Electronic Library of Scientific Literature - © Academic Electronic Press


Volume 50 / No. 6 / 2002




The accession of Slovakia to the EU opens at the same time the way into the European Monetary Union (EMU), which represents current culmination in the West – European integration.

The formation of EMU was preceded by the discussion on criteria for the optimal currency area (OCA). This discussion was opened by R. A. Mundell by his article A Theory of Optimum Currency Areas. While defining OCA R. A. Mundell stressed the importance of high mobility of production factors (mainly labour force) as a factor ensurig full employment in case one region faces the asymmetrical shock. Further OCA criteria (open economy, the degree of commodity diversification, elasticity of wages and prices, the degree of cycle synchronising etc.) were demonstrated by R. I. McKinnon, P. B. Kennen, J. C. Ingram and others.

The economists often wonder, whether EMU is OCA. By seeking an answer to this problem the economists started to deal with the problem of benefits and costs (risks) linked with the EMU entry. Empirical studies mostly concluded that EU-15 does not represent OCA. Interesting results are in the works of T. Bayoumi and B. Eichengreen, who pointed out on the basis of the so-called OCA index that apart from the "hard core" led by Germany there is also a group of countries gradually converging towards OCA and a group showing low convergence.

Considering the EMU history tells us that in the Eurozone no major disturbances have occurred so far and that single monetary policy has been more or less successful. The first serious test of the EMU strength was the last recession which demostrated itself in the Eurozone only by the cooling-off period. The extension of EMU will present more severe test of its stability – this, however, will take place no sooner than in the year 2007.

The approaching date of EU entry revived in candidate countries the discussion on benefits and costs linked with the EMU membership. Candidate countries expect positive balance of benefits and costs, in some cases, however, in the long run only.

Fulfilment of Maaastricht convergence criteria is the prerequisite of the EMU membership. The evaluation of fulfilment of these criteria shows that at successful accomplishment of necessary reforms Slovakia could gradually approach most successful candidate countries and thus also EMU. One can positively appreciate fiscal stability in terms of public debt (though not its tendency) and the exchange rate stability. The inflation criterion (inflation convergence) will be more complicated to fulfil. Most complex task, however, will be to decrease the public finance deficit.

Slovakia’s approach towards the EU is not decided only by the fulfillment of Maastricht criteria but above all by the progress in real convergence and by the fulfillment of microeconomic criteria developed by OCA theories. As for the overall structure of economy after ten years of Slovakia’s transformation, the country after all approached West European standards.

In candidate countries, at present there are discussions about the optimal timing for the Euro introduction. Some economists (mainly the representatives of central banks in candidate countries) prefer the strategy of rapid entry into EMU. As the main and immediate benefit of the entry into the Eurozone, they consider the elimination of the risk of destabilising currency turbulences and financial crises. On the other hand, there are also the risks of entry – mainly the loss of autonomous monetary policy and deceleration of real convergence.

Representatives of the EU and EMU mostly warn against an early acceptance of Euro. Every candidate country (including Slovakia) has a possibility to convince relevant organs in the EU and EMU that its ambitions to enter EMU are real and justified. The cautious effort for balanced process of approaching towards EMU does not inevitably mean slowness and lagging behind.




From the Slovak point of view the European Union (EU) is the main source of foreign direct investment (FDI). The article analyses the position of the EU as a global investor, its position in candidate countries and Slovakia and describes possible consequences of EU investment flows on Slovak economy with regards future Slovak membership in the EU.

The Slovak accession to the EU should lead to substantial increase of FDI. Main countries that now play and will continue to play crucial role as investors are geographically proximate countries, namely Austria and Germany. The position of Slovakia as host country lags behind other candidates. Main differences in attracting FDI reflect their market size, the quality of business environment, labour costs, natural resources endowment, different privatisation methods and market access.

From the long-term perspective the Triad (USA, EU and Japan) is biggest provider as well as recipient of FDI. During 1998 – 2000 it accounted for three-quarters of global FDI inflows and 85 per cent of outflows, and for 59 per cent of inward and 78 per cent of outward FDI stocks. The share of the EU within the Triad has been increasing. The position of the USA as largest outward investor has been taken over by the United Kingdom since 1999 and France in 2000. The EU remains dominant as both investor and recipient of FDI.

