrastructure, but also non-structural policies such as land use planning.
Flexible capacities for preparedness, response and recovery to help manage unanticipated and novel types of crises.
Good risk governance via transparent and accountable risk management systems that learn continuously and systematically from experience and research.
Source: OECD (2014[10])
Several weaknesses in the system for assessing strategic needs and the procedures for procurement of strategic equipment were discovered during the Covid-19 pandemic. In 2020 and 2021, the government, several line Ministries and the Agency for Commodity Reserves (ZRSBR) were found not effective in the procurement of protective and medical equipment by the Court of Audit (Court of Audit, 2021[11]). For example, the Commodity Reserves Act’s (ZBR) requirement that the five-year Commodity Reserves Programme adopted by the government must also determine the minimum quantities of individual goods kept in the reserves was not fulfilled. The method of planning stockpiles in the five-year programme was based on generic descriptions of goods, which made it impossible to determine which individual products were supposed to be in stock. Moreover, it was also not clear in advance, which Ministry or agency should assess the needs for equipment and collect the data on the existing stocks of goods.
The Court of Audit subsequently assessed the corrective actions of the government as satisfactory. However, the auditors emphasised that the existing regulations, plans and other implementation documents must provide more precise determination of responsibilities of the individual Ministries and other stakeholders. Such clarification is particularly needed regarding the responsibilities in planning equipment for each department and responsibilities of the Slovenian Civil Protection and Rescue Administration (ACPDR) in determining and managing equipment stocks. Finally, a methodology for determining the types and necessary quantities of equipment stocks should be developed also for areas outside of healthcare (Court of Audit, 2021[12]). The amended Commodity Reserves Act adopted in 2024 followed up on these recommendations and defined some of the procedures and roles in greater detail and will be used in the preparation of the next five-year programme in 2028.
However, the existing system can be further improved. For example, the authorities could start using most economically advantageous tender (MEAT) criteria and security of supply criteria when managing the public stockpile of medicines and other health material (OECD, 2024[13]), in addition to ensuring diversification of suppliers and introducing stronger penalties for supplier withdrawal. The dynamic purchasing system currently in use for fuel purchases could also be introduced in other areas, such as veterinary medicine, to reduce contract cancellations, and monitoring of pharmaceutical stocks could be improved to ensure the use of products before the end of their shelf-life (Agency for Commodity Reserves, 2025[14]). In Switzerland, for example, private sector data gathered on the website drugshortage.ch help monitoring the supply of prescription drugs, in addition to official data on medical goods shortages tracked by the Federal Council. Timely data on medical supply bottlenecks serves as a good example of how the private sector can contribute to the monitoring of specific supply chains (OECD, 2024[9]).
2.3. Improving trade integration and reducing barriers to capital flows
Copy link to 2.3. Improving trade integration and reducing barriers to capital flowsStable, transparent and predictable trade and investment regimes reduce uncertainty and trade costs. Reversal of global economic integration, moving from an interconnected trading regime to a more localised regime, could reduce global real GDP by more than 5%, while not necessarily offering more stability in the face of shocks (OECD, 2025[6]). Conversely, lower trade costs would increase the resilience of Slovenian firms, by expanding the number of possible suppliers and buyers and reducing supply-related risks (OECD, 2024[9]).
Effective trade costs, which encompass all factors constraining international trade versus domestic trade, can be further reduced. The estimated level of trade costs varies depending on methods and assumptions (Arvis et al., 2016[15]; Rubínová and Sebti, 2021[16]). According to the UN/World Bank ESCAP database, effective trade costs in the manufacturing sector are higher in Slovenia than its four neighbours, but below the OECD average (Figure 2.5, panel A). The WTO’s Trade Cost Database, which has a more granular sectoral dimension and includes services, points in the same direction, with effective trade costs higher in Slovenia than in the four neighbouring countries in both manufacturing and services (Figure 2.5, panel B). Lower trade costs could be achieved for example by improving at-the-border regulations and procedures, and through further digital infrastructure investments improving connectivity.
