development report 2012 - UMAR

28 Development Report 2012
Development by the priorities of SDS – A competitive economy and faster economic growth
Figure 9: The share of high-tech products 1 in goods exports
In %
40
35
30
25
20
15
10
5
2000
2001
Czech R. Hungary Slovakia
Slovenia
EU
2002
2003
2004
Source: Handbook of Statistics 2007–2008 (United Nations), 2007; United Nations
Commodity Trade Statistics Database, 2011; Calculations by IMAD.
Note: 1
Product classification by technological intensity is based on the UN
methodology (Trade and Development Report, 2002).
After a decline in the early stages of the economic crisis
(2010 and 2011), the level of internationalisation of
Slovenia’s economy again increased; however, foreign
direct investment has remained at a level that is too
low to accelerate economic restructuring and increase
productivity. In the circumstances of a considerable
decline in domestic consumption, the average share of
international trade, in comparison with GDP, following
the decline in 2009 rose for the second consecutive
year last year 35 . It was a result of the recovery in foreign
demand and the growth of foreign trade prices and, at
the same time, a further decline in domestic demand.
In the past two years and in comparison with 2008, the
intensity of Slovenia’s foreign trade relations grew above
the EU average and more than in the majority of small
EU economies. However, this was not due to an increase
in Slovenia’s export competitiveness since the country’s
foreign market shares shrunk during this period,
but instead due to the fact that exports are gaining
importance as domestic demand slumps. As regards
foreign direct investment (FDI), in 2010, we witnessed
the first signs its recovery as inward FDI began to rise
after a decline in the previous year and outward FDI
continued to decline. FDI flows and changes in FDI stock
show a continued increase in inward FDI for 2011, while
disinvestment on the side of inward FDI has practically
come to a halt 36 . The increase in FDI inflows, in the form
of both equity capital and intracompany lending to
Slovenian branches, and particularly the positive flow
of reinvested profits could represent a gradual return
of confidence for foreign parent companies in their
Slovenian branches. This is also indicated by the results
35
See indicator Share of exports and imports in relation to GDP.
36
See FDI indicator.
2005
2006
2007
2008
2009
2010
of surveys conducted in foreign branches in Slovenia
(Burger, Jaklič, Rojec, 2011). 37 Despite the positive
signals, however, FDI stock in Slovenia is too low to
significantly contribute to restructuring and improving
the competitiveness of the Slovenian economy. Slovenia
thus continues to be ranked among the EU Member
States with the lowest FDI stock when compared to its
GDP. FDI inflows also remain way below the highest 2007
and 2008 levels.
The share of the population engaged in entrepreneurial
activity has been on the decline ever since the onset of
the economic crisis. After the growth in the period of
favourable economic trends (2005–2008), early-stage
entrepreneurial activity 38 , which measures the share
of the population entering in entrepreneurial activity,
dropped to an all-time low during the period 2008–2011
(from 6.4% to 3.7% of the population aged 18–64).
During this three-year period, the share of nascent
entrepreneurs, i.e. those setting up a business or owning
a business for less than three months, declined. In 2011,
this has already resulted in the decline in the share of
new entrepreneurs (running their businesses from 3 to
42 months) which was at a relatively high level until 2010.
A decline in early-stage entrepreneurial activity is closely
connected with the economic crisis, as the data point to
a significant decline in entrepreneurial activity driven by
business opportunities. Business opportunities were the
main growth factor in entrepreneurial activity in the time
of favourable economic conditions. After an increase
in 2010, the share of necessity-driven nascent and new
entrepreneurs, which is relatively stable in the long term
and fluctuates from year to year, recorded a sharp decline
last year, which could be partly explained by a lower
number of persons eligible for self-employment subsidies
in 2011 (4,502 compared to 5,148 in 2010) even though
there was great interest in this self-employment measure
(Employment Service of the Republic of Slovenia, 2011).
However, it continues to represent a relatively small part
of early entrepreneurial activity. The decline in early-stage
entrepreneurial activity is accompanied by a decline in
overall entrepreneurial activity, which combines earlystage
and established entrepreneurship. The share of
established entrepreneurs (operating for more than 42
months) declined for the first time since the onset of
the economic crisis in 2010 and remained almost stable
in 2011. In 2008 and 2009, early-stage entrepreneurial
activity in Slovenia was above the average for those EU
Member States where data are available, and was below
the EU average for the second consecutive year in 2011.
In the majority of the EU Member States covered by the
survey, entrepreneurial activity has already recovered
(as a result of business opportunities identified) in the
37
It should also be noted that the survey was conducted in
September and October 2011, when economic forecasts for the
following year were more optimistic than at the beginning of
2012.
38
The data are taken from a research by the Global
Entrepreneurship Monitor (GEM). For more details see the
Entrepreneurial Activity indicator.