national system of innovation in slovenia - Mednarodni odnosi

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2. MACROECONOMIC PERFORMANCE AND FRAMEWORK
CONDITIONS FOR INNOVATION
2.1 Drivers of macro-economic growth
With stable and dynamic economic growth from 1997 to 2007 Slovenia constantly
decreased development gap compared to the EU. International trade (foreign demand
in particular) has been the major driver of economic growth and international
integration, while foreign direct investment that could potentially increase
productivity and technological upgrading remained modest and less important
than in other new EU member states (Table 2.2.1). 1 Economic crises has reduced
trade flows significantly and economic activity declined sharply in late 2008 and
2009 2 (Figure 2.1.1), which interrupted the implementation of the Slovenia’s Development
Strategy goals in the field of economic and social development (IMAD
2010). As for the non-achievement of the goals in R&D and innovation area, the
reasons go beyond the economic crisis alone.
The crisis almost wiped out progress in the field of economic and social development
resulting from strong GDP growth and rising employment in the period
of favourable economic trends. Slovenia failed to take advantage of those times for
radical changes to facilitate technological breakthroughs and sustainable development.
The crisis has exposed numerous structural weaknesses, particularly the
fact that Slovenia’s GDP growth is overly dependent on low-technology industries
and traditional services, which limit the competitive edge of its economy. A quick
return to the trajectory of economic recovery and improvement of the population’s
welfare is therefore a great challenge for Slovenia, especially as the economic
crisis severely affected the medium-term fiscal position and availability of sources
of finance, and as the level of potential GDP also dropped. Relatively low growth
of economic activity and employment in the coming years will be reflected in
modest growth in general government revenue, which will make the consolidation
of public finances even harder.
1 With 29 % share of inward FDI stock in GDP Slovenia lags behind EU average (35 %) and also
other new EU member states (UNCTAD 2009).
2 Global trade declined in 2009, and Slovenia’s exports were down 15 %. The largest decline in
domestic demand was recorded by investment, at 30 %. Private consumption also declined,
but government spending increased.