Electronic Library of Scientific Literature - © Academic Electronic Press


Volume 49 / No. 4 / 2001



Jaroslav NĚMEC

The paper responds to the attempts of various foreign authors (quoted in the paper) to explain the causes of the long lasting state of crisis in transforming countries (TCs) by reform policy errors. It proves that reforms that aimed predominantly at the change of the system of economics (privatisation and development of the capitalist market with its inevitable institutions), could not avoid the effects that appeared after these countries entered free markets. This entry inevitably provoked severe violation of internal balance in these economies. One could not fully overcome these unbalances as yet in any of these transforming countries, some of them, however, still have the chance to succeed in this. The prolonged crisis of the economy and society in all TCs is above all the expression of generated unbalance. In the paper the author at first tries to explain historic background of unbalance, describes its state and manifestation, and identifies the barriers that so far prevent to overcome this unbalance.

All TCs had for several decades specific market links among themselves and special links toward the other countries. In the first case an agreed (planned) co-operation prevailed. At this co-operation the exchange (sales) of goods was not limited by competition (principles of exchange in the so-called Comecon countries). That enabled to build up a certain production potential mutually influenced within Comecon. According to the potential and product growth, one generated in each of these countries resources for reproduction and further growth, final consumption increased (real level of revenues) and consumption covered through public funds (hospitals, schools cultural and government organisations, residential building fund etc.) increased too. The exchange with other countries (outside Comecon) was implemented in compliance with the usual market principles, e. g. under the condition of competition, and for market prices following the supply and demand rules. Comecon countries could purchase in these free markets only up to their proceeds from their own export sales (using convertible currency they earned by their exports). Different conditions of purchase (imports) forced Comecon countries to adjust sales conditions in domestic market, especially as the domestic demand for goods from free markets highly exceeded import possibilities (convertible currency reserves). One applied there sales for high prices, sales to predetermined subjects (to enterprises, organisations), free currency rationing etc. That created unbalance in exchange relations between all TCs and free markets. As long as government control of foreign exchange endured, this unbalance could not manifest itself. It existed as a latent one only. The unbalance manifested itself immediately after the abolition of the government regulation. The demand for the commodities imported from free market area at a given stock of convertible currencies inevitably exceeded the supply and gradually invoked the changes in the current exchange rates of domestic currencies towards convertible currencies. This invoked devaluation and led towards an abrupt increase of internal price levels (at the unchanged level of nominal incomes). That all has taken place in some countries spontaneously, in other countries at a predetermined devaluation rate. This resulted in the decrease of demand not only for the imported goods and services, but in the decrease of the total demand too. Devaluation adjusted imports to exports. In some countries (as for instance in the ČSFR) the adjustment was total, in other countries the adjustment has taken place only up to a bearable degree. In all countries, however, this adjustment was only temporary. In all cases, however, the overcoming or mitigation of foreign trade unbalance was made at the expense of internal balance. In most countries the demand slumped very deep under the level of supply. (The author specifies the differences in the demand slump in different countries by the structure of economy, co-operation links, various dependence on raw materials, and above all by different exports to free markets before the year 1990 and different abilities to flexible re-direction of exports to the new markets).

The decrease of demand led gradually to the reduction of supply down to the level of demand, which in turn meant a considerable part of idle enterprise capacities (production branches and the whole national production potential). After this reduction price movement stabilised in some TCs, which one evaluated as the recovery of market balance in spite of the high enterprise losses, increased unemployment and idle capacities, indebtedness and other features incompatible with the state of balance. The continuance of production at partially exploited capacities led to the marked deterioration of production economics; it resulted above all in the increase of the share of fixed costs in the unit of production. At the same time the costs of imported raw materials, energy, fuels and some parts of fixed capital continued to grow. Growing costs generated strong pressure to increase prices in all branches. When enterprises decided to increase prices, their chance to sell decreased. Some enterprises contrariwise accepted to carry on production even at the cost of losses. In SR one enforced prices that the author calls “prices of survival”. The author explains this situation that contravenes the principles of capitalist economy, by the state ownership of enterprises. This ownership of the state enabled temporarily to suffer the losses, and to prevent further unemployment increase. There was also the interest of managers to privatise these enterprises. At prices that balanced demand with supply over 51 per cent of enterprises landed in the loss as early as in the year 1991. The same share of enterprises carried on in loss production in the following years too. Only in the last year the share of deficit firms dropped under the 50 per cent level. Some of the enterprises ceased to exist; the others managed to overcome the problems. The author however points out that even a number of enterprises that achieve profitability and keep resources to pay operation costs (wages, raw materials, energy etc.) do not always cover full production costs. The coverage of using the fixed capital and its reproduction remains questionable. The author calls attention to the fact that after the rash changes of price levels the assessment of fixed capital purchased before the year 1991 did not change and thus depreciation charges remained at the same level. One considers these depreciation charges, which are included in the production costs, to represent the source of reproduction the original equipment. However, every unit purchased before the year 1991 for 1 million costs in 1994 double the sum and in the year 1997 almost three times the original price, while imported machines cost frequently even ten times the pre 1991 price. Taking into account this fact, it is obvious that all enterprises actually covered the consumption and reproduction of the fixed capital at least by two thirds from their profit and not from the depreciation. Should we reproduction investments withdrawn from the profit, recalculate into the costs (through appropriate level of depreciation), we might discover that only a minority of profit making enterprises could produce sources sufficient to reproduce fully their fixed capital. This means that only in a minority of firms gradual de-capitalisation did not/does not occur.

