The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.

Self-starter is falling behind

Slovenia was in economic pole position in eastern Europe when communism collapsed in 1990. But it has now fallen behind its neighbours, held back by lack of investment and political uncertainty in the former Yugoslavia. Many companies are 60% owned by management and employees, and often do not welcome outside investors. The investment companies formed to buy into privatization have disappointed, with few taking a positive approach. This could be starving Slovenia of much-needed funds. Gavin Gray reports

Slovenia is the most developed economy in eastern Europe, and provides perhaps the most interesting test of whether the region's industry can reorganize to survive the rigours of the free market. Unlike the rest of eastern Europe, Slovenia rejected the notion that multinational investment was a prerequisite for restructuring. Instead, employees and management were allowed to decide how their companies were privatized, and were allocated shares at big discounts. The government believed that restructuring and recapitalization should take place in the secondary market ­ with the employees and other domestic shareholders playing the leading role.

Yet the scheme remains incomplete, two and a half years after its formal launch. Evidence is growing that it was over-ambitious and that the after-effects could stifle growth, which fell from 5% in 1994 to 3.5% in 1995.

The decision to put employees at the centre of privatization reflects Slovenia's inheritance. The 1,500 factories being sold were not state-owned under communism; they operated instead under the Yugoslav system of self-management, which gave employees and management free rein in deciding how they were run. Many Slovenian companies obtained western technology through licensing agreements in the 1970s and 1980s, and by the end of the 1980s the EU was already the Slovenian republic's main export market.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree