Page 44 - bne_April 2021_20210401

44 I Southeast Europe bne April 2021
Slovenia: Emerging Europe’s secret success story
Clare Nuttall in Glasgow
Slovenia started the transition as the most prosperous state in the post-socialist space, a position
it has held on to despite a severe debt crisis and stiff competition from several Central European economies that
were booming until the coronavirus (COVID-19) pandemic struck.
The small country’s post-independence history has been a series of firsts: it was the first Southeast European country to join the EU, the first emerging European country to join the eurozone and the first from the region to switch from borrower to donor status at the World Bank. It
also outperforms the rest of the region, or at least is one of the leaders, on most human development indicators.
The chart (See page 46) below produced using a World Bank data tool makes the point nicely. It dynamically shows GDP growth over the last 20 years. You can see the wealth gap between Western and Emerging Europe clearly, but you can also see how Slovenia overtakes Portugal,
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Western Europe's poorest nation, in about 2002 and starts to close the gap with the rich nations until the 2008 global financial crisis knocks everyone back.
Slovenia’s strong starting point when it embarked on the transition was thanks to a variety of historical factors. Much of what later became Yugoslavia was under the Ottoman Empire for centuries, while Slovenia spent hundreds of years under the Habsburgs, along with modern-day Austria, Czechia and much of Central Europe.
After the Second World War, a socialist government was installed in Yugoslavia, like the rest of Central, Southeast and Eastern Europe. Yet after Yugoslav leader Josip Broz Tito’s split from Moscow, leaving Yugoslavia as one of the leading non-aligned states in the Cold War,
the federation was free to pursue its
own economic policies, nationalising
big companies while leaving smaller companies to operate independently, and it also benefited from Western loans.
“Slovenia had the highest per capita GDP among all countries from this part of
the world at the time they started their process of transition from planned to market economy. The reasons are partly on the side of specifics of the former Yugoslavia as a whole and partly on specifics of Slovenia within Yugoslavia,” said Mojmir Mrak, professor and Jean Monnet Chair holder at the Academic Unit for Money and Finance at the Faculty of Economics, University of Ljubljana.
“As far as Yugoslavia as a whole is concerned, its socio-economic model of development was quite different from the one in all other ex-socialist countries. While economies of all these countries were based on state ownership and central planning, Yugoslavia introduced a very distinctive system based on public ownership and [a] self-management economic system. Yugoslav companies operated within an economic system that contained many market or at least quasi-market elements in the areas of