The author lacked relevant data on losses and profitability on enterprises in other TCs, assumes however similar state as described above. Information on the production decrease, unemployment rate, amount of credits, volume of budget deficits, inflation rates, repeated devaluation as well as further features signalling low exploitation degree of production potential witnesses the fact that production with similar loss features and similar de-capitalisation rate occur elsewhere too. Where enterprise lacks sources to pay wages, as is currently the case in various TCs, one cannot expect it has sources for reproduction.

Resource deficit that do not allow full reproduction of production capital is not the only factor caused by the loss of markets and the decrease of production. As already mentioned, the whole sphere of consumption supplied through schools, hospitals, state or co-operative housing funds, theatres and other cultural or science institutions and the whole area of infra-structure – roads, railways, energy and district heating lines etc. developed hither-to proportionally to the growth of product. All that was built and maintained by enterprise resources either through taxes or directly by centralised resources. These means (granted later from state budgets only) did not drop nominally too much, similarly as population incomes. Devaluation and price increases markedly decreased their purchasing power. They were then sufficient to cover operation costs only; at the same time these costs rapidly decreased. These means, however, were not sufficient anywhere for covering overall maintenance and reproduction. As public funds were available, it was impossible to stop their usage or otherwise reduce their exploitation to the level of resources able to cover maintenance and reproduction (as immediately happened in the case of final consumption dependent directly on individual incomes).

From the description of the situation that ensued in all TCs follows that only the part of consumption accommodated by the incomes of enterprises, organisations or families adjusted itself to the sharp decline of resource generation. The part of consumption linked to the fixed capital, firm public funds and infrastructure did not adapt itself so flexibly to the change of resource generation (even here, however, some reduction has taken place); this apparently was impossible. The overall consumption thus exceeded the declined resource generation and economy entered long lasting unbalance. To overcome this unbalance was, and is, possible only by the

The first course assumes the acceleration of resource generation; the second one supposes a painful process of deteriorating consumption standards achieved so far and the dissolution of some part of generated material and also spiritual wealth of the nation. The policy of individual countries oscillated within these two dilemmas; while the economy condition once pushed the country towards the attempts to expand, the other time again forced to restrict and implement various reductions. The problem lies in the fact that consumption reduction always again and again reduces the existing market and thus the domestic space for supply growth. As (and as long as) its loss is not fully compensated by exports, there always arises a new pressure to decrease production, to lay off labour force, new decline of demand then appears etc. Expansion is possible only as far as an unbearable deficit in foreign exchange appears. Expansion is, however, dependent on resources that could enable restructuring and modernisation, which in turn is usually linked with credits. These again, as long as they did not provoke the acceleration in resource generation (that was the usual case) – loaded heavily the payment balance and supported further devaluation of currency with all accompanying features. Confronting both courses one finds out that without the accelerated resource generation the turning point in economy is impossible. The question is whether one can reach it even before the restoration of balance or if the balance restoration is a condition of the acceleration in resource generation. The author is sure that the key to solve the situation is the acceleration resource generation still at the unbalance state. The opposite orientation – e. g. to restore balance first and only then to establish an accelerated growth can lead towards chronic unbalance only. This is the situation of various underdeveloped countries permanently dependent on the external resources.

Considering the possibilities of an accelerated generation of resources lead the author to analyse the situation of enterprises and enterprising environment after privatisation and to the evaluation of privatisation itself. The last part of the paper is dedicated to this problem. It concentrates there to the question why the ownership change has not manifested itself more profoundly in positive changes in more efficient management, and why expected changes in structure did not appear. One further asks why new owners were unable so far to compensate the loss of foreign markets, have not made up for losses etc. The author demonstrates that the main cause was not, as many quoted authors believe, the privatisation method that was used. He admits that privatising methods influenced an enterprising environment to a certain extent, the decisive role, however, played the situation in privatised enterprises. New owners acquired ownership rights mostly to the high losing and indebted enterprises, which were unable to restore production profitability without the compensation of new markets. The costs with privatisation, with the price of enterprises and credits further deteriorated the situation of enterprises. The owners, having found they have no chance to overcome losses of their privatised enterprises, oriented themselves at the exploitation of property rights they gained through privatisation. Here notorious practices begin at the law’s edge or even confronting the law. This process of “rent seeking” still continues; at the same time, however, the cleanup of ownership conditions goes on and the number of enterprises that achieved good position on the new foreign markets grows. These enterprises are able to reproduce capital from their own resources begin to strengthen domestic market too and thus help to restore of the overall balance of national economies. This, for the moment, is the case of only few TCs. It can be, however a model case for other countries too.



