| The Vienna Institute for International Economic Studies - WIIW |
ABSTRACT
After an introduction into the transformation processes in Slovenia, the reasons for the relatively modest FDI inflows are explained. The role of foreign investment enterprises (FIEs) in the Slovenian economy is discussed based on balance-sheet data. The comparison of FIEs and domestically owned enterprises does not leave much doubt that FIEs perform much better, not only in general but also with regard to the vast majority of manufacturing branches in which they are involved.
Analysis suggests six major areas in which FIEs show distinctively different operating indicators that might explain their superior performance. These areas are company size, level of capital intensity, structure of assets, level of export orientation, structure of financial sources and level of solvency. The most distinctive feature of FIEs in the Slovenian manufacturing sector is their superior size, measured by any indicator. This is important because size determines a number of company characteristics (such as production techniques, type of products, skill intensity, salary level, etc.), one of which is also higher capital intensity as the second distinctive feature of FIEs. The superior export orientation of FIEs can be attributed to the 'foreign ownership' factor itself, that is to the fact that a FIE is an integral part of an international corporate network.
Keywords: Slovenia, foreign direct investment, economic development, comparative advantages, industrial restructuring
JEL classification: D92, F21, L60, O11, O12, O16, O19, O52