The transition in Slovenia may well have been the most smooth and painless of all in Central and Eastern Europe, but it had its downsides as well, a leading economist has said.
According to Janez Sustersic, who is in charge of a government body in charge of overseeing the economy, the gradualist approach to privatisation has resulted in some delays in important reforms.
Although the slower pace of transition was justified in the first years after independence, the pace should have picked up after 1995, when restructuring of the economy was too slow, director of the Institute for Macroeconomic Analysis and Development (IMAD) said.
Speaking at a recent seminar, Sustersic said data from the European Bank for Reconstruction and Development shows that Slovenia had a constant backlog in economic reform.
Although Slovenia did not carry out fewer reforms than the leading country, Hungary, it carried them out one to two years later. As a result, Slovenia's transition could be labelled as cautious more than gradualist, Sustersic claimed.
One of the sectors that has not undergone necessary reforms yet because of the slow approach is the financial sector, Sustersic stressed.
Special measures that were in place throughout the transition shielded the banking sector from competition, he pointed out, adding that this must change now.
According to Sustersic, another direct cost of this slow reform process is that it turned off foreign investors.
Given that companies with foreign capital restructured faster and with greater efficiency, Slovenia missed an important opportunity in this respect, Sustersic added.
In the future, Slovenia will have to improve its use of knowledge and the links between universities, researchers and business.
What is more, the country will have to bolster market regulations in a bid to strengthen competition, reduce state ownership in companies and attract foreign investment, he said in a presentation called "Political Economy of Slovenian Transition".
Sustersic's spoke about Slovenia's transition at a seminar on Slovenia's transition organised last week by the Slovenian Macroeconomic Forum.
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