This paper employs data from the Russian Longitudinal Monitoring Survey and Slovak Microcensus to investigate human capital determinants of wage and employment changes from 1992 to 1996. We investigate how returns to schooling are changing over the transformation period in these two countries.

Both countries, Russia and Slovakia, although belonging to the group of transitional economies, are very different. They can be considered to be representatives of two types of transitional economies. Slovakia – a small open economy – ranks among the Central European countries which seem to be more advanced in economic terms, facing a perspective of becoming in short or medium-term members of an enlarged European Union. Russia, on the other side, is the largest among Eastern European transition economies, characterized by persisting rigidities, a huge share of informal sector, low rate of registered unemployment, serious problems with wage arrears, etc. However, the differences at macroeconomic level do not automatically imply that the underlying labor market processes at the level of individuals have to be different, too. We would like to show that there are certain tendencies common for all the transitional economies, whatever their size or location, or other characteristics are.

The evidence for Russia indicates that unconstrained wage setting shifted returns in favor of more educated individuals at the beginning of economic reforms (1992– 1994). But the consequent structural changes along with devaluation of some skills and reduction of supply of skilled jobs caused the rates of return to schooling to decline. The returns to experience also tend to decline substantially over the transformation period. Compared with workers in state-owned and privatized companies, workers from new private firms have greater returns to schooling and smaller returns to experience. This pattern is different in Slovakia, where state-owned firms evaluate education most compared to private firms and foreign firms, while foreign firms tend to evaluate experience and managerial occupations more than the other two categories of firms. We also find robust evidence of a strong impact of firm-specific and regional characteristics on wages in Russia. Among other results, higher education tends to reduce the probability of exit from employment and duration of unemployment. We also show that sample selection bias may play a role in the evaluation of the results, as the Heckman correction procedure increases the magnitude for the coefficients of interest (schooling, education, experience, age and gender) in both countries.


Vladimír BALÁŽ – Allan M. WILLIAMS

This paper analyses process of internal migration in transition countries Central Europe and Slovakia in particular. A model based on several thousands particular regional data examines relation between basic pull/push migration factors (investment, housing, income, unemployment and natural change in po-pulation) and internal migration rates in Slovakia in 1985–1999. While these factors fitted well for period 1985– 1989, they explanation power was significantly lower for periods of early and late transition (1990–1994 and 1995–1999). This paradox was likely to be explained via dismantling communist economic institutions in early transition period and lagging introduction of market institutions in Slovakia. Hungary seemed to do better and accounted for better explanation power of the model. Last part of the paper provides for international comparisons of internal migration in transition countries and advanced economies. Importance of market institutions (investment, housing and labour markets) for population mobility is discussed further.



The purpose of the paper is to broaden the view on the role of the art and science in marketing discipline. This paper traces the development of the art versus science debate, discusses the pros and contras of various scientific approaches. It commences by setting out an oversimplified three-stage model of the “art or science” controversy, continues with an assessment of the outcomes, implications and concludes by offering some options, that are available to academic marketers.

Marketing in Europe is regarded as a special function and section od the theory of enterprise economics, whereas in Anglo-Saxon countries it is considered to be economic discipline sui generis. The potential object of research includes social life as a whole with all types of enterprises, and human being in the centre – that means that the theory of enterprise economics and marketing appear to be in a certain sense a relation against other disciplines. The problem of whether division into individual disciplines, or admissibility of interdisciplinary subjects (such as marketing) are meaningful has been often discussed since the 1960s. The complexity of the subject marketing brings about the necessity of “borrowing from other sciences, and this cannot be avoided.

The “art versus science” confrontation was never a straightforward, head-to-head contest. At each stage od the debate, other marketing considerations interposed themselves and to some extent succeeded in shaping the trajectory of the dispute. In the very early stage, for instance, the debate was not about art or science as such, but about academic delusions and attempts to shake off marketing´s negative “salesperson image”, about the abandonment of its intuitive style for a more professional, progressive ethos. Logically, the second great phase of the debate was ostensibly fought on philosophical terrain – realism versus relativism etc. – but it was actually about the legitimacy or otherwise of diverse, mainly qualitative, alternative research methodologies, proposed by a younger generation of marketing intellectuals. Somewhat paradoxically it could be concluded that the great art – science debate never actually took place – the controversy was always about “marketing: science or non-science?”. Art never came into it. Not a single person in the entire history of the debate attempted to make a case for marketing as an “art”.

