2004 enlargement of the European Union
Slovakia
Economic impact
Since then, its economy has known some growth in general. As we know, Slovakia was confronted with some reforms between 1989 and 1993 (which was the year of its independence with Czech Republic). It enabled the two countries to withdraw from the socialist order which was about incoherence and imperfection. However, such reforms lead to the partition of the Slovak region. That is why, from the 1st of January 1993, Slovakia became independent. Until 1997, there was a lack of relation with some extern countries and the country had to finance its own resources and decided to call the IMF asking for help. Slovakia is one of the ten countries which entered the European Union in May 2004. We must not forget that since its entry, some direct impacts on growth factors have to be considered. If we take check on the Maastricht criteria, Copenhagen criteria, Europe agreement as well as assistance programs that intervene throughout the variables, it will have more or less a direct impact. If we take the Maastricht criteria, it should contribute positively to the growth. Besides, those criteria are not seen as a constraint for the countries. Besides, the result on economic growth will also highly depend on national actors’ behaviour and the capacity of decision-makers to cope with costs of those reforms..[1]
Economic growth
To carry on with its economic progress like this, before entering the European Union, Slovakia had an special economic system, at first, in a sense that the state remained dependent to others such as Czech Republic or Russia. Secondly, its industrial specialization became obsolete as well and its economy still relies on a few sectors only (notably the automotive sector). That is why, the country will have to change its approach. Skill shortages are also another problem that is to be pointed out which will have a negative effect on future investors. The country must invest in building skills of its workforce and its ability in adapting changes in the labor market because the tendency to automation is becoming high. It also must develop innovation capacities and adopt new technologies so that the population won’t lose their jobs among other aspects.
In 2017, Slovak’s growth mainly relied on labor-intensive segments such as automotive assembly. A development of the competitive manufacturing sector in automotive and electronics (representing a huge part of Slovak’s exported products) was noted thanks to foreign investments which had a positive impact on the Slovakian’s economy and productivity. However, as seen before, the fact that those industries could be automatized represents a real danger for the country. To be less dependent on automatization, the government has to continue enhancing the companies’ environment. Certain reforms should be taken into account, these are in progress on a juridical point of view even if the process remains long and tough. We must not forget that how more you spend in research and development, how more a country’s growth will be obvious. It also means that the cooperation with research & development companies should be reinforced as the link between companies and growth is really strong.[2] In that sense, the GDP has grown more notably since 2000 before experiencing a fall after the subprime crisis in 2008. The economic growth throughout the years (until 2008) can be explained by the previous structural reforms experienced by the country before its entrance in the European Union. After that period, the GDP came back on track thanks to its currency volatility and the trust put by the foreign investors [3].
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Public debt
In addition, public debt has decreased in proportion to Slovak’s GDP. In fact, public debt follows this trend :
| Year | Public debt |
|---|---|
| 2003 | 43.2% |
| 2004 | 41.7% |
| 2005 | 34.7% |
| 2006 | 31.4% |
| 2007 | 30.3% |
| 2008 | 28.6% |
| 2009 | 36.4% |
| 2010 | 41% |
| 2011 | 43.4% |
| 2012 | 51.8% |
| 2013 | 54.7% |
| 2014 | 53.6% |
| 2015 | 51.9% |
| 2016 | 52% |
| 2017 | 51,3% |
| 2018 | 49,4% |
| 2019 | 48% |
As we have seen it earlier, Slovakia has known an economic growth since its entry in the European Union. In the same way, living standards have also scored better since and public debt, as a proportion to Gross Domestic Product (GDP), has also fallen. The fact that public debt remains at that level means that it forces the government to have a balanced budget which would have an impact on variables such as less state expenditures or more taxes [4]. Indeed, the European Commission has spoken about the derogatory clause in the Stability and Growth Pact. That clause enables an easier coordination between budgetary policies whenever there is an economic recession. The activation of the clause general override allows to temporarily deviate from the adjustment path in view of the achievement of the medium-term budgetary objective, that would not jeopardize medium-term fiscal sustainability. It enables EU-member states to deviate from their budgetary obligations that would normally be applied. The Commission and the Council would then take the necessary measures to coordinate policies while respecting the pact [5]
Unemployment
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It is proved that since 2004 the unemployment rate has been steadily decreasing. In fact, the results show that in 2004 the unemployment rate was at 16 % and in 2022 it would be at 5,7%. We notice that there is a continual drop between 2012 and 2022.[6] The country faces structural problems, namely, long-term unemployment and low employment rates highlight the regional differences such as some marginalized communities, especially the Roma community counting for about 10% of the Slovak population [7] [8]. Besides, according to the OECD, the long-term risk of production automation affects low-skilled jobs based on the latest report which shows that currently nearly two-thirds of the employment remains in danger. Most Roma people live in poverty and face social exclusion in most aspects of their daily lives. Most of them are thus familiar with long-term unemployment and short life expectancy. Moreover, there is significant employment growth, due to investment inflows and strong expansion of the economy has led to labor shortages in some areas. Wages are increasing and inflation goes the same way considering the high request. The standard of living has improved over the years, almost all indicators of well-being have improved over the past 10 years but Slovakia is lagging in health areas. While overall poverty and inequality are scoring low, the majority of Roma in Slovakia, which accounts for about 10% of its population, are facing exclusion. Extreme social conditions, characterized by a very low employment rate, widespread poverty, and limited life expectancy. To improve the living standards of Roma, the government will need to set up systems that can improve the situation of Roma in Slovakia such as social, housing, education, and employme
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- ↑ Hapiot, A. (s.d.). Integration to the European Union and the transformation process of rules : The Case of Slovakia.. Retrieved on 04/15/2021
- ↑ OECD. (2019).OECD Economic Surveys Slovak Republic. Retrieved on 03/27/2021
- ↑ Sandschneider, E. (2014).Slovakia in the EU: An Unexpected Success Story. Retrieved on 04/15/2021
- ↑ Sandschneider, E. (2014). Slovakia in the EU: An Unexpected Success Story. Retrieved on 04/15/2021
- ↑ European Commission. (2020). Recommandation du Conseil concernant le programme national de réforme de la Slovaquie pour 2020 et portant avis du Conseil sur le programme de stabilité de la Slovaquie pour 2020. eur-lex.europa.eu (in French). Retrieved on 03/25/2021
- ↑ Statista (s.d.).Unemployment rate in Slovakia. Retrieved on 03/26/2021
- ↑ Kuchař P. & Vaska, L. (2013). Regional Aspects of Unemployment in the Czech Republic and Slovakia. Retrieved on 04/15/2021
- ↑ OECD. (2019) OECD Economic Slovakia Retrieved on 03/26/2021