During last years the EU is accounting for 70 per cent of world FDI outflow out of which 68.7 per cent is invested in the EU itself. In 2000 intra-EU FDI flows accounted for 48 per cent of global FDI outflows. Biggest investors are France, the Netherlands, Germany and Austria. Three EU member countries, namely Germany, the Netherlands and France – provided candidate countries two thirds of FDI in 2000. France invested mainly in Poland, the Netherlands as well as Germany in Poland, Hungary and the Czech republic.

Slovakia as host nation participates on the global FDI inflows only by 0.003 per cent. Slovakia lags behind neighbouring countries. Three countries of the Central and Eastern Europe – Poland, the Czech republic and Russian federation attracted two thirds of the FDI flowing to the CEE region. The situation has changed in recent years due to privatisation that is short-term phenomena. The FDI stock in Slovakia reached record level however this amount is lower than annual FDI inflow reached by the Czech republic in last four years. Biggest investors in Slovakia include Germany and Austria.

The position of Slovakia as host nation according to inward FDI index calculated by UNCTAD is satisfactory and reached the level of 1, i. e. Slovakia was able to attract FDI with regard its economic strength in the world economy. However it lags behind the Czech republic, Poland, Baltic states and Bulgaria.

Central and Eastern European countries attracted in 2000 only 2 per cent of world FDI inflows. The EU serves as a main source for FDI in candidate countries accounting for 80 per cent.

The positive effects resulting from future EU membership in the area of foreign direct investment include strengthening of political and economic stability that will contribute to future FDI inflows, attracting FDI from non-member countries, strengthening financial stability and country’s credibility, stronger anti-corruption pressure and positive influence on environment.

Negative effects include abolition of tax incentives offered to foreign investors (that will require finding new ways how to attract FDI). Other negative effects include FDI concentration into few industries that might lead to stronger sensitivity of economy on external environment changes, using cheap labour, which is not long-term strategic advantage of Slovakia as host nation, increased balance of trade deficit, the creation of dual-economy, deepening regional differences.




In the context of European Union, economic and social disparities act a brake to the integration process. Therefor economic and social cohesion leading to economic unity of countries and their regions has become one of the goals of the European Union.

For such purpose special regional policy has been developed by the Community. The cohesion should be contributed to by the Member States through their regional policies as well. Regional policy of the Union is one of those policies which are coordinated by the Community, that means that its role is just to coordinate and harmonize regional policies of Member States.

Role of economic and social cohesion is to overcome negative consequences caused by free market and enforce change(s) using appropriate tools, if such changes could not be achieved by market itself or could be achieved after considerable long time; it also results from the premise that the stronger the regions are and the smaller the differences among them are, the stronger the European Union, as one entity, is.

To enable a successful integration to take place, to increase overall harmonic development of the region and to prevent from deeper regional disparities to occur, Member States have identified, along with achieving uniform internal market and economic and monetary union, a proactive support of economic and social cohesion of the Community to be one of their major goals.

One of the crucial forms used by the Union to support economic and social cohesion is a financial assistance granted to the region through own structural tools. Another instrument through which the Community tries to contribute to the economic and social cohesion is a space planning which is to create a continual vision of the European space structure, coordinate planning of particular countries to assist development of the regions in such a way.

In the course of over forty years a large variety of tools have been established by the European Community to achieve a balanced economic trend in all areas. For instance, space planning contributes to a better understanding of the area and creates developmental scenarios for them while financial assistance is provided through structural policy.

Co-involvement of all Member States in crucial for the latter one as they have to provide incentives and funding.

Since establishment of the European Communities regional policy has undergone five major stages of its development. There was not much significance attributed to it at the beginning, however under the changing circumstances it has become one of the most important areas of interest of the Union.

Several factors have indicated that importance of the regional policy will increase in the next coming years. It is due to European monetary union as well as economic impact of accession of the Central and Eastern Europe countries which would substantially reduce the average gross domestic product per capita and worsen other macroeconomic indicators.

