ABSTRACT

All Central and East European countries in transition have experienced large political, economic and social changes in the recent past, though the extent and depth of the changes vary considerably among these countries. Thus, for example, Slovenia was a fairly well-developed market economy and had been moving toward a more pluralistic and civil society even prior to the actual transition. In other words, transition did not represent such a sharp discontinuity as it did in some other Central and East European countries. Although Slovenia shares some of the common traits of the transition process (privatisation, creation of a multi-party political system, initial drop in production, increase in unemployment), the causality differs somewhat. Thus, the economic downturn which occurred in 1991 following independence, was a consequence of the almost total rupture of trade with its important trading partners in the internal market, i.e. the republics of the former Yugoslav federation. This downturn was not a consequence of the transition process as such, though of course the transition process did contribute its ‘share’. Also, Slovenia did not experience a prolonged slump since, during the nineties, output decreased only in 1991 and 1992. According to the OECD survey of Slovenia (OECD, 1997), its per capita GDP is the highest among all European countries in transition, (in 1995 it amounted to some US$ 10,500 in purchasing power parities). Inflation has been tamed and is decreasing; in 1995 it reached the one digit range. Slovenia also has a fairly low level of public debt, amounting to some 35 per cent of GDP, and almost balanced public finances. Unfortunately, the country has experienced a large increase in unemployment and a sharp drop in labour force participation – due mostly to a massive exodus into retirement, mainly encouraged by favourable early retirement schemes.