20240513-IMF-Republic_of_Slovenia_Selected_Issues_37页_5mb

Summary of Selected Issues Paper on Boosting Productivity in Slovenia

Background:

• Slovenia achieved significant income convergence with the EU before the Global Financial Crisis (GFC), but post-GFC growth slowed.
• Boosting productivity is critical for accelerating growth recovery and convergence, driven by factors including investment, labor market, innovation, and institutional reforms.

Key Findings:

• Growth Composition: Key drivers shifted post-GFC from capital accumulation/TFP to labor’s contribution, while private investment declined.
• Productivity Trends: TFP growth slowed (similar to peers), constrained by low capital intensity, limited innovation, and structural rigidities.
• Firm-Level Drivers: Smaller firms lag in productivity, though SMEs are increasingly innovative. Leverage positively impacts growth at low-to-moderate levels.
• Innovation & Investment: Public and private investment gaps exist, hindering physical and technological upgrading. Infrastructure adequacy but limited R&D capacity.

Policy Recommendations:

• Innovation & Capital: Promote technology investment, patent filings, and green/digital transitions to build competitiveness.
• Regulatory Environment: Simplify entry, reduce labor/bureaucratic barriers, implement tax reforms, and ease informality to encourage dynamism.
• Labor & Skills: Enhance workforce-relevant training, address mismatches between education and market needs to better deploy skills.
• Capital Markets: Deepen equity financing, attract venture capital, and develop capital markets to support SMEs and innovative startups.
• Inequality & Institutions: Maintain high living standards through effective policies on gender equality, low inequality, and accessible public services.

Conclusions:
Slovenia faces challenges in deepening reforms, reducing barriers, boosting innovation, and enhancing capital deepening but retains strengths in education and human capital. Addressing these areas can improve productivity convergence with the EU.