The principles of the EU regional policy was formulated during regional policy and structural funds reform in 1988.

Table 1
Overview and Characteristics of the Regional Policy Principles

General Principles

Principles of Regional Policy Organization

Principles of Regional Development Funding

Principles of Program Implementation Evaluation












Control of financing






Efficiency of activities conducted jointly by the States in the field of economic and social cohesion is based on execution of the above principles.

The four utmost crucial principles of regional policy of Community have been identified in the course of reform of structural funds in 1993 as follows: programming, partnership, concentration and additionality.




Contracting-out is in principle standard method of public/private partnership in developed countries with market based economies. In spite of relatively long experience with a use of it, most evaluations prove that both advantages and disadvantages are connected with the use of contracting-out also in situations with high potential of supplying markets.

The experiences from developed countries indicate that the use of this "market type" tool in processes of public sector and public management reforms in CEE is very complicated and multidimensional issue. Currently there are many important factors and barriers limiting possibilities to implement contracting-out approaches in transitional CEE countries, and limiting possible positive impact of it in all respective dimensions. Using standard public economics approach, we might analyse following important problems areas:

In our paper we try to assess selected theoretical and practical aspects of contracting-out in CEE countries, using real dates from the Slovak Republic. In theoretical part general contracting-out issues, and most important specific features of transitional economies influencing processes of contracting-out are highlighted, with focus on current situation in the Slovak Republic.

To be able to support theoretical findings and expectations, field research was realised, focusing on the assessment of the current scope of the use of contracting-out of supportive services in selected public sector organisations. All findings support our hypotheses, expecting following:

According to our findings, contracting-out of supportive services is realised within public sector organisations in Slovakia, but in very limited scope – just 21 supportive services were contracted in 40 randomly selected organisations (compared to the Czech Republic with 47 contracted supportive services in 56 visited similar organisations).

Purposes to contract are very similar to these included in standard theory – necessity to decrease number of employees, economic advantages, lower costs, delegation of management responsibilities, quality increase, lack of qualified personnel, and in one case supreme body ordered the contract.

Purposes, why organisations do not contract supplementary services are more interesting. Most of classic budgetary organisations claimed that internal production is more cost-effective than external supply – however, real calculations to support this were missing. Many organisations stressed the problem of lack of existing capacities to supply the respective service by private sector, and some also the problem of rigid rules of financial management not allowing for the possibility of virements (for example to move resources from salaries to services), and the problem of bad experience with contracting-out. To assess these arguments, we might have doubts about first one (this was mostly just excuse for non-willingness to try to find better solutions), but other three highlight to some extent problems of local specific environment.

Experiences with contracting-out are very contradictory. We might to divide them to more categories:

The case of total failure of contracting-out – the collapse of the delivery of service did not appear, contradictory to the Czech Republic, where in one case the students of secondary school lost the chance to get their lunch.

Some good examples indicate important potential of contracting-out procedures also in very difficult Slovak conditions. The potential of contracting-out will increase as the markets and the quality of public management improve. A lot can be done in Slovakia in this area very soon. We might for example suggest to introduce some form of competitive compulsory tendering as the rule, with positive impact on better transparency, improved financial management and in some cases also real costs savings and quality improvements in public sectors of CEE countries. However, we did not find this agenda in current public sector reform documents in the Slovak Republic.



Ľuboslav SZABO – Miroslav GRZNÁR

Subsidising of enterprising subjects in the agricultural sector is implemented in almost all countries in the world and has a variety of reasons. One of those is great differentiation of land quality and climatic conditions in individual regions of the country. This markedly influences production and economic effects of farming. The entrepreneurs in marginal conditions cannot compete with entrepreneurs farming in the most favourable conditions without the interference of the State that will cover objectively higher costs, provided that production under given conditions is vital, or when it is necessary to retain settlement there.

The State however exercises also other tools of direct or indirect support of agricultural producers. These tools are enforced by production fluctuation due to climatic conditions year by year on the one hand, and on the other hand by the necessity to rectify unfavourable impact of price liberalisation and shortages in the capital availability and the flow capital in the branches of agricultural basic production.

