Electronic Library of Scientific Literature
Volume 46 / No. 6 / 1998
Jaroslav NĚMEC – Ivan PRACHÁR
The integration of the CEE into the EU has been often interpreted in terms of inevitability to achieve or at least to approach the "level" in the EU member states. In this context economic level of a particular country is usually measured by nominal GDP calculated in a domestic currency and recalculated (in terms of exchange rate) to some convertible currency. Thus, the nominal GDP (Y) of the Slovak economy can be exhibited as follows:
Y = (S Qj x Pj) / e; for j = 1, n;
Qj - physical quantity of good or service (commodity) “j”, which is component of GDP;
Pj - current price of commodity “j” in terms of national currency (SKK);
e - exchange rate of SKK to USD;
Hence, nominal GDP of a particular country is determined by quantity of physical
products (Q), by the price level and the exchange rate between domestic currency and the
convertible currency. The nominal GDP is influenced by any changes in the above items.
Provided, the quantity of Q is constant (physical volume of goods and services), the
nominal value of GDP in compared countries (in terms of convertible currency) might change
as a result of:
1. the diverse development of prices (which is also possible under conditions of unchanged currency relations), or
2. various developments of exchange rates.
Only in the case the price levels and exchange rates do not change, the constituents
decisive for GDP development would be the increases or decreases of Q, i.e. quantity of
physical product (efficiency of productive potentials of a particular country and the rate
of their utilisation). All we have said about dependency of GDP on the above factors
(between compared countries) is not just a theoretical possibility.
The authors illustrate on the statistical data how the quantity of nominal GDP in terms of convertible currency (and hence productivity) has been changing in particular countries also when quantity of product (Q) remained unchanged or the change was - comparing to the nominal value of GDP in terms of convertible currency - not as big. For example, in 1990 GDP in SKK in Slovakia decreased over the previous year by 2.5% while in USD it was by 46.9% (see table 1). The quantity of the product (Q) and its nominal value has also developed differently after 1990 (see the comparison of the GDP developments in both, constant and current prices, table 2) as has the relation between GDP among particular countries. Statistical values of this particular indicator had been increasing or decreasing as a result of devaluation or inflation rates and the size of indebtedness rather than an outcome of an increased physical products and changes in economic efficiency (see tables 3a, 3b, 4). Diverse evolution of factors that determine the size of GDP (in convertible currencies) has been manifested in diverse evaluation of GDP (in purchasing parity power - see table 5, 6)) in individual countries. This resulted in a rather different picture of their economic levels (see table 7) comparing to what have shown nominal GDP data in terms of convertible currency (e.g. in the USD).
On the basis of the statistical data comparison - that apparently show that the differences in official statistical values of GDP in USD do not represent distinctions in economic efficiency - the authors of the paper come to the following conclusion: the reduction of the existing lags (including those compared with the EU) cannot be restricted to the reduction of relative (per capita) differences in efficiency and performance. This outcome confirms the fact that current performance of all transition economies is below the level of their productive potentials (efficiency) prior to transformation. The utilisation of such potential deteriorated most saliently in those cases where the beginning of transition and liberalisation of foreign trade was accompanied with the largest depreciation of a domestic currency. If the depreciation of the currency emerged due to the need the expected (or already existing) demand for foreign products and services via the extent of export, than it is only natural that devaluation must had been more extensive in countries with relatively bigger demand, meaning countries with relatively higher purchasing power and more developed economy. (Both, purchasing power and the level of economic development had been higher in CSFR as compared to Hungary or Poland). As an outcome the economic performance (in the CR and the SR) diverged from efficiency (potential product) more that elsewhere. This could be also documented by the fall of GDP value comparing to its initial level. Relatively higher depreciation of purchasing power (demand) in CR and SR was accompanied with significant decline of utilisation of production capacities. However, after the fall followed a faster GDP growth and more or less equally quickly had been increasing real incomes. Balance of trade remained equal just for a short period. Already in 1995 import exceeded export that had lagged behind the growth of demand (incomes) for foreign goods. In the following years the deficit of trade balance was increasing and in 1998 again needed adjustment.
If a similar devaluation emerged as in 1991 (that should have utterly removed deficit) it would have deteriorated not only incomes but the size of production as well, followed by side effects such as increased unemployment, prices, etc.). Consequently, the gap between GDP in SR and the EU countries will broaden and the process of eliminating economic backwardness will slow down.
