Business Competitiveness after Euro Adoption in Slovakia

Slovak enterprises recorded significant worsening of economic and financial indicators in the time after euro adoption. Dramatic changes in the results of non-financial corporations were observed in most of the EU countries. The main driving factor was a drop in global demand. Some indicators suggest that the adoption of the euro and consequent effective exchange rate appreciation could have an additional negative effect on selected services. Decrease in price and cost competitiveness was only temporary. Tradable sector represented mainly by manufacturing seems to be sufficiently competitive. With gradual recovery of the global economy we can see a growing importance of previously identified competitiveness factors: support of research and development, education and innovations.business competitiveness, impact of euro adoption

Competitiveness Factors of Slovak Companies

This paper examines factors affecting the competitiveness of leading Slovak companies, using results obtained through a questionnaire survey. The results imply that companies are aware of the key role of consumers. By putting emphasis on production modernisation and extensive use of information and communication technologies, the companies are successful in placing their products on foreign markets, but the final customers are beyond their reach. The results confirm that the most important factors of competitiveness are intra-company factors, above all company management and cost reduction. Other factors considered to have a strong impact are the EU membership of Slovakia and energy costs. The planned adoption of the euro in Slovakia was seen as increasing competitiveness. Companies are starting to realise the need for transition to a higher level of competitiveness, one based on innovation. Among the main threats to competitiveness is the potential exacerbation of labour market imbalances.company competitiveness, SWOT analysis, questionnaire survey

EIB Working Paper 2021/06 - Efficiency and effectiveness of the COVID-19 government support

We utilize several unique firm-level datasets in order to assess the efficiency and effectiveness of the government support aiming to curb the economic consequences of the coronavirus (COVID- 19) pandemic. The results, drawing on the experience of a small open European country (Slovakia), suggest the distributed COVID-19 subsidies save non-negligible number of jobs and sustain economic activity during the first wave of the pandemic. General distribution rules designed on the fly may bring close to optimal results, as relatively more productive, privately owned, foreign-demand oriented firms are prioritized and firms with a higher environmental footprint or zombie firms record a relatively lower chance of obtaining government funding. By assuming constant cost elasticities to sales, we show that the pandemic deteriorates strongly firm profits and increases significantly the share of illiquid and insolvent firms. Government wage subsidies somewhat mitigate firm losses and have statistically significant effect, but relatively mild compared to the size of the economic shock. Our estimates also confirm that larger firms, receiving smaller relative size of the support, have more space to cover their additional liquidity needs by increasing trade liabilities or liabilities to affiliated entities, while SMEs face higher risk of insolvencies

Welfare in Slovakia and the EU — an alternative to GDP per capita

GDP per capita is used as the basic measure of economic development and prosperity across the world. However, it is a limited measure of living standards, focussed on capturing changes in economic output per person and neglecting many things central to quality of life. Several alternative approaches to assessing quality of life have been proposed such as the OECD Better Life Index (2017), the UN Human Development Index (HDI), or Gross National Happiness. One notable contribution is the consumption equivalent welfare measure introduced by Jones and Klenow (2016). Our results from using this measure suggest that the quality of life in most EU countries is higher than suggested by GDP per capita relative to the U.S. The primary reasons for this are that, particularly compared to the U.S., countries in the EU tend to have lower income inequality and longer life expectancy. Implementing this measure for Slovakia, our results indicate that relative welfare is approximately 10 percentage points higher in Slovakia than GDP per capita would suggest. In the medium run, consumption equivalent welfare in Slovakia grew faster than income from pre-crisis levels. Improvements in the quality of living in Slovakia over time have been driven by an increase in life expectancy and consumption, as well as consistently low levels of income inequality. Nevertheless, living standards in Slovakia are still low in comparison to advanced EU economies and the U.S. Lower life expectancy, which reflects the quality of health of the population, accounts for most of the difference in welfare in comparison to these advanced economies

The Effects of euro Adoption on the Slovak Economy

In this study we assess the effects of euro adoption from an economic perspective. The benefits and disadvantages of Slovak entry to the euro area were discussed already when the euro adoption strategy was adopted. This analysis utilizes the latest information, using the set euro adoption date and the chosen euro adoption scenario. We attempt to quantify the most important effects, so that the costs and benefits can be compared. The costs and risks related to the euro area entry will depend on economic conditions and policies. Therefore we analyze the economic policies, which should support euro adoption, the issues of optimal timing of euro area entry and the impacts of euro adoption on citizens, businesses and the state administration.

Micro-based evidence of EU competitiveness: The CompNet Database. National Bank of Belgium Working Paper No. 253, March 2014

Drawing from confidential firm-level balance sheets in 11 European countries, the paper presents a novel sectoral database of comparable productivity indicators built by members of the Competitiveness Research Network (CompNet) using a newly developed research infrastructure. Beyond aggregate information available from industry statistics of Eurostat or EU KLEMS, the paper provides information on the distribution of firms across several dimensions related to competitiveness, e.g. productivity and size. The database comprises so far 11 countries, with information for 58 sectors over the period 1995-2011. The paper documents the development of the new research infrastructure, the construction of the database, and shows some preliminary results. Among them, it shows that there is large heterogeneity in terms of firm productivity or size within narrowly defined industries in all countries. Productivity, and above all, size distribution are very skewed across countries, with a thick left-tail of low productive firms. Moreover, firms at both ends of the distribution show very different dynamics in terms of productivity and unit labour costs. Within-sector heterogeneity and productivity dispersion are positively correlated to aggregate productivity given the possibility of reallocating resources from less to more productive firms. To this extent, we show how allocative efficiency varies across countries, and more interestingly, over different periods of time. Finally, we apply the new database to illustrate the importance of productivity dispersion to explain aggregate trade results