The effort to keep the balance between the markets of foodstuffs and agricultural products and to prevent the downfall of prices calls for the support (guarantee) of farmer’s prices in the main commodities. One must also support exports of excess pro-ducts, and the support of stagnant inputs is necessary as their prices grow faster than those of the prices of agricultural products. The lack of financial resources in the farms prevents the reproduction of fixed capital and therefore further tools of the agricultural policy support investments by direct subsidies or by favourable credit conditions.

Subsidy policy of the State in the pre-entry period started the course of adaptation to the rules implemented in the EU countries and therefore one looks for the methods that will impair the market function to a lesser extent and more objectify the allocation of subsidy means.

The paper is addressed to the effects of support granted to the agricultural entrepreneurial subjects in Slovakia. The results of analysis of the differently classified sets of agricultural enterprises suggested that the rate of the current support for the agricultural sector in Slovakia is not very high. That could be an advantage at the expected EU entry, as it makes local farmers to increase their competitiveness and performance. At the same time it is a disadvantage as it improves the situation of our future market rivals, who gain at present up to six times higher subsidy compared to our support.

Our operational hypothesis assuming that subsidies support performance growth in agricultural enterprises has not been confirmed. Subsidies influence positively by decreasing losses and thus they improved the social position of agricultural entrepreneurs. The research into the influence of subsidies suggested, however, that higher subsidies support intensifying process by means of input increase.

Low transparency of the allocation of subsidies confirms relatively high subsidies into the enterprises that have been in losing for a long time due mainly to the incompetence of their management. As for the volume of granted subsidies per the unit of area, one notices only a small difference between profit making and loss making enterprises. That means that one grants subsidies without exacting appraisal of the enterprise ability to utilise these abilities efficiently and to improve performance and efficiency.

The scale of subsidies currently granted in Slovakia is very wide and therefore it is difficult to appraise the impact of subsidies. The expected entry into the EU will require a special control mechanism supervising subsidy assignment as already known in the EU countries.




The paper presents some theoretical and methodological principles as well as practical experience concerning the identification and modelling of interventions into the factors of intensive product and service quality improvement, their analysis and evaluation, specification and management, while taking into account the latest world-known methods and results of research projects, in particular the project VEGA 1/4394/97 titled Research into the Factors of Intensive Product and Service Quality Development.

The quality of Slovak products and services has been well-recognized and accepted in Europe and elsewhere in the world since long ago; however, it is not sufficiently known to the general public.

Nowadays Slovakia has a relatively well-developed system of metrology, standardization and testing, alongside with an adequate system of certification, accreditation, and notification. Our industries produce quite a range of quality products, yet the loss of traditional purchasers and customers, problems with privatisation, strong competitors on the global market, and customer preferences changing regularly require new different solutions to the intensive quality improvement of Slovak products and services.

Issues of product and service quality factors have been intensively dealt with not only in industrially developed countries and economic groupings, but also in transforming economies.

There are two typical model situations and relevant marketing strategies that are suitable and used as a basis for determination of factors of intensive quality improvement:

Both strategies place an emphasis on quality; nonetheless, intensive quality improvement factors and interventions differ.

Quality as a term is understood as a summary of proper characteristics of any entity manifested in a particular environment and time by its distinctive functions. Quality, which is the state of entity, and the level of quality as the gradation of its characteristics, should be distinguished.

The identification of quality factors is understood as the process of recording distinctive characteristics and functions of any entity and variable factors of its rise and change.

A quality model is considered to be a total elaborated record and expressed identification results.

To create a basic conception of quality factors operating in producing organizations, the theory of systems could be adopted, especially its transformation system.

To identify quality factors, 30 small and medium-sized Slovak enterprises manufacturing various products and providing various services have been examined. The analysis was based on the organizational self-assessment criteria according to the EFQM Excellence Model and the results of interviews with the management representatives of relevant organizations.

It can be shown from the analysis of quality factors in 1997 – 2000 that there are several critical success factors in small and medium-sized Slovak organizations, such as: customer satisfaction, business/performance results, quality systems and processes, and organization management.