Taking a closer look at the development of economies in transition after launching liberalisation of foreign exchange (that took a similar shape in all countries in question), the authors reach a conclusion that the goal to achieve the economic level comparable to the EU member states depends on the degree of economic stabilisation rather than on a relative size of GDP at the onset of transition process.
An integral part of stabilisation involves the ability to keep foreign exchange equilibrium. The authors prove that the tendency towards the foreign trade disequilibrium in SR (as well as in other countries) cannot be explained by preferring foreign products by domestic subjects. The core of problems lies between the development of GDP, monetary incomes and aggregated demand. Provided, the GDP growth is determined by demand (on the domestic and foreign markets) and, at the same time, monetary incomes do not exceed the size of GDP, import should not be greater than export. After the demand for domestic product is met, the GDP along with incomes should be enlarged only as an outcome of foreign demand. Export would limit the GDP growth as well as incomes and import increase. If, despite of this import outpaces export it is because incomes - that create aggregated demand - exceed realised value of GDP. Incomes temporary allow for buying foreign goods (including raw materials and investment goods) above the level of own export. They also enable temporary continuation of GDP above the level limited by export. All these sources have character of credits (from abroad as well as internal credits sui generis), or circulate or get into markets via various channels. Because they are not related to a single country they can hardly be regarded as an incidental phenomenon, a result of wrong policies.
According to the authors the interruption of market ties between GDP and monetary incomes that leads to repeated failures of external equilibrium is called out by the need to compensate for internal disequilibrium. In a word, all this has to do with disequilibrium between the creation and the needs of sources, that level was defined by production potential before the beginning of transformation. From 1990 onwards this potential (e.g. in Slovakia) was considerably reduced. However, only that portion which had been covered via household incomes diminished consumption. Still, what has left was a significant portion of production consumption (equal to fixed assets especially to the renewals of fixed capital), and consumption of public sphere (schools, hospitals, residential buildings, etc.) This bulk of consumption might have been reduced - following the fall of the GDP - only to a limited extent. This situation resulted in the immediate internal shortage of sources, destabilisation of economies and to an intensification of pressure on all limits. Thus the internal decapitalisation, mutual indebtedness of firms, indebtedness towards domestic and foreign banks. Destabilisation that was instigated by dissequilibrium has not the same cast of character in different transition economies. Nevertheless, the starting point of a permanent growth and progress in economic adjustment towards the EU economies depend on ability to overcome the existing destabilisation.
Table 1: GDP SR in bill SKK and mil. USD in terms of exchange rate
|Indicators||1989||1990||1990/1989 v %|
|GDP in 1993 constant prices, bill SKK||493,2||481,0||97,5|
|GDP in current prices, bill SKK||267,3||278,0||104,0|
|Exchange rate of SKK/USD at the end of the year||14,29||28,00||195,9|
|GDP in 1993 constant prices, mil. USD||34514||17179||49,8|
|GDP in current prices, mil. USD||18705||9929||53,1|
Source: ; date in USD and indexes are authors calculation
Table 2: Basic Indexes of SR GDP in USD (current prices and exchange rate) and in SKK (constant prices) - year 1989=100
|current prices, exchange rate at the end of the year, in USD||100,0||53,1||59,1||62,8||64,1||73,6||92,7||101,6||100,5|
|constant prices, in SKK||100,0||97,5||83,3||77,9||75,0||78,6||84,0||89,8||95,6|
Source:  a ; authors calculation
Table 3a: CEFTA countries GDP per capita in USD (in current prices and exchange rate)
Source:  a 
Table 3b: Percent Change over Previous Year of CEFTA countries GDP per capita in USD
Source: Authors calculation based on data  a .
Table 4: CEFTA countries GDP per capita at constant prices in national currencies (year 1989=100)
Source: Authors calculation based on percent changes over previous year
Table 5: CEFTA countries GDP per capita in 1990 -1996 (in USD in terms of purchasing power parity)
Source: data for year 1991 by ; data for years 1992 - 1996 by WIIW, OECD, Eurostat ; 1) Source ;.