In a paradoxical marketing milieu where organizations are increasingly exhorted to be both global and local, centralized and decentralized, large and small, and planned yet flexible, and are expected to serve mass and niche markets, with standardized and customized products, at premium and penetration prices, through restricted and extensive distribution networks, and supported by national yet targeted promotional campaigns, it is not surprising that the traditional, linear, step-by-step marketing model of analysis, planning, implementation and control no longer seems applicable and appropriate.

This paper, it must be emphasised, does not claim to be the last word on art or science debate. Nevertheless, it does try to raise a number of significant topics, which warrant careful consideration – especially in these times of millennial tension. There may be more overlapping in marketing as a science, as an art and last but not least as a technique.

Hardly someone would not accept the contention that marketing is essentially an applied discipline, but it is undeniable that 40–50 years ago, some of the most enthusiastic contributors to academic marketing journals were practitioners.

If, in sum, marketing is to move forward conceptually, if it is to attract practitioners back into the fold, it is to face 21st century with renewed confidence, it must fix science with art, expertise and day-to-day business. Marketing, paradoxically, has never been so popular, as it is today. Despite many critiques, it is considered to be the key to long-term business success, it was embraced in various fields as diverse as health-care, public administration and the non-profit sector; it is successfully infiltrating Russia and China; and it is now treated with admiration even by academics.



The paper deals with the most dynamic element in the process of transfer to the eco-nomy of the information era – information technologies. One ascribes to these technologies the key role at the implementation of high efficiency not attainable by other means. This efficiency justifies calling this economy as “new economy”.

The author analyses weak spots of the information system implemented by the classic economy (the author defines it as the economy of pre-computer era) and indicates its four basic problem spheres, which will be surmounted by modern information technologies.

The first problem sphere is related to the link between supply and purchase relations (material flows). Modern enterprise cannot live day by day. Each enterprise of a certain size formulates its marketing plan (usually for a year) and secures its supply and purchase relations with other enterprises by contracting. The factor of imperfect information on the future causes imperfect relation links. One has to calculate with risk, additional corrections etc.

The author of this paper expects overcoming these negative aspects by means of the new economy’s information system, which will be able to ensure the linkage of material flows among enterprises during the phase of marketing planning already.

The second problem sphere is linked with the price system. Prices as an inevitable instrument for the provision of maximum efficiency (optimisation) are in classic economy influenced too by imperfect information on the future and are in addition deformed as a result of various protectionism practices, inadequate review on the market situation etc. The link of value (price) flows with material flows will become inevitable in the economy of the information era.

The third problem sphere concerns the incomplete exploitation of the economy resources and the unemployment linked with it. Early interconnection of material and value flows will allow identifying in time the incomplete exploitation of resources and to transfer the economy output towards the potential product.

The fourth problem sphere is the slowness of information processes in classic eco-nomy. Large speed of information processes is the key prerequisite for the solution of the three above mentioned problem spheres.

Information system of the new economy naturally expects the utilisation of large speed and capacity of the modern information techniques. This, however, is not enough. The movement and processing of information in the new economy is of such enormous size, that to master them changes will be needed in the information system proper, aimed at a considerable reduction of processed information.

Important, but relatively smallest changes are expected in the information systems of enterprises. It will be important here so ensure that the basic information unit (the so-called information vector, e. g. the set of material consumption rates and added value components for the relevant product) should be available at the information media. Needless to say, it won’t be possible or necessary for this information to leave the databases of the enterprise.

Substantial reduction of information processes – compared with the classic economy – will be possible to achieve:

To ensure large iteration speed one reckons with the assumption, that the reduction of information operations will be provided mainly by the switchover from an information link system “everyone with everyone” to the system of “telephone exchange” e. g. information on the supplied and demanded quantities will be available in the so called electronic market. Furthermore, the information process savings will be achieved too by starting the linkage of material flows at the products entering directly final consumption (at value flows one starts by raw materials).

Further key axiom – small number of iteration steps – will be ensured by using the so-called basic module of the OPTM method. Important advantage confirmed by thousands of experimental calculations is the fact, that optimum is achieved at the very small number of iterative steps (1 to 3 iterations, rarely more), and that is true even for problems of huge dimensions.

When deviations from the basic module appear, iteration number grows. These deviations appear in case of the so-called capacity barriers, in case of cycling, in case of the so-called feedback as well as in the problems respecting time factor or space factor. In another situations, on the contrary, the number of iterative steps decreases.

The author calculates roughly that 15 to 20 iterations will be necessary to achieve optimum, which is manageable in the real time.

The paper points out further at some connections with internet and e-business. One will exploit fully all novelties of internet, naturally the emphasis will be given to the safety, reliability of partners, protection against web malfunctions etc.

As for the problem of e-business, the author answers it positively: e-business enables to provide an information system for the new economy, e. g. provides the electronic market linkage for individual products (their material and value flows), corresponding to the axiom of maximum efficiency, and real time implementation. The author expresses the idea of the paper presented here: Providing we know what we are aiming at, the fruits of our efforts will arrive sooner and will be abundant.

