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production and trade. As far as Slovenia is concerned, it was traditionally the most developed republic of the former Yugoslavia. This was made possible
due to its geographical location on the border with Austria and Italy, diversified structure of the economy with a large proportion of final goods production and well-educated labour force.”
The socialist era saw the emergence
of some of the companies that remain central to the Slovenian economy today. Among them are Gorenje, one of Europe’s largest household appliance manufacturers now majority-owned by China’s Hisense. Gorenje started out as a producer of agricultural machinery when it was set up by the government in 1950. Four years later the Krka lab was established, which has now grown
Slovenia and Kosovo in the late 1980s was as high as 8:1.
As early as the 1970s, the tensions within the Yugoslav federation were becoming apparent, as documented in one New York Times article from 1978, titled “Even in Yugoslavia, a rich-poor split”. The journalist wrote: “Slovenes are political realists, so no one here in their capital raises the subject of separating from Yugoslavia except to reject it. ... But the political and economic crisis that has long confronted Yugoslavia has sharpened Slovenia's awareness that its two million people have the highest level of economic development among the republics and provinces that make up this federal country of 23 million.” This raised the question of “whether northern Yugoslavia is paying too dearly for the south”.
Slovenia's Elan now sells its skis all over the world. Source: Elan
embroiled in the wars that cost thousands of lives and devastated the economies of other post-Yugoslav states as the federation disintegrated. Its
war of independence from Yugoslavia, fought between the Slovenian Territorial Defence and the Yugoslav army – the latter weakened as many of its Slovenian members deserted or switched sides, lasted from June 27 to July 7, 1991, ending with the Brioni Agreement brokered by the European Community.
Three months after the agreement
was signed Slovenia became formally independent. Figures compiled by the World Bank for 1991 show that Slovenia’s GDP per capita that year was $6.634, more than $2,000 below that of the poorest EU member state, Portugal, but more than twice as high as in any of the Visegrad states.
Another thing that set Slovenia apart from its peers in the region was the development model chosen at the start of its transition. “Slovenia adopted
a gradual model of transition where the state kept its involvement in the economy, while others, notably Poland, adopted shock therapy and put forward lot of market liberalisation reforms
that accelerated this process,” says Radu Cracan, economic analyst at the European Bank for Reconstruction and Development (EBRD).
Already among the strong sectors were food and beverage, automotive, metals, pharma and chemicals. As incomes continued to rise, this stimulated the development of consumer sectors too. Pre-existing commercial links with neighbouring West European countries like Italy and Austria supported the development of export-led growth,
an important contributor to the GDP expansion of over 4% a year between 1993 and 2008. At the same time, unemployment declined to just 4.4% between 2004 and 2008.
“Over the 30 years of Slovenia’s independence, the country established itself as a viable small and open economy with a reasonable good level of international competitiveness,”
said Mrak.
into an international generic pharma company, selling to over 70 countries worldwide. Another internationally recognised Slovenian company is Elan, founded by ski jumping champion Rudi Finzgar who made skis for Yugoslavian Partisan forces during the Second World War.
Yet the relative prosperity of industrialised Slovenia, and to a lesser extent Croatia, in contrast to the poorer republics to the south, contributed ultimately to the break-up of Yugoslavia, along with the debt crisis that escalated during the 1980s. Igor Guardiancich, assistant professor at the Department of Political Science, Law and International Studies (SPGI) and Università degli Studi di Padova, pointed out that by the late 1980s, the gap in GDP proxies between
By the early 1980s, Yugoslavia was struggling under a heavy debt burden after decades of borrowing from both East and West to drive economic expansion, and a further blow from
the oil price shocks of the 1970s. The government introduced strict austerity measures, including fuel rationing. But this wasn’t enough to stop the economy lurching from one crisis to another in the 1980s, a decade characterised by inflation – though hyperinflation didn’t erupt until the end of the decade and in the early 1990s – rising unemployment and falling living standards. This
made the richer republics, Slovenia and Croatia, increasingly unwilling to subsidise the poorer ones, sowing the seeds for secession and eventually war.
Yet Slovenia managed to avoid getting
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