Table 6: Rate of Hungary per capita GDP to SR (=100) in exchange rate and in terms of purchasing power parity in USD (in %)
|in current prices and exchange rate||184,7||148,4||163,0||166,5||157,1||132,2||124,0||122,1|
|in purchasing power parity||78,6||87,5||91,7||95,2||94,1||91,0||85,5||x|
Source: authors calculation based on data  a 
Tab. 7: Per capita GDP in transition economies (TE) and in EU in 1990 (in USD, in purchasing power parity)
|GDP per||EU average|
|capita||= 100||TE = 100|
|EU -15 average||15426||100||47|
The aim of the contribution is an characterization of basic macroeconomic relationships
connected to position of market services in the economy, and identification of their
interindustrial features connected to intermediate goods market and final demand
The contribution is based on utilization of the Slovak I - O tables for the years 1987 and 1993. They represent in the one hand, the last table from the time of central planning, and in the other hand, the first table which was compiled in the conditions of economic transition.
Up to now continuance of the transition process in the Slovak Republic shows that effects of market services on economic development is given, first of all, by:
Development of market services using for individual industries was determined, first of
all, by the needs of changes in serving of material production, and specifics induced by
transition of the intermediate goods market from the conditions of central planning to the
requires of a market. With the formation of the cost structure of production of individual
industries, especially in the first years of transition process, decrease of using of
market services output in the industries of material production, and increase of using of
market services output in the service sector, were connected. In these years the
development of input coefficients for market services in individual industries was
determined by changes in functioning of these industries. The role of market services in
the development of final demand was determined, first of all, by income formation and
changes in use and creation of output.
Most important influence of market services on social development in Slovakia is given recently, first of all, by lowering of regional unemployment. Market services represent also one of most magnetic sector for foreign investors.
Developments on the Slovak capital markets were shaped through changes in privatization policy in period 1993– 1998. While investment privatization funds provided for main part of market liquidity in period 1993– 1995, direct trades between the new enterprise owners and powerful manager lobbies gained on importance since 1995. Non-standard privatization techniques and ambiguous regulatory measures undertaken by the state authorities destroyed investor confidence in the market fairness. Market manipulation distorted investment prices and Slovak capital market became illiquid and non-transparent. In 1998, a mix of government macroeconomics and capital market policies deepened the market crises. Creation of a standard regulatory framework, including implementation of the relevant EU directives, will be of vital importance for further development of the Slovak capital market.
Félix HUTNÍK – Rudolf ŠTANGA
In this paper we analyse the perspectives and possibilities of development of food
economics in Slovakia, from “the production chain” point of view. We focused our
attention on the production of agricultural raw materials and their processing, i.e. on
the agricultural & food industry as a whole (production base of food economics).
Food economics in Slovakia is still looking for its position in the whole national economy and it is not yet an active part of the economic growth of this country (from 1993). We are afraid that our food economics in its macro-economic relations could be under long-term pressure by the foreign competition. While real GDP has increased rapidly since 1994, agriculture and food industry have achieved poor results in this figure by smoothing their recession. The food trade satisfies the demand of domestic consumers that causes at the other side a huge deficit as a result of agricultural and food commodities imports that otherwise could be produced at home.
Domestic demand has been already revived but it has not stimulate positively domestic supply. The most passive branch is food industry, that is the main reason why there have been noticed no developments in the co-operative and integration processes of the agriculture raw material production.
The agricultural raw material processing industry has objectively better circumstances for a faster growth of its value added respectively of its part of GDP comparing to agriculture itself. It can increase the produced food assortment and it can better evaluate the processing of raw material. We are worried that while dealing with the solution of the recent situation, the implementation of policy measures seeking to protect the domestic producers will be a priority rather then implementing policy measures in support of more rationalised production of raw materials, final goods, or to support reciprocal economic and financial ties between the agricultural & food producers and the wholesalers.
In the production of some basic food raw materials and final goods (milk, oilseeds, sugar, beef, etc.) we overcome the proclaimed self-sufficiency. The other negative side of these commodities is that exactly the final or intermediate goods from their category are imported. For that purpose we call for a more intensive and target related support toward the restructuring projects of the food companies competitiveness and for completing of the food chain in ineffective wholesales stores and of the atomised links of foreign trade.
We are a small country and isolation is no solution at all. Without transformation in production and exporting of food, intermediate goods and other high value added ingredients, the agriculture and food industry can pave the way into sterility. With regard to international experience and tendencies in the international trade, supporting the 90% of sufficiency in the production of the agricultural raw materials looks as archaic as it is. It is more effective to achieve sufficiency or surplus in the production of such raw materials that we can be transformed into competitive final goods for the purposes of domestic and foreign trade. Subvention of the export of commodities is unproductive from the strategic point of view.
