Publication: The Automotive Industry in the Slovak Republic: Recent Developments and Impact on Growth
Date
2008
ISSN
Published
2008
Author(s)
Jakubiak, Malgorzata
Kolesar, Peter
Izvorski, Ivailo
Kurekova, Lucia
Abstract
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.
Citation
“Jakubiak, Malgorzata; Kolesar, Peter; Izvorski, Ivailo; Kurekova, Lucia. 2008. The Automotive Industry in the Slovak Republic : Recent Developments and Impact on Growth. Commission on Growth and Development Working Paper;No. 29. © World Bank, Washington, DC. http://openknowledge.worldbank.org/handle/10986/28010?show=full License: CC BY 3.0 IGO.”