The paper also presents a more detailed analysis of relationships among factors representing the success ratings that examined organizations have achieved:

The analysis puts the main emphasis on the relationships between the assumptions and organization results. There are a number of cases when organizations achieve better results with worse assumptions and vice versa. The paper includes the content and description of such situations.

For comparison reasons, besides Slovak organizations, 35 case studies of organizations from the EU countries have been examined and evaluated by the application of the same model.

The fundamental finding is the fact that organization management is a crucial critical excellence factor in the EU countries followed immediately by customer orientation, with total quality management systems in a closer distance. What is remarkable is the fact that such a large-scale factor in the EFQM Excellence Model as processes are, has not appeared separately among the first ten factors. It can be said that, to a certain extent, it is included in the first three factors.

Consequently, following the model of quality factors, the main and most difficult task is creating an optimum concept/vision of what production and a producing organization should look like now and in the future to be able to satisfy customer needs, entrepreneurs, its owners, society, and other subjects.

Good knowledge of the situation in the best producers in a particular product line in the world serves as a reasonable ground for searching a concept. For evaluating comparisons of products and businesses the term "benchmarking" is used [18].

Correct and precise identification of factors of intensive quality development is a must for rational interventions so that competitiveness of Slovak products and services is increased.

An appropriate marketing strategy must be a point of departure for the identification of factors, which can also be considered as a critical factor of intensive quality development.

The core of quality factor examinations is the modelling of an organization as a transformation system and mapping out its internal environment and external surroundings, as well as naming and quantifying its main components that are subject to a further factor analysis.

The factors of intensive quality development that have arisen from the analysis correspond to the situations in particular organizations and the state of affairs in them; however, these cannot be generalized and directly transferred to the Slovak economy as a whole. Nevertheless, our relatively extensive survey in small and medium-sized enterprises can lead to a number of widely applicable key success factors:

Issues concerning factors of intensive product and service quality improvement/development involve also a strong positive educational aspect, since managers, engineers, and other organization staff must be value-oriented and qualified in this field in advance.




The article responds to the current business environment in the Slovak Republic thus reflecting activities leading towards integration processes, the article mainly considered a theoretical basis for the business results reporting, i. e. profit/loss in the accounting system, a comparative analysis of its formation, structure, its objective framework and presentation in accordance with international accounting standards to compare the Slovak accounting legislation.

A business result (profit/loss) is one of the most important financial indicators reflecting the profitability of making business. In the financial format the business result specifies the circulation of assets in a company, indicating whether the assets invested into business, inputs and outputs are smaller or bigger than the evaluated results. Business result, i. e. a profit or loss, is used for assessment of business activities. Reporting profit/loss under the historical cost convention (time approach), analysis of all changes in cost and income items, comparison of the result with figures achieved in comparable companies provides investors and other users with an accounting information which allows to see how successful were the business transactions performed during the reported period, and to estimate company’s future development.

Theoretically, the business result (profit/loss) in accounting can be found using a method based on accruals, i. e. financial gains from transactions are applied in the time when originated instead of the time of sale or purchase, or using a cash flow method. Both of these accounting policies have their pros and cons. A modern accounting system is based on the accrual method which is generally applied in the developed world economies.

A company financial result per an accounting period can be defined in two ways: as a difference between the assets/equity items listed at the beginning and at the end of an accounting period (in the balance sheet), and as the difference between income and expense items per an accounting period (profit and loss statement).

Regarding international accounting standards two documents are important: the General Accounting System for preparing and presentation of financial statements (in general) and IAS 8 – Net profit or loss per a particular period, basic errors and changes in the financial statements policy dealing with income and expense items as with important determinants for a company business result calculation, and with their classification for the same purpose, i. e. profit/loss mandatory structure. In accordance with those documents the present accounting legislation of the Slovak Republic, a company business result is formed by two items: financial result from ordinary activities and from extraordinary activities.