Value added is a decisive source of reproduction of the productivity of land, labour force and capital, that counts for a limited substitution of the subvention.
During this period of transformation there are two production elements of agriculture and food industry that has not achieved yet the self - financing for their reproduction purposes realised from the real increase of the value added. In one hand, more market instruments should be implemented in the agriculture and food industry management. Illusions of unreal further dependency from the state budget should be get rid of. In the other hand it is impossible to reduce the deficit of the own reproduction resources by the rationalisation of the expensive inputs (as the deficit is mainly caused by a disparity in the prices of inputs and outputs that is a fact which can not be affected by agriculture producers). For that purpose it is justified the requirement for a real liberalisation of agricultural products prices that are recently heavy regulated.
From such an adjustment of market environment, the food producers has the chance to use the raw material of improving quality and to increase their assortment of food production, that could be sold to domestics or for the purpose of restaurant or public board. This is the way how to increase the value added and to create new segments in domestic and foreign market, and this is also a natural base for a further co-operation of farmers and food producers or wholesalers. During the last two or three decades, in the agriculture part of GDP structure in developed country predominates food production rather than production of agricultural raw materials. In our country it is the opposite, when agricultural production predominates under heavenly regulated prices of agricultural products.
Food industry has shown unusual skills in its efforts to increase the real value of VA (value added) in such countries of OECD like France, Belgium, Finland, Portugal, Holland, Italy, Austria, Spain, Greece and Denmark. (Between 1976 and 1995 its increase varied from 25% to 75%). This is a challenge for our food producers too, and where could be focused the attention and increased financial injection of subvention policy.
From the comparative analysis of the developed countries economy is derived the need for a crucial change in the attitude and of the practical realisation of investments in agricultural and food industry in Slovak Republic. For the purposes of their increasing competitiveness, the investment policy should be orientated toward restructuring of food industry and principal change in its technology or in its marketing channels. At the same time VA in food production has lower requirements for investments than agriculture and their increase is slower in the first case.
Food vertical chain has been seriously extended in the main direction of production chain. In literature it could be found the term “Food Marketing Industry”. This includes activities that are related with everything that participates in inputs providing (not their production) for farmers, processing managers, wholesalers and in providing of inflows, agricultural raw materials, final foods, intermediate goods, up to the way to consumer. Recently such a complex in USA produces 10% of GDP and employs also 10% of the country working force and it has the tendency for a remarkable growth in these figures. As a part of this segment, “Food Service Industry” (offering food services out of the residence) has achieved a revolutionary development.
Food industry is a part of national economy that develops under the same rules as the global economy: the formation of VA faces stagnation in agriculture production, in branches that produce inputs for food industry and in the first processing of agricultural raw material, while it accelerates with the extension of intermediate goods (the secondary sector) and it achieves rapid growths in the field of food servicing (tercial sector). Basing on the so called substitution rate (see: Markuš, year 1970, 1987) it could be concluded that absolute employment in food industry will grow following a period of long-term fall. Employment increase in food trade and in public food service has been noticed in our country since the seventies.
Changes in the proportion of VA structure in the sectors of food industry are based on the high growth in labour productivity in agriculture and in raw material processing. This leads us to follow the so called vertical systems of VA production.
In the future, the food industry in Slovak Republic could have potential possibilities for a dynamic growth. Food industry as a whole, in a stable market system in developed countries represents an effective aggregated system and it is of high probability that it will keep this attribute also in the future, of course under the assumption of a certain level of economic growth.
Recently, the business structure is still unsettled and unclear especially in agriculture (we mean especially agriculture co-operatives). Generally, it is noticed a deficit in the private initiative that could have contributed for example in cost rationalisation.
However, in the future, we expect the creation of new forms of business that will use the advantage of co-operation and integration of individual parts of food vertical chain. This could be one of the ways of partial profit distribution to the producers of raw materials.
This statement is supported by the need to solve the dissequilibrium in the position of agriculture in the national economy by more organic forms rather then implementing only subsidies. The solution (the expected or the natural one; given by the decision of the firms) will meet barriers set up by the recent agriculture policy, that has led to an uncommon politicisation of agriculture.