In the conclusion the paper mentions some implementation and relation problems. On the road to practical applications one will have to master various methodical and informative problems.

One may expect support from those, who will profit from the introduction of the presented information technologies. However, from those who abuse market defects, resistance will appear. The attitude of big supranational corporations will be ambivalent. The important impulse for the implementation of optimisation technologies might be their application in the sphere of public acquisition as well as in the sphere of optimising marketing plans in big corporations.



The paper consists of the three parts. The first one is addressed to the problems of the EU preparedness to its extension and to the admission of associated countries. It points out at the acceleration of the process and at the requirements of the EU in the sphere of currency exchange rates and convertibility of the candidate countries’ currencies.

The second part reflects the preparedness of the Slovak Republic to enter the EU in the sphere of currency policy and the system of currency exchange rate in the context of the EU requirements and possible standards of the IMF.

The degree of preparedness of the Slovak Republic to enter the EU will be influenced above all by the three basic factors, namely by the economic level, inflation rate and state of external economic unbalance. All the listed factors are strongly influenced by the monetary and currency policy of the National Bank of the Slovakia (NBS). NBS went over to the new strategy of currency policy – the Bank abandoned the system of fixed currency exchange rate with a defined oscillation range as an anchor of the monetary policy and introduced controlled floating and implicitly defined inflation aim. NBS monetary policy is currently in numerous publications incorrectly characterised as inflation aiming. This is a result of the inadequately specified aim of the current monetary policy of the NBS, which is a certain “hybrid”, consisting of the information on the short-term inflation prediction by NBS (though not as an aim) and influencing the exchange rate environment. Higher accentuation of the inflation rate by the NBS, above all the emphasis on the core inflation can be explained by the efforts to achieve main long- -term aim of the monetary policy, e.g. stable currency. One also respects the new phenomenon of the European Monetary Union (EMU) and the level of inflation in the EMU countries. The selection of the appropriate exchange rate system is an important part of the choice of the NBS monetary policy.

The important condition of the entry of the Slovak Republic into the EU is also an ex-ternal monetary balance along with the wide external convertibility of the Slovak Crown and relatively stable currency exchange rate. External unbalance could provoke fears of possible devaluation, the growth of foreign indebtedness and at the moment of EU admission the inability to accede also the exchange rate mechanism – Exchange Rate Me-chanism II - and observe its rules, however voluntary the entry into this system might be.

Even before the exact specification of the dates of entrance of candidate countries into the EU the European Commission requires that candidate countries should adjust their currency exchange policies both to the Copenhagen criteria of entry published in the year 1993, and to the Maastricht criteria of 1991 for the entry into the EMU. On 7th November 2000 the Ministers of finance of the EU countries sitting as the EU Board for Economy and Finance (ECOFIN) reached an agreement on the so called three phase strategy in the currency exchange rates for the future EU members. Even if from the report of ECOFIN follows that candidate countries should be formally left to decide their system of currency exchange rate in the first, e. g. pre-preparatory phase, direction of their economic and monetary policies should already correspond to the prospect of their expected EU membership. The systems of currency exchange rates should be considered individually and their choice should take into account various factors as for instance macro-economic stability, transformation relief, and eventually the rate of participation in the common market. One expects that the candidate countries immediately after their entrance into the EU will enter the European exchange rate mechanism (European monetary system II). One expects further, that these countries will behave accordingly to day already.

In the second phase, already after their admission, new members will be expected to take part in the European exchange rate system II. This mechanism was originally established for countries that did not participate at the common currency Euro and contains the fluctuation range ± 15 per cent. The system is sufficiently flexible to enable currency exchange rate systems currently used in candidate countries to adapt themselves to it. It however definitely rejects free floating of the relevant currency as well as its fixed linkage to any other currency except to Euro.

In the third phase current candidate countries will take over Euro on the same conditions as the other members, e.g. by the fulfilment of the Maastricht agreement conditions.

Slovak Republic used until the 1st October 1998 the system of the fixed currency exchange rate, and the method of deriving the exchange rate from the national currency basket. This basket consisted then of 60 per cent DEM and 40 per cent USD, and the currency exchange oscillation range was ± 7 per cent. Since the date listed above one use the system of currency exchange rate, which after the definition of the IMF is ranked into the group of managed floating. Euro has become the reference currency (originally German Mark DEM served as a reference currency).

The paper positively evaluates the implementation of the current currency exchange rate system and envisages possible solution for the future. In principle there are two possible ways for the Slovak Republic in the sphere of the currency exchange rate during the pre-entry process. One is the way of a strong link of the Crown to Euro already in the pre-entry phase, for instance by means of the currency board. The other way is that of looser currency exchange system in combination with the strong central bank and its distinct strong responsibility mandate for the price stability with an explicitly or implicitly expressed this role in the inflation aim.