Both international accounting standards and the Slovak accounting system include the assumption of the company consistent business activities, on the principle of prudence and the principle of accruals. The acceptance of the above mentioned principles is a prerequisite of a reliable and comparable financial result – profit/loss. Except for the above mentioned fundamentals, the financial result calculation within the accounting system, and presentation of the result in company financial statements according to a required structure should meet other applicable regulations, principles and conventions. Regarding the principle of accruals there are two important principles: comparability (consistent figures) of income and expense and their time relevance (when the income and expense occurred) in accordance with the reporting accounting period. Compliance to these principles is significant to provide reliable information on the company profitability per a certain period in the financial statements. These principles are directly defined under the Slovak accounting legislation with a guidance how specific accounting procedures should be met. The content and format of the financial statements of a company, (the result as the profit and loss statement) are substantially in a harmony with the international accounting standards. Financial statements provide relevant information on the final profit/loss from ordinary activities and from extraordinary activities of a company before and after taxation, and also about individual income/expense items, which participated on the profit/loss formation and influenced the total amount and its format.




Globalisation of foreign markets intensively stimulates the implementation of information technology and telecommunication networks into different sectors of economy. Any further progresses in the field of information technologies will indisputably result in facilitation and acceleration and transformation of classical trade and payment procedures into their electronic equivalent. Internationally designed and accepted trade and payment standards will result in growth of world output.

United Nations Economic Commission for Europe Working Party 4 – UN/ECE/WP4 was appointed with diagnosis of conditions for worldwide electronic trade exchange, analysis of the directive for registration and certification of digital signatures, and creation of databasis of electronic legislative documents – Archive of E-conditions. Electronic Data Interchange with its standard EDIFACT could serve as unified standard for transfer of electronic documents and information. Electronic payment and settlement is one of the basic functions of EDI systems. Cheques and bills are payment instruments of modern market economy, an effective usage of which can help Slovak entrepreneurs keep and join new trade contacts in global economy.

Aim of this article is to present new possibilities and innovations of cheques and bill of exchanges in compliance with their present trend. This article has assessed the desirability of legislating for electronic cheques and bills. It has established the validity of their electronic forms under the existing legal framework in Slovakia. To state the topic in complex we point at their genesis. Both of these payment instruments are under Slovak conditions mostly used in cross border trade contacts. Any further increase of their usage can be expected together with the implementation of their electronic equivalent. These are not the technical difficulties, however, missing legislative conditions.

Writing and signature, e. g. are two of the several requirements that bills and cheques must satisfy in order to be valid under the Bills and Cheques Act. It has been established in this article that improvement in the present legislation will enable bills and cheques satisfy those two requirements. Both instruments should be capable of being transferred by way of endorsement and delivery from one person to another in such a way as to constitute the transferee their holder with a right to enforce the obligation against the underlying debtor.

Electronic payment instruments represent a great benefit to the business. Improved legislation will broaden the types of transactions that could be conducted electronically. Legislation will enable business to compete nationally and internationally with the exploitation of electronic payment and monetary instruments.

New economy calls for implementation of electronic trade and payment methods which can become the fastest instruments in the global business world.




The article deals with the basic principles of decision analysis. Two tools of decision analysis – decision trees and influence diagrams are compared.

Decision analysis provides the structure and methods for systematic analysis of the decision problems. Decision analysis provides along with the framework for thinking about the decision problems also analytical tools, which are able to simplify the decision analysis process.

The decision problems of choosing one activity (variant of solution of a real problem) from a finite set of all considerable activities are considered in the article.

Decision analysis simplifies the orientation in the decision problems. Decision analysis can be defined as a prescriptive approach, which enables people of average intelligence to think systematically about some complicated, important real problems. Decision analysis provides a certain structural framework and the instructions for systematic thinking in the solution of complicated decision problems.

In the application process of the decision analysis often subjective opinions about the uncertainty and about values of some problem parameters are important input data.

Accordingly the methods of decision analysis allow to include also subjective opinions into the formal analysis. Decision analysis offers also procedures, which facilitate orientation and a certain self-control of the person, his own subjective opinions.

Decision analysis is based on knowledge of the statistical decision theory, which deals with decision theory in uncertainty conditions when statistic information is provided, which allows to include some uncertainty aspects into the formal decision problem analysis. Decision analysis can then be defined as the summary of decision methods, which are based on the statistic decision theory.

