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After 20 years of status quo: the failure of gradualism in Slovenia’s post-socialist transition

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  • Spruk, Rok
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    Abstract

    In the past 20 years, the Slovenia has been praised as the richest former socialist country, having accomplished the advancement from borrower into donor status at the World Bank and having entered the European Monetary Union as the first country from former socialist block. In the due course of transition to market, Slovenia adopted the gradualist approach to economic reform, emphasizing gradual privatization, excessive regulation of the labor market and financial sector as well as the slow stabilization of public finances. In this paper, we review macroeconomic performance of Slovenia in past two decades in a comparative perspective. The paper outlines the growth trajectory of Slovenia from the onset of Habsburg Empire to the present. We showed that until 1939, Slovenia has almost fully converged to the income per capita frontier of Austria and Italy while the income per capita diverged substantially in the period 1945-1990 from Western European frontier. We review the contours of labor market protectionism, state dominance in banking and financial sector and emergence of the corporate oligarchy as the main symptoms of stalled economic performance given a substantial differential in income per capita between Slovenia and EU15. Moreover, we demonstrate how former communist elites transformed into powerful networks of interest groups which preserved status quo from socialist period through systemic blockade of key economic reforms to stabilize public finances in the light of age-related pressures and to boost productivity growth and structural change.

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    Bibliographic Info

    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 36268.

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    Date of creation: 19 Jan 2012
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    Handle: RePEc:pra:mprapa:36268

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    Keywords: post-socialist transition; macroeconomic stabilization; economic growth; political economy; Slovenia;

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    1. Alexander Apostolides, 2008. "How Similar to South-Eastern Europe were the Islands of Cyprus and Malta in terms of Agricultural Output and Credit? Evidence during the Interwar Period," Working Papers 80, Bank of Greece.
    2. Mico Mrkaic, 2002. "The Growth of Total Factor Productivity in Slovenia," Post-Communist Economies, Taylor and Francis Journals, vol. 14(4), pages 445-454.
    3. André Sapir, 1980. "Economic growth and factor substitution: what happened to the Yugoslav miracle?," ULB Institutional Repository 2013/8294, ULB -- Universite Libre de Bruxelles.
    4. Daron Acemoglu, 1993. "Reward Structures and the Allocation of Talent," CEP Discussion Papers dp0143, Centre for Economic Performance, LSE.
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