Slovakia

Slovakia ties with Argentina for 31st place, with its Comparative Liveability (48th) reduced by the perception of little freedom of choice. It scores much better on Economic Competitiveness, achieving 22nd place due to impressive education and openness ratings.

Although Slovakia missed out on the first big wave of foreign direct investment inflow to Central Europe in the 1990s due to a semi-autocratic regime, the coalition that came into power in 1998 has made up for the delay by boosting the country’s Economic Competitiveness through effective governance and a high quality of market-oriented regulation.

Examples of these economic policies include a low flat tax (19%), flexible labour regulations and the low cost of starting a business. Social security, welfare, healthcare and pension schemes have also been substantially reformed. These measures have significantly reduced labour costs, making Slovakia one of Europe’s most attractive economies. Foreign investment now exceeds $30 billion a year, contributing to a high openness score. Foreign investment is especially robust in the automobile sector: Volkswagen, PSA (Peugeut/Citroen) and Kia produce around 600,000 cars per year combined.

Exports show a similar trend and are almost four times higher in 2008 than they were a decade earlier. The sum of foreign trade and foreign investment currently amounts to almost 170% of the country’s GDP. This is partly a result of the regional trade agreements into which Slovakia has entered, particularly EU membership.

Outstanding mass education levels support the country’s economic dynamism. The average secondary education per worker is over five years. The large number of researchers in the workforce suggests that highly-skilled human capital is abundant as well.

In line with Slovakia’s rising income levels and economic dynamism, social challenges are moderate, at least by Eastern European standards. The problems caused by the cold climate will become less important as incomes continue to rise and more people have access to good housing and affordable heating. Community and family life concerns are less acute in Slovakia than in other countries in the region.

Still, the problems of pessimism that exist in many Eastern European countries are prevalent here. Perhaps this reflects ‘transition shock’, particularly among the elderly. Less than half^g of the population believes that they can get ahead by working hard, and a mere 54%^g are satisfied with the freedom to choose what to do in life, according to the Gallup World Poll. Dissatisfaction with personal health is similarly high -- an indicator which is at odds with Slovaks’ relatively favourable average health-adjusted life expectancy.

Environmental indicators are also weak. A low score on abundance of nature is amplified by dissatisfaction with environmental protection efforts and the air quality.