In statistical decision theory the experimental information is combined with other relevant problem aspects with purpose to find the best solution.

Several tools for structuralization of decision problems are known. The suitability of application of any of them depends on the character of the particular problem.

Some decision problems can be structuralized by payoff table or loss table. This problem and other ones with similar structure can be structuralized by help of the decision tree or the so-called influence diagram. In the article mainly the influence diagrams are mentioned (less presented in our literature so far) and compared with decision trees on the example of the decision problem known as "prospector problem".

The influence diagram enables a simple graphic projection of the decision problem. It consists of value nodes, decision nodes, chance nodes and arrows, which connect them. In the influence diagram there are mentioned also all options related to the corresponding decision nodes, also all results related to chance nodes together with probabilities of their coming and yields related to value nodes.

The conditional Bayes decision principle is being used by solving decision problems. In our literature you can find the most known decision trees solution algorithm called the decision tree reduction, it is not mentioned in our article. One of the solution algorithms of influence diagrams is mentioned in detail.

Generally, every decision problem which could be structuralized and solved by decision tree, can be structuralized and solved by the influence diagram as well, and the same results are obtained, and also the other way round.

Decision trees and influence diagrams suitably supplement each other. The most suitable application of influence diagrams is in the problem structuralization stage, to describe the structure of large decision problems. Decision trees are very suitable to describe the problem in details.

Often we begin with the construction of influence diagram to easier understand the basic problem items. Then follows the conversion into the decision tree with the goal to better understand the problem details. The influence diagram can be more effective by presenting the problem, decision trees can be more effective e. g. in sensitivity analysis.

It depends only on the character of the solved problem, which of these techniques will be dominant for a concrete problem solution. These techniques are complementary, not competitive.

Excepting the conditional Bayes decision principle also other decision principles exist. The majority of them have only theoretical importance.

There are the decision problems in which the set of all possible states of nature is the finite interval, equal to the set of all possible actions. The decision problems exist in which the set of all possible states of nature is the finite interval and the set of all possible actions is the finite set.

In the given example both the set of all possible states of nature and the set of all possible actions are finite sets and the making of the sequence of decisions is necessary. The decision problems of this type are the most frequent in practice.




The core of the explanation in this paper deals with the secondary generalisation of the Schumpeter’s oscillation model in economic systems. As already known, W. Weidlich and G. Haag made the first generalisation of the Schumpeter’s evolution model by means of synergetics in [31]. The authors for the sake of better comprehensibility of the problem included in the text of their paper also a simpler and in wider economic community better known model, which however can also lead towards the emergence of deterministic chaos of the "classic" Lorenz type (meteorologist E. N. Lorenz [12]). Having in mind the same aim, by bridging over both approaches in order to address better the readers, the authors avoided analytic mathematical means and used more comprehensive computer simulation and/or computer experimenting with traditional mathematical model changed into simulation model. This experimenting takes place in the STELLA toolbox.

In the innovated generalisation of Schumpeter’s oscilation, the authors replaced the original two evolution equations by the three equations striving to demonstrate that the-se equations in the extreme case identify themselves with well-known Lorenz approach or may be with his reduced system of the three evolution equations describing the dynamics of climatic systems. That might mean that also evolutionary economic systems can tend towards the emergence of such chaotic regimes. This conclusion might explain the fact why economic oscillations bear in general the signs of chaotic dynamics, and the fact that Lorenz system of evolutionary equations is characterised by certain universality, as their validity proved itself in various systems qualitatively differing one from another. In recent 10 – 15 years, one discovered in scientific and special literature various applications of chaotic dynamics for economic brainteasers. In the attached list of literature, the reader can convince oneself – the authors point out in the text at some interesting solutions.

The authors in their research of complex and adaptive economic systems gain new knowledge on the two mutually complementary tools:

Alas, one has to observe that most delay in this respect has been generated under the new regime, when during the eager surplus labour at the condemnation of the Marxist paradigm of the economic thinking one stressed relatively obsolete mode of the neo-classic economy.