In compliance with current considerations, IMF studies and views of many experts, more acceptable for the Slovak Republic is the solution to retain current looser system of the currency exchange rate and to strengthen the responsibility of the central bank for the price stability with an explicitly or implicitly expressed of its role in the inflation aim.

Thus in the sphere of currency exchange rate NBS envisages a relatively stable currency exchange rate towards Euro, and at the same time expects real appreciation of the exchange rate within the framework of current exchange rate system – controlled floating and inflation aiming for the time being only implicitly expressed. This will enable the central bank to pay its attention to the internal development and to react to the internal and external shocks, while the declared aim will anchor the inflationary expectations in the sphere of inflation better than monetary aggregate or credit aim.

In the third part the paper deals with the liberalisation of the foreign currency policy of the Slovak Republic through the abolition of foreign currency limitations in the sphere of liberalisation of foreign current and capital transfers. The course of liberalisation of the foreign economic operations, which extends Slovak Crown convertibility is presented in the paper in detail by means of the timing chart.

In the conclusion of the paper remaining currency constraints are listed. These should be dealt with still before the EU entry. After the 1st of January 2001 the following controlled financial transactions to abroad still remain: direct investments outside the OECD countries, portfolio investments abroad, purchase of estates outside the OECD countries, opening and management of accounts in foreign banks (with the exception of possibilities listed in § 10, article 4 of Currency Act No 202/1995 Z. z.), trading with foreign derivatives, purchase of foreign bonds (over case limits defined in § 15 art. 4 Amendment of the Act No 388/1999), release of inland estate purchase for foreigners, reporting and transfer obligation.

Slovak Republic will continue to relax controlled financial transactions until their full liberalisation at the very latest till the day of entry into the EU.



The real development in transition economies also the example of Slovak Republic, show that transition economies find themselves in a disequillibrium situation. This stage of disequillibrium is result of a big transition recession, higher increase of prices than in standard economies, passive account of balance of payments, disequillibrium at the labour market, high unemployment rate and high financial distress of Slovak companies.

The article is aimed at consequences of privatization process arisen from buy-out by domestic entities using foreign capital. In analysis, authors have combined the macro-economic and microeconomic approach towards assessing the financial situation of the whole business sector in Slovak republic. Based on the analysis, privatization process using foreign capital may evoke a situation of so called privatization or investment trap. Privatization by foreign capital also increases the capital demand and at the same time, it has an impact on the rise of inflation. If the inflation is being hold under a restrictive policy of the central bank and if there is a low economic growth in the country, then the economic situation of privatized companies is getting worse. Investments of companies increase, employment decreases, the loss of companies and internal debt of companies is rising. Part of the work is aimed at the mechanism of the finance leverage effect in connection with privatization process and companies financial structure in Slovak republic.

The financial structure of the majority of companies in Slovak republic is not good. Companies have got a high share of short-term foreign capital and low share of long-term financial sources. Another problem of companies is a high level of financial distress, not performing financial market and low rate of return on assets. The way of privatization process to present, not paying loans (situation of default) and low level of payment discipline in companies are the factors which are in many cases the cause of financial distress in companies. Therefore, from the banks point of view, providing loans is a very risky activity, which has a negative effect on the whole supply of loans and conditions for providing loans. The risk arising from investing into own capital is very high mainly concerning minor shareholders. An inevitable assumption for improving the financial situation of companies in Slovak republic is to improve the framework conditions for financing business sphere.

The performance and conditions of the big privatization process via direct sales and coupon method established highly concentrated ownership structures. These are because of low liquidity of the capital market nearly stable. Privatization by the buy-out of domestic entities without own capital is in transition economies in accordance with standard market economy countries a non-traditional way of privatization process. This kind of privatization has not exactly solved the transfer of ownership structures, burdened the capital market and crowded out private investments from the Slovak economy.



These paper aims at the mapping of the possibilities of Slovak households on the market of the consumer goods and services based on their incomes and consumer habits. Scanning a behavior of consumers was aimed to show the consumption changes of foodstuff and nonfood goods and services during the period of transformation.

Economic growth was reducing in the previous period of three years. It determined the dynamic of the population income forming. The share of household current incomes on incomes in national economy had a declining character since 1996. According [1] this share in 2001 can be on the level 80.6 per cent. In comparing with 2000 the households can expect the increasing of household incomes in 2001 only slight. The reason is the price development. It will determine the further decline of the real household consumption. On the other side the small level of demand of households can to slow down the consumer prices of goods and services.

The structure of household incomes (in the system in national accounts) is relative stabilized in which 51.2 per cent are the compensation of employees, 23.4 per cent gross operating surplus, 5.6 per cent property and entrepreneurial incomes, 16.5 per cent social incomes and 3.3 per cent current income transfers.

