Slovenia has climbed eight spots to 32nd in the rankings of the 2008 World Competitiveness Yearbook, an annual report compiled by the Lausanne-based International Institute for Management Development (IMD). The US remains the most competitive of the 55 economies listed, followed closely by Singapore and Hong Kong.
"Part of the reason for Slovenia's progress is that last year most of the world economies reported high growth, while Slovenia's was significantly above-average, which reflected on its competitive edge," Peter Stanovnik of the Ljubljana Institute for Economic Research told reporters on Thursday.
Apart from the strong growth, Stanovnik pointed to the arrival of multinationals in Slovenia and partnerships that Slovenian companies form in the single European market.
"Slovenia has improved the conditions for doing business, financial conditions for small and medium-sized companies and conditions for foreign investment," Stanovnik listed.
A colleague of his, Art Kovacic, agreed that the progress Slovenia had made was a "very good competitive achievement". While government efficiency remains level, the country has made an improvement in economic performance, and managers are more on a par with their European peers.
Kovacic specified that in the past four years, Slovenia had advanced in terms of international trade and prices, while it had fared worse in foreign investment, but it had made progress in economic efficiency.
"Slovenia's gap to the European competitive average (EU 15) has halved, and the optimistic scenario is that the country could achieve the EU-15 average within the next 15 years," Kovacic said.
The Global Competitiveness Report 2007-2008, which the World Economic Forum (WEF) compiles on a more long-term basis, shows a somewhat different picture, though.
"Slovenia's position in terms of long-term challenges can be compared to Estonia's, but we are still lagging behind it. Slovenia's problem remains a lack of market efficiency and technological gap," Stanovnik said.
"Slovenia places well in domestic economy, international trade and prices, while international investment, where Slovenia ranks 50th, remains an obstacle, just as it does employment, where Slovenia places around the 40th spot," Stanovnik said.
He maintains that government efficiency is poor in fiscal policy, while the welfare model is quite good, and the country ranks somewhere around 20th spot in public finances. He pointed to the problem of legislation governing the formation of new companies.
"Slovenia has strongly improved productivity and efficiency in companies, but standards and values remain problematic in that we remain closed to third-world economies," Kovacic said, adding that the reason was the small size of the economy and slow progress on the labour market.
Slovenia's competitiveness in terms of the use of information and telecommunication technologies is the market environment is improving, but quite the opposite holds true for institutional environment and regulatory framework.
Stanovnik also highlighted the lack of cooperation between universities and industry and red tape encumbering such cooperation.
Kovacic meanwhile noted that Slovenia was just not open enough to foreign direct investment and that government policies failed to respond promptly to changes.
The biggest barriers to business as pointed out by the IMD are tax regulation, inefficient government bureaucracy and underdeveloped infrastructure for some companies, plus companies' access to finance.
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