Figure 2.5. There is scope to reduce effective trade costs in manufacturing and services
Copy link to Figure 2.5. There is scope to reduce effective trade costs in manufacturing and services
Note: The effective trade costs are estimates of the costs involved with international trade relative to domestic activity. Panel A shows trade costs estimates by ESCAP-World Bank for agriculture, manufacturing, and total goods averaged across destination economies. Panel B shows trade cost estimates from the WTO, average across ISIC Rev. 4 sub-sectors. The trade costs are expressed as ad-valorem equivalents, in logarithms. This is the additional cost (in %) that is associated with trade between countries relative to within countries. These costs involve transport and travel costs, information and transaction costs, ICT connectedness, trade policy and regulatory differences, governance quality and other factors like geography. Rubínová and Sebti (2021) shows that transport and travel costs, trade policy and regulatory differences and information and communication technology is especially important for the variation in trade costs. Four neighbours refer to Austria, Germany, Italy and Switzerland. OECD is a simple average of OECD countries.
Source: ESCAP; WTO; and OECD calculations.
Despite ongoing digitalisation pushing down trade costs, the shipping of goods across borders still involves considerable costs. Behind-the-border and at-the-border procedures and regulations, the quality of infrastructure and digital connectedness can have significant effects on trade (Ohnsorge, F. and L. Quaglietti, 2023[17]). For example, at the border firms are required to present the necessary documentation, comply with customs and other procedures and be subject to clearance and inspections. Some of these factors are captured by the OECD’s Trade Facilitation Indicators where Slovenia fares better than the OECD average in many sub-indicators but generally lags best performers (Figure 2.6). In particular, Slovenia performs worse than the OECD average on internal and external border agency cooperation, which includes institutional frameworks, mechanisms and IT systems for domestic and external cooperation. To improve domestic border agency cooperation, the government could enhance digital interoperability by improving exchange of data and common data standards as well as coordination on the certified trader programme by harmonising applicable requirements, coordinating certification processes and streamlining monitoring and follow-up procedures and inspection practices. In addition, cross-border agency cooperation could be improved by advancing cooperation on IT systems, expanding shared risk profiling of traders and goods as well as systematically exchanging risk analysis results and inspection results with partner countries to ensure more predictable cross-border movements (OECD, 2025[18]).
Figure 2.6. There is scope to improve some trade facilitation measures
Copy link to Figure 2.6. There is scope to improve some trade facilitation measures
Note: “Trade facilitation” refers to a specific set of measures that streamline and simplify the technical and legal procedures for products entering or leaving a country to be traded internationally. Trade facilitation covers the full spectrum of border procedures, from the electronic exchange of data about a shipment, to the simplification and harmonisation of trade documents, to the possibility to appeal administrative decisions by border agencies.
Source: OECD Trade Facilitation Indicators (TFIs) database.
While all companies tend to benefit from improvements in trade facilitation, small companies benefit more, as trade costs are particularly onerous for small firms, which lack specialised human resources and may only ship infrequently and in small quantities. Automation, such as border agencies allowing electronic submission of documents, can help reduce both fixed and variable transaction costs. In addition, better inter-agency co-operation, including better communication, infrastructure and equipment, can help remove redundant controls and duplicative documentation requirements, further reducing costs for companies shipping across borders (López González and Sorescu, 2019[19]).
Slovenia is restricting services trade more than other OECD countries and has made little progress in lifting restrictions since 2020 (Figure 2.7). Conditions on the entry of natural persons seeking to provide services on a temporary basis as intra-corporate transferees, contractual services suppliers or independent services suppliers remain more cumbersome than international best practice. Insurance services are the most open sector in Slovenia while legal and engineering services are the most restricted relative to the sectoral STRI average (OECD, 2025[20]). The restrictions to movement of people are significant compared to best European performers, mainly driven by limitations on the duration of stay for services suppliers and limited recognition of foreign qualifications. At the same time, barriers towards suppliers from within the European Economic Area (EEA) across all services sectors are significantly lower than barriers applied on a Most Favoured Nation basis and Slovenia maintains an open market for services suppliers from other EU countries. To unlock new opportunities from services trade, the government could replace the distortionary nationality or reciprocity requirements with regulation on qualification standards and recognition of professional qualifications, alongside other measures, such as streamlining existing regulations, lowering unnecessary barriers and improving regulatory transparency, discussed in detail in Chapter 4.
Figure 2.7. Barriers restricting trade in services could be further reduced
Copy link to Figure 2.7. Barriers restricting trade in services could be further reducedOECD Services Trade Restrictiveness Index (STRI), from 0 to 1 (most restrictive), 2025
Note: STRI indices take the value from 0 to 1. Complete openness to trade and investment gives a score of zero, while being completely closed to foreign services providers yields a score of one.