In period 1998– 2000 the share of final consumption of households on gross disposable income was increasing and the share of gross saving was falling. It is the following trend since period 1992– 1997. The saving rate declined from 13.1 per cent in 1997 on 12 per cent in 2000. This development is a result of the economic growth retarding and it reflected in slow down the growth of current household incomes and in the price increasing. It is also result of significant increasing of the supply on the consumer market. It is characterized by the amount of hypermarkets and they are spreading by the nets in present. The household saving situation is determined also by the lower concern of households on the financial market where the interest rates are declining.

The development of income distribution shows father deepening in differentiation of the household income groups. The income level of serf households is 74 per cent and farmer household incomes show 68 per cent of the employee household incomes.

Regional basic data on the generation and use of income in sector households indicate that the households in Presov region have 90 per cent of Slovak income average only and households in Bratislava region more than 1.25 – fold of this average. The situation in Slovak districts of the south and east area of Slovakia is more difficulty. It is result of high of unemployment rate (Rimavska Sobota 37.5 per cent). The long-term problems with the generation of enterprise and household incomes are in these districts. From the point of view consumer behavior it indicates the limited consumption demand with the reasons in development of extent and structure of regional supply for the long time. The changes after 1989 in structure of consumption expenditures were determined by consumer price development of nonfood goods and services in total households. In the case of low-income households and households with more than 3 children the structure of consumption expenditures was affected also by foodstuff consumer prices. The main price impact on household expenditures was in the case of housing, transport and health. In these areas the households can expect the price increase following and the raising of the share of consumption expenditures. The share of foodstuff and non-alcohol beverage expenditures and also the share of service expenditures will be declined.

In comparing with the expenditure structure typical in developed marked economies in the expenditure structures of Slovak households is high share of foodstuff expenditure henceforth. It is 27.6 per cent of net monetary expenditures and 23.5 per cent of gross monetary expenditures in present. Significant changes are indicated in following groups: cereals and baker products, milk, cheeses, eggs, vegetable, potatoes, mineral beverages and juice. The share of these foodstuff consumption groups on total consumption expenditure groups is increasing. The changes in consumption structure are accompanied by real fall of foodstuff consumption in natural units as well the consumption is under the volume recommended as healthy in every foodstuff item. In low-income households and in households with more than 3 children the consumption of dairy products, some of south fruit and vegetable as well as the consumption of meat is very low. The base foodstuff groups share more than 64 per cent of total expenditures of foodstuff and non-alcohol beverages. The nonfood and service expenditures are 60– 70 per cent of total consumption expenditures by social groups of households.

The changes in expenditure structures by social groups of households show that the consumer behavior of households in the Slovak republic comes up to consumer habits and consumer structures of the function marked economies very slow. Of principle the different income level of the Slovak households and the predicted price development does not make the faster changes in expenditure structures as well as does not make the comparable facilities.


Félix HUTNÍK – Rudolf ŠTANGA

One began to implement the principles of capitalist farming in theory and in practice as late as the beginning of the 20th century. The enterprising in the agricultural sector was extraordinarily influenced by an agricultural policy particularly after the year 1870. Since then agriculture started to drop into an ever deeper economic isolation.

We understand today the formation of the agribusiness theory as an attempt to equalise the position of agriculture from the point of view of the national economy.

The condition achieved in the economic indicators of agriculture should satisfy us. Industrialisation phase of its development, which has taken place after the World War II has brought, however, many negative aspects. Thus we try in this paper to substantiate our view of the flex point both at the technology sector of the agricultural production and in the sphere of overcoming the economic isolation of agriculture as well. The authors are interested not only in the sustainable development of the agricultural production, but in the sustainable enterprising in agriculture too.

The paper defines starting points for the reflections on the prospect of agriculture in the world. Rich countries have an unwritten responsibility to begin systematic work on a balanced utilisation of all limited natural resources of foodstuffs on the behalf of the whole mankind. Whereas in the developed countries the per capita production of agricultural products increases, in underdeveloped countries it remains more or less stable. Irrigation as an important source of the utilisation of water in agriculture become inevitable as a major rationalisation means. In current century water will become far more appreciated than gold. Currently there is a huge unbalance in the exploitation of commercial primary energy per capita in individual countries.

The expected growth of energy consumption will influence negatively the environment in various ways. One expects multiple growth of energy consumption extracted from biomass. By an expected population growth many scientists predict that biotechnology at their correct, ethic and safe use can help to sustain world population.

The entry into the 21st century will gradually bring about new technologies and techniques into the agriculture and foodstuff industries both in the rich as well as in the poor countries. Today, naturally, rich countries have much better conditions for the exploitation of know-how in biotechnology, conserving soil, water, air and health of animals and men. Developed world should therefore support personally as well as financially developing countries so as to improve their ability to absorb new technologies and to take part in research and development.

The authors explain also the standpoints that in their view will have a say towards the prospect of agriculture development in developed countries and in Slovakia.

