Economy - a historic overview

The reintroduction of an economy based on free enterprise has been a difficult process in Slovakia. Because much of the country’s industrialization took place during the Communist era, many Slovakian industries were inefficient and produced goods that were not competitive in the world market. To modernize these industries and retrain workers has required foreign investment, but this has been slow in coming, due in part to perceived political instability in the country. Compounding the problem of outmoded industry was the Czechoslovak government’s decision in the early 1990s to drastically reduce the country’s defense industry. The production of weapons and other military equipment had been based largely in Slovakia and had employed as much as 10 percent of the Slovak workforce in the 1980s. The reduction led to a decline in overall industrial production and a significant rise in unemployment.

The Slovak economy has improved somewhat in recent years. Between 1993 and 1994, gross domestic product grew by 4.3 percent, inflation fell from more than 20 percent to about 12 percent, and the budget deficit was brought under control. The pace of change remains slow, however. A fundamental part of the conversion to a market economy is the return of state-controlled enterprises to private ownership which has been marred by a non-transparent privatization process.

Foreign trade is important to Slovakia’s economy. In 1994 imports and exports each totaled more than $6 billion. Crude oil, natural gas, machinery, and transportation equipment are Slovakia’s main imports. Exports include machinery, chemicals, fuels, steel, and weapons. The Czech Republic, Slovakia’s main trading partner, supplies about 30 percent of Slovakia’s imports and purchases approximately 40 percent of its exports. Austria, Germany, and Russia are Slovakia’s other leading trade partners.

The currency of the Slovak Republic is the Euro (before January 1, 2009 it was the Koruna(Sk), or crown in English). Click here to see samples of the old currency

Slovakia is a member of the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (World Bank), as well as of the European Bank for Reconstruction and Development (EBRD). In October 1993 the Slovak government signed an association agreement with the European Union (EU), and in 1995 the country applied for EU and OECD membership.

Economic History

Slovakia, which until 1918, was known mostly under the name of "High Hungary" or "the Highlands", but also known under the Turkish name of "To’t vilajet ", is an ancient economic entity. As early as 100 B.C., in Bratislava, coins were struck under the name of "biateque." In Slovakia, the famous Roman inscription engraved on the Rock of Trencn dated 179 A.D. has been conserved and testifies to the long commercial tradition of its regions. For seven centuries, from 1335 to 1918, gold ducats from Kremnica were struck, using local gold, and were always of the same purity and weight.

In the fifteenth century, gold was extracted in Slovakia at the rate of 1000-1500 kilos per year which represented around 40% of the world production plus 10,000 kilos of silver, representing 30% of world production. Slovakia was, at the end of the fifteenth century and the beginning of the sixteenth century, the largest producer of copper in Europe. The mining and the metallurgical industries, were, for a long time, at quite a high level. In 1627, in Bansk tiavnica, gunpowder was used to extract minerals. Three hundred years after the creation of the Istropolitana Academy (founded in 1465 by Mathias Corvin), the first Academy of Mines and Forests in the world was created in Bansk tiavnica and in 1786, the first international association of scientists for the development of mines saw the light of day.

The development of the capitalist market in Hungary and the strong Hungarization which took place in the last decades of the 19th century and the beginning of the 20th century had a negative impact on the Slovak economy which made it lose its independence by integrating itself into the Hungarian economy. For more than 40 years, a disintegration and a brutal destruction of the political, cultural, social and economic life took place in Slovakia. During that period (around 1890), in the Administration of the "Comitats" and in Education, there were 1035 Slovaks for 7865 Hungarians in Slovakian cities. In the public administration, there were 1147 government workers, of which only 29 were Slovaks.

Emigration was the fate forced on the Slovakians who had to leave Slovakia. In the 1890s, there were four times more Slovakians in Budapest than the total population of Zilina. At that time, Budapest was the biggest Slovakian city. In the period from 1899-1913, 394,713 Slovakians emigrated to the United States. Today, almost two million Americans declare themselves to be of Slovakian origin.

After the creation of Czechoslovakia on October 28, 1918, and after six years of independence of the State of Slovakia (1939-1945), Slovakia, as of January 1, 1993, has begun to write its own economic history.