Source: OECD Services Trade Restrictiveness Index (STRI) database.
To improve innovation and productivity, Slovenia could better use its potential to attract foreign direct investment (FDI), which has provided an important channel for productivity gains through integration into global supply chains, notably in the automotive and pharmaceutical sectors. However, the stock of inward FDI, well below 40% of GDP, is consistently one of the lowest among the EU countries, partly related to the approach to privatisation in the 1990s, which gave preference to internal buyouts and domestic institutional investors (IMAD, 2025[1]). In addition, the stock of FDI is reduced by the existence of state-owned major firms in some service sectors, such as insurance (OECD, 2025[20]). While inward FDI flows can facilitate knowledge transfer and innovation, foreign-owned companies may also provide a stable source of financing. After the 2008 financial crisis, foreign-owned companies in Slovenia maintained their investment levels, even as domestic-owned firms reduced their investment significantly (Damijan et al., 2022[21]).
Slovenia is relatively open to FDI. According to the OECD’s FDI Restrictiveness Index (a component of the Product Market Regulation indicator system), the remaining restrictions are limited and in sectors such as financial services and air transport largely reflect EU directives and regulations (Figure 2.8). However, some reciprocity conditions in areas such as land and real estate, mining, and certain professional services – including legal and auditing services – still pose barriers for investors from affected countries. These restrictions also partly explain higher (more restrictive) scores in the STRI index discussed above. Periodic reviews of remaining measures would help to assess whether they remain proportionate and justified considering their costs, including reduced competition and contestability. Where full liberalisation seems not feasible, narrowing the scope of existing measures could offer an intermediate solution. For example, the government could narrow the scope of reciprocity requirements in land and real estate by exempting land used for business purposes, differentiating between commercial and residential property or distinguishing between existing and new developments.
Figure 2.8. FDI restrictions can be lowered
Copy link to Figure 2.8. FDI restrictions can be loweredOECD FDI Regulatory Restrictiveness Index, from 0 to 1 (most restrictive), 2024
Note: The OECD Foreign Direct Investment Regulatory Restrictiveness Index (FDI RRI) measures four types of statutory restrictions on FDI: 1) foreign equity restrictions, 2) screening and prior approval requirements, 3) rules for key personnel, and 4) other restrictions on the operation of foreign enterprises. The FDI RRI is a composite index that takes values between 0 and 1, with 1 being the most restrictive.
Source: OECD FDI Regulatory Restrictiveness Index database.
As in most OECD countries, investment incentives in Slovenia are equal for both domestic and foreign investors and consist of grants, loans, guarantees and interest rate subsidies. In addition, they may also include purchase of property owned by a local community at a below-market price, using a direct agreement. As for any investment incentives, careful design as well as monitoring and evaluation are needed to ensure that they represent value for money.
Table 2.1. Policy recommendations
Copy link to Table 2.1. Policy recommendations|
MAIN FINDINGS |
RECOMMENDATIONS (Key recommendations in bold) |
|
|---|---|---|
|
Addressing supply disruptions |
||
|
The 2024 law provides for consultation with the private sector in preparing the five-year plan for the management of strategic reserves. |
Involve the private sector more in the management of strategic reserves. |
|
|
The system of strategic needs assessment and procurement procedures during the Covid-19 pandemic were not effective in the procurement of protective and medical equipment. |
Continue developing effective procurement procedures and the system for monitoring the stocks of strategic reserves. |
|
|
Facilitating trade and capital flows |
||
|
Shipping goods across borders involves costs that can be further reduced. |
Reduce effective trade costs by strengthening trade facilitation through automation and better inter-agency co-operation. |
|
|
Services trade restrictions are higher than the OECD average and little progress have been made since 2020. |
Streamline regulations and lower unnecessary barriers to services trade, for example on the duration of stay for services suppliers. |
|
|
The stock of inward foreign direct investment is low by European standards. |
Reduce the regulatory restrictions on FDI, mainly foreign equity limitations and reciprocity conditions, towards levels in the least restrictive OECD countries. |
|
References
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[12] Court of Audit (2021), Post-audit report: Corrective measures in the audit of the effectiveness of purchases of protective and medical equipment to control the spread of the SARS-CoV-2 virus (Porevizijsko Poročilo: Popravljalni ukrepi pri reviziji učinkovitosti nabav zaščitne in medicinske opreme za obvladovanje širjenja virusa SARS-CoV-2), Računsko Sodišče, Ljubljana.
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