Integration of Slovenia into EU and global industrial networks: review of existing evidence

Slovenia is a small economy, which is somehow "condemned" to be open and highly internationalised. Relatively high shares of exports and imports in GDP indicate that the economy is highly dependent on foreign markets and inputs. This orientation is additionally strengthened by the final stage of the transition process and accession to the EU, both meaning definite opening of the economy and its integration into EU and global economy. Internationalisation of operations is, therefore, increasingly becoming a critical factor for creating and stimulating a competitive corporate sector in Slovenia. To strengthen the internationalisation processes, the policy of internationalisation should be based on the following: (i) lifting barriers to internationalisation; (ii) taking the actual needs of companies as a starting point; (iii) flexibility, transparency and the long-term perspective; (iv) adaptability and a re-examination of policy; and (v) a holistic concept of internationalisation. Increasingly important aspects of internationalisation are inward and outward FDI. The paper review the existing evidence on the internationalisation of Slovenian economy in all the various modes. The paper is composed of three parts. In the first part the scale and dynamics of industry integration of Slovenia into EU/global industrial networks by the way of foreign trade, outward and inward processing trade (OPT) and subcontracting and FDI is given. The second part analyses the integration of Slovenian car components industry in international industrial networks, and the third part concentrates on the motivation and strategies of foreign investors in Slovenia and Slovenian investors abroad

Nature and determinants of productivity growth of foreign subsidiaries in Central and East European countries

The paper examines the determinants of productivity growth in foreign manufacturing subsidiaries in five Central and East European (CEE) countries by analysing patterns of control, nature of firms' capabilities and firms' market orientation. Building on the so called 'developmental subsidiaries' perspective we show that productivity growth is determined jointly by corporate governance, production capability and market orientation variables. CEE subsidiaries have relatively strong autonomy over control of their business functions, but within a dominantly production oriented mandate. Majority foreign equity share has a significant and positive impact on subsidiaries' productivity growth. These results present very strong regional characteristic

Performance after mass privatisation : the case of Slovenia

Initial ownership structures resulting from the mass privatisation programme were intended as transitional, whereas optimal would be set up gradually and would result from secondary transactions. Therefore, mass privatisation is typically considered successful if secondary transactions lead to improved ownership, in particular, with emergence of strategic investors. If this approach is correct, positive effects of mass privatisation are thus not shown only by companies remaining in control of initial owners but mostly by the companies that have already gone through secondary privatisation. Accordingly, the success of secondary sales is to be evaluated by how successfully companies perform after the sale to new owners. This paper attempts to verify empirically those assumptions. The econometric analysis of panel data, after correcting for a selection bias, shows that TFP (total factor productivity) growth is highest in public companies. In addition we found that the secondary privatisation has had practically no positive effect on economic efficiency in the period 1995-99. We interpret these results as supporting evidence for the theoretical approach, which argues that the impact of strategic investors on performance may be ambiguous and that the quality of the capital market institutions is more important than ownership effects. The former creates incentives for performance by increasing the cost of expropriation of minority shareholders

Productivity growth and functional upgrading in foreign subsidiaries in the Slovenian manufacturing sector

The paper discusses the determinants of productivity growth in manufacturing foreign subsidiaries in Slovenia. Special attention is given to the impact of control pattern. Using the standard growth accounting approach we show that productivity growth is significantly and positively correlated with the level of foreign parent companies' control of marketing and strategic business functions. Larger subsidiaries and subsidiaries with higher exports to sales ratio also experience higher changes in the productivity level. Subsidiaries in high technology intensity sectors exhibit significantly lower change in productivity than subsidiaries in other sectors

FDI in hot labour markets: The implications of the war for talent

This paper highlights an inherent contradiction that exists within investment promotion activities in rich countries. Since the financial crisis, many inward investment agencies have shifted their activities from job creation per se to seeking to attract investment in high-tech activities. Such knowledge-intensive sectors are engaged in what has become referred to as “the war for talent”, so locations need to understand their value proposition to firms, especially where labour is tight. This paper explores the implications of this, in terms of the impact on employment and earnings of high skilled labour. We show that, because skill shortages already exist in many of these sectors, seeking to attract inward investment in these sectors simply causes the earnings of such workers to be bid up, and employment in the incumbent sector to fall. We highlight the over-riding importance that firms place on the availability of skilled labour when determining locations, and how policies which promote labour market flexibility, particularly through investment in skills to address skill shortages, can significantly mitigate the adverse effects, which tend to be more keenly felt in poorer regions of Europe where skilled labour is in even shorter supply

New forms of equity investment by Yugoslav firms in developing countries

Contribution to the project: New forms of investment in developing countries - phase I