Farmers in the European Union directly manage 44 per cent of the area of the 15 member countries. Our farmers manage almost 50 per cent. They should be responsible for the adequate utilisation of the half of the territory not only to the present generation, but to the future generations too. The changes in the agricultural practice in the 20th century, above all at the control of inputs and exploitation of irrigation brought the farmers into a seemingly liberated position free from the limitations imposed by the natural potential of the Earth. Urgent correction faces us.

The outlook of production extension of non-agricultural raw materials opens or widens new markets for agricultural enterprises in various branches of manufacturing industry. These industries will in future most probably use renewable raw material sources to a greater extent. That would widen material and financial flows and multiply interaction between industry and agriculture, which should then lead towards the improvement of the income situation of agricultural enterprises and advanced level of their management.

After the reform of CAP in the EU in the year 1992 organic agriculture markedly started gaining ground. Naturally, organic agriculture has to establish particular vertical line in foodstuffs, which is a long term task.. Non-foodstuff raw materials as well as organic agriculture will spread a fanned beam of enterprising activities of farmers in economically developed world. The authors present examples of alternative agriculture in the USA and comment on its future.

In the recent 4– 5 years (when genetically modified seed started to be used to a greater extent) world community and parliaments of different countries paid greater attention to the genetic modified organisms.

When one reminds that the agriculture industrialisation has been responsible for the degradation of natural resources world wide and that the population growth in developing countries tends to exert pressure in this direction further on, we should appreciate the advantage of genetically modified plants and animals.

Possibilities that modern agro-biology suggests for the adaptation of plants to climatic, soil and water conditions represent potential economic advantage for farmers in the developed as well as in the developing countries.

The incoming new stage of agribusiness evokes also some social risks. We can suspect that one might constitute the same organisational and economic dependency of the farmers, manufacturers and after all consumers too on the suppliers of inputs as in the present stage of “industrial” agribusiness.

The USA is a pioneer of the new forms of co-operation and integration at the specialised foodstuff vertical lines where (apart from other aspects) the advantage of further concentration and specialisation of agricultural raw stocks is exploited. The Czech national F. Čuba is also a propagator of such a development. The focal point the agricultural enterprises should follow is to shake off the disadvantage of many-sided production and pursue maximum efficiency in exploiting all inputs. Specialised production of agricultural stocks should be linked organisationally with the consecutive economic activities at the foodstuff verticals. This is the way for the formation of the new enterprising structures in foodstuff management. We see in the suggested organisational and managerial processes certain decisive possibilities above all for our agriculture (but to a certain extent also for the agriculture of the EU countries) to step out of the economic isolation. The idea is the “sustainable development” and de facto the substantiated and tantamount agriculture in the developing market system in the whole world.

We can assume that in the production of material assets the information society will develop in a certain contradiction towards the forms and management of such production in the industrialisation phase.

The achievement of a certain state of mass consumption of standard foodstuffs is certainly important for the stability of each society and the world. However, its gradual replacement by an individual consumption of non-standard foodstuffs is an indication of the new development of the society, and the accommodation of its material and cultural needs.

At times of the activities of physiocrates in the countries entering the capitalist era, the decisive part of GDP was generated in agriculture. This fact influences very probably economic thought of Quesnay and his followers. At the formation of the agribusiness theory agriculture in capitalist countries (above all in the USA) generated only a minor part of the GDP. This optically diminishes the importance of agriculture. Yet the agriculture as a part of the foodstuff management and above all the fact that agricultural land occupies decisive part in the majority of countries, plays a decisive role in the reproduction of man’s fundamental living conditions.

Let us not, however, be misled by solving our problems and the problems in agriculture of the economically more developed countries. The time of tolerance and real economic help for the poor countries has already started. Without that we cannot master vital problems of the whole world.

Liebig’s theory on the plant nourishment was born in the 19th century, yet it fully gained ground in its industrial mood as late as in the 20th century, more accurately speaking after the World War II. Last century was an era of particular growth of hectare crops and farm animal yields. 21st century signals new devices and means of an intensive soil and farm animal exploitation, which means a turning point towards the rational exploitation of renewable natural and human resources.

This is some specific return to nature based on scientific knowledge, mainly on biotechnology and on the information maturity of the society. These facts form the basis for flex point not only in the production of agricultural raw stocks, but also in the organisation, management and marketing of foodstuffs and production of the non-foodstuff raw materials.


Štefan BUDAY

The agricultural land price accomplishes one from the important functions to express the production and economical potential of agricultural lands situated in different natural conditions. The system of ecological soil-quality units (ESQU) and the price list of arrable land rather exactly characterize the production and economical potential of lands expressed by land price. This system finds its use mainly in property rights and fiscal relations, in the land protection, in the qualitative new determination of economical relations between land owners and users, in land arrangements etc.

The prices of agricultural land were calculated for individual ESQU (according to the methodology for agricultural land evaluation) in so called “optimal situation” it means without other factors beeing taken in even they directly affect the price. This reality becomes most evident at the administration of land arrangements, when the executors must take other factors into account, which directly influence the land price level, if they evaluate individual parcels of land.


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