The Automotive Industry in the Slovak Republic

This paper analyzes recent automotive investment in the Slovak Republic and shows how the development of the automotive industry has influenced growth in productivity and output in the broader economy. The study also discusses the motivations for automotive investment, with the country evolving from a relative laggard in reform implementation and foreign direct investment in the late 1990s to one of the region's top performers and one of the fastest-growing economies. It is argued that strong reform implementation, together with continued and credible commitment to reforms, were both preconditions for attracting automotive investments and the key factors that enabled these investments to flourish. The reform efforts were made possible by strong political consensus on accelerating European Union (EU) accession and boosting living standards. Taking into account the specificity of the industry, other aspects related to factor endowments have also played a role. Generous investment incentives appear to have played an important role in swaying foreign investors in selecting the Slovak Republic within the broader region of central Europe. Once investment in automotive production started, it contributed to additional investment by suppliers that has helped generate locally owned suppliers. These, in turn, are beginning to supply car producers in neighboring countries. All told, the full impact of the original automotive investment will be felt only over several years, but even in the early years it has been substantial. With output at the existing three producers set to reach capacity only by 2010, the impact is likely to be more substantial still.

Bibliographic Details

Main Authors:	Jakubiak, Malgorzata, Kolesar, Peter, Izvorski, Ivailo, Kurekova, Lucia
Format:	Working Paper biblioteca
Language:	English en_US
Published:	World Bank, Washington, DC 2008
Subjects:	ACCESSIBILITY, AIRPORT, ASYMMETRIC INFORMATION, AUTO INDUSTRY, AUTOMOBILE, AUTOMOBILE PRODUCTION, AUTOMOBILES, AUTOMOTIVE INDUSTRY, AUTOMOTIVE SECTOR, BANKING SECTOR, BANKING SECTOR REFORM, BANKING SYSTEM, BIDDING, BORROWING, BUS, BUSES, BUSINESS ENVIRONMENT, CAPITAL INVESTMENT, CAR, CAR INDUSTRY, CAR MANUFACTURERS, CARPENTERS, CARS, CENTRAL BANK, CITY TRANSPORT, CLIMATE CHANGE, COMMERCIAL BANKS, COUNTRY INVESTOR, CREDIBILITY, CRISES, CURRENCY, CURRENCY DEPRECIATION, DEMOCRACY, DEMOGRAPHIC, DEPOSIT, DEPOSIT RATES, DIVISION OF LABOR, DOMESTIC COMPETITION, DOMESTIC ECONOMY, DOMESTIC INVESTORS, DOMESTIC MARKET, ECONOMIC DEVELOPMENT, ECONOMIC GROWTH, ECONOMIC PERFORMANCE, ECONOMIC POLICIES, ECONOMIC REFORM, ECONOMIC REFORMS, ECONOMICS, EMERGING MARKETS, EMPLOYMENT, EXCHANGE RATE, EXPORTER, EXTERNAL DEBT, EXTERNAL TRADE, EXTERNALITIES, FINANCIAL BENEFITS, FINANCIAL CRISES, FINANCIAL INCENTIVES, FINANCIAL INSTITUTIONS, FINANCIAL MARKET, FINANCIAL SECTOR, FINANCIAL SYSTEM, FISCAL DEFICIT, FISCAL POLICIES, FLAT RATE, FOREIGN COMPANIES, FOREIGN DEBT, FOREIGN DIRECT INVESTMENT, FOREIGN INVESTMENT, FOREIGN INVESTMENTS, FOREIGN INVESTOR, FOREIGN INVESTORS, FOREIGN OWNERSHIP, FREE TRADE, FREE TRADE AGREEMENT, GLOBAL ECONOMY, GOVERNMENT POLICY, GOVERNMENT SUBSIDIES, HEAVY TRUCKS, HIGH UNEMPLOYMENT, HIGHWAY, HIGHWAY CONSTRUCTION, HOST ECONOMY, HOST GOVERNMENT, HUMAN CAPITAL, INCOME, INCOME TAX, INCOME TAX RATE, INDEBTEDNESS, INDIVIDUAL INVESTORS, INFLATION, INFORMATION SERVICE, INFRASTRUCTURE DEVELOPMENT, INNOVATION, INTERNATIONAL BANK, INTERNATIONAL DEVELOPMENT, INTERNATIONAL FINANCE, INVESTING, INVESTMENT CLIMATE, INVESTMENT DECISIONS, INVESTMENT ENVIRONMENT, INVESTMENT INCENTIVES, INVESTMENT PROJECTS, INVESTOR PERSPECTIVE, JOB CREATION, JOINT VENTURE, LABOR COSTS, LABOR DISPUTES, LABOR FORCE, LABOR MARKET, LABOR MIGRATION, LABOR MOBILITY, LABOR PRODUCTIVITY, LABOR SHORTAGES, LIVING STANDARD, LIVING STANDARDS, LOCAL INFRASTRUCTURE, LOCAL MARKET, LOCAL MARKETS, LOCOMOTIVE, LORRY DRIVERS, MACROECONOMIC POLICIES, MANUFACTURING INDUSTRY, MARKET ECONOMY, MARKET FAILURE, MARKET REFORMS, MARKET TURNOVER, MATHEMATICS, MOBILITY, MONETARY FUND, MORAL HAZARD, MOTOR VEHICLE, MOTOR VEHICLE INDUSTRY, MOTOR VEHICLES, NATIONAL CURRENCIES, NEW MARKETS, ORGANIZED CRIME, OUTPUT, PARENT COMPANY, PENSION, PENSION REFORM, PENSION SYSTEM, PENSIONERS, PENSIONS, PERSONAL INCOME, PORTFOLIO, PRIVATIZATION, PRODUCTION PROCESS, PRODUCTIVITY, PRODUCTIVITY GROWTH, PROFITABILITY, PUBLIC CRITICISM, PUBLIC FINANCE, PUBLIC FINANCES, PUBLIC FUNDS, PUBLIC PERCEPTION, RAILWAY, RAPID EXPANSION, RAPID GROWTH, REAL WAGES, REFERENDUM, RETURN, ROAD, SAFETY, SECURITIES, SECURITIES MARKET, SECURITIES MARKETS, SECURITY COSTS, SINGLE MARKET, SKILLED LABOR, SOCIAL ISSUE, SOCIAL PROTECTION, START UP CAPITAL, STATEMENT, STRATEGIC INVESTOR, SUPPLIERS, TAX, TAX BREAKS, TAX CONCESSIONS, TAX EXEMPTIONS, TAX INCENTIVES, TAX RATE, TAX RATES, TAX SYSTEM, TOP MANAGEMENT, TRANSITION COUNTRIES, TRANSPARENCY, TRANSPORT COSTS, TRANSPORT EQUIPMENT, TRANSPORTATION, TURNOVER, UNEMPLOYED, UNEMPLOYMENT, UNEMPLOYMENT RATE, UNEMPLOYMENT RATES, WAGE DIFFERENTIALS, WAGE INCREASES,
Online Access:	http://documents.worldbank.org/curated/en/239331468100744815/The-automotive-industry-in-the-Slovak-Republic-recent-developments-and-impact-on-growth http://hdl.handle.net/10986/28010
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