That proved to be most conspicuous by raising the textbook of Samuelson and Nordhaus up to the altar in the role of solitary Holy Script. The authors wish by no means to discredit the quality of this textbook acknowledged throughout the world, they point out also by this contribution, that the latest trend within the framework of the main stream economics accept many newer achievements from the area represented by non-linear dynamics applications. After all, Samuelson is known by his acceptance of new achievements of economics and was able to include masterly these new achievements into the cited textbook throughout of his all scientific and tutorial career. The authors feel as disparagement of Samuelson’s lifelong effort the aspiration of several Slovak economists to conserve the knowledge of Samuelson’s earlier edition textbook of in our conditions.

The authors of this contribution want at the same time express their discontent with the fact that the Journal of Economics as an academic periodic culpably resigned to the development of the academic economic science. This deviation went on throughout an unbearably long time interval and was compensated by pragmatic articles and utilitarian analyses of the economic practice. The authors accept, however, that social order as well as other problems, as for instance financing, made the publisher and editorial board to function in such undue solutions. However, such a frontal retreat from the mission of academic journal that we witnessed in recent years was certainly not justified.

When we abandon the strict mathematical definition, we can the dynamic system call a "complex" one provided it is non-linear and suitable to characteristics having at least three following features:

  1. discontinuity in time in its condition variables,
  2. sensitive dependence on initial conditions, or
  3. aperiodicity ("irregularity") of fluctuation shapes.

Most important is, however, that such features should occur endogenously inside the dynamic system itself and not as external perturbations in such an appearance as for instance series of random shocks used by classic economy in its models of the real industrial cycle. This gives our system Keynesian character.

Should we want to enumerate at least a concise list of approaches of the complex dynamics applied in economics, we should mention at least the theory of catastrophes, systems of interactive particles or cells, fractals, evolutionary synergetic, odd attracts, and above all the theory of chaos, the application of which is the theme of this subscription.

From the point of view of better orientation of the reader, we mention at least selectively the following development sections on the relevant problem, while what we only suggest or name is explained in more detail in the main text. As one generally knows currently more today, the theory of chaos has begun by the research results of the meteorologist E. N. Lorenz (1963). This theory based on the idea of sensitive dependence of the dynamic process on given initial conditions was further developed by Li and Yorke (1975), and later by various mathematical personalities. Plainly speaking small changes in the parameter value at the process start or small changes of the initial value of the agent delivering impact to the process are sufficient to lead the system towards the behaviour which differs dramatically from the initial small change. There is a metaphoric example well known from current literature as an effect of the wave of butterfly wings: "... butterfly wings wave over Hong-Kong and result is a hurricane over Florida."

This effect, when related to the economic problems is used for instance for the denial of the information value relevance in the theory of rational expectations in less stable conditions. Let us add that just in transitive economies the conditions are strongly non-stationary, or have a high rate of uncertainty. For instance in Slovakia this high uncertainty rate is instigated or even accelerated to the unbearable magnitude the Government and Parliament by their legislation process that smashes the quality of Constitution, Acts and other state regulations of equal statute. Alas, many Acts adopted also during the government period of the recent coalition instead of strengthening and stabilising the state and society have taken over fundamentally destructive character.

In the course of the past 20 – 25 years, one of the authors in the Journal of Economics published many papers and articles for discussion, where he pointed out at the need to research more intensely into the problem of the influence of chaotic dynamics in market economies that strongly depend on stock-exchange speculations and voluntary behaviour of central banks. He criticised some approaches that oversimplified objective economic reality. And criticised also concrete models of such authors as Schinassy (1981), Benhabib and Day (1982); Grandmont (1985), who at their times were the pioneers in exploiting these tools.

In any case, however after the lapse of years one should say that the potential of numerous tools suitable for the research of chaotic dynamics in general as well as in the economic research in particular have not yet been exploited in full. Some of these uncertainty cases can be considered to be similar as are the sources of fundamental uncertainty of Keynes’ type. In the presented contribution we try to prove, how one can endogenously generate aperiodicity and typical chaos within the framework of modelling of the chaotic dynamics related to the economic development.


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