Martina LUBYOVÁ – Martin MAROŠ – Ľuboslava URAMOVÁ
Inequality in the majority of Central and Eastern European countries (CEEC) during the pre-transition period was traditionally low. The income distribution was compressed, mostly due to centralised wage-setting, low returns to skills/education and major restrictions on private ownership, which more-less eliminated possibilities to receive other than social or labour income. Transition to a market economy was in many CEEC accompanied by a sharp increase in income inequality. In this paper we present our results on inequality in Slovakia and its development over time since the year 1989. We use several standard inequality measures (Theil T, Theil N, Gini and coefficient of variation) and we apply them to both income and expenditure concepts of inequality.
Iveta PAUHOFOVÁ – Edit BAUEROVÁ
The study deals with the characterisation of the possibilities of inhabitants of
Slovakia on the market of the consumer goods based on their incomes and the consumer’s
usage. Mapping a consumer’s behaviour was aimed to show the changes of consumption of
the foodstuff and non/food goods and services during the period of transformation.
Economic growth in the followed period of time was accompanied by growing share of current incomes of population on GDP (being in 1997 on the level of 80,8%). This development did not lead, however to significant improvement of income situation of inhabitants which has been markedly deteriorated since 1989. Based on (4) it is likely that the development of the economy in 1998 will affect the current incomes of the inhabitants by 10.8– 12.4%, thus the income allowances of households will slightly improve. According (8) the present consumer behaviour and fixing of the consumer usage after 1991 do not allow predict that increment of incomes causes remarkable changes in the structure of consumer expenditures and it might not also affect the consumption of goods. The structure of income of inhabitants (in the system of national accounts) may be characterised as stabilised in which 57.2% are compensation of employees, 19% gross operating surplus, 4.3% property and entrepreneurial income, 0.8% accident insurance transactions and 18.6% current unrequited income transfers.
The growth of share of income from entrepreneurship seems to be positive. If the incomes are divided to social, employee and others the last one coming from property and capitalisation represents only a minimal item (0.9%). The economically inactive persons with proper sources of income for whom almost half of their all incomes originate from property and capitalisation are the only exception. This group is however tiny at the present, being 0.08% of the all households. While as mentioned above the structure of incomes seems to be stabilised, the structure of expenditure is unstable. Significant share unrequited transfers of expenditures is caused by personal income taxes, which in relationship to the income permanently grow. Taxes of the current incomes grow gradually being 3.3% in 1994, 4.3% in 1996 and 4.8% in 1997. The volume and share of the accident insurance transactions on the expenditure increases as well, however, the income of population from these reasons is decreasing.
The present level of income situation demonstrates that after the dramatic fall in incomes after 1989 it did not reach the original level yet. The average yearly growth of the gross disposable income in period 1993–1997 was 12.1%. It was lower, than growth of final consumption of households. Gross savings in 1997 were almost three times higher, than in 1992. However, propensity to save decreased: in 1992 from gross disposable income shared 19.3%, while in 1997 only 16.2%. This development was accompanied by growing fears of population concerning the economic development, with prediction of decreasing growth of the economy in the short-term period. Development of the income distribution shows gradual deepening in differentiation of the incomes. In the interval of the lowest incomes, the first 10% of household’s dispose with 3.4% of incomes, in the interval of the highest incomes the last 10% of households have 22.5% of incomes. About 85.5% of all households did not reach 1.5 average income. The average of the income p.c. is only 1.63 times higher than the poverty-threshold, fixed by law. Under the doubled level of the poverty-threshold are the incomes of 70% of all households. Strength of concentration of the households between 0.5-1.5 poverty-threshold income level shows, that up to now the condition for creating a strong middle-class as far as the income-level concerns is insufficient. Missing this important segment of the civic society and deepening of the differentiation of the incomes will lead with high probability split the society to the haves and haves-not.
Regional data on the distribution of the incomes show that 48.6% of population of Slovakia, having disposable no more than 15 000 Sk yearly, lives in the Košice-, Prešov- and Trenčín- county. Half of the 2% of the population, having the highest income lives in the Bratislava-county. In the interval of yearly incomes between 15000 and 51000 Sk p.c., operates even 71% of the population. In the smallest villages the net incomes are by 12% lower than in the cities with more than 50 thousand inhabitants.
Because the low-income level as a whole and the dynamic growth of the prices the family-budgets are under high tension. There are only minimal reserves inside them. Main part of the net consumption expenditures covers the basic needs. Real consumption expenditures due to growing price level in spite of the growing current incomes and current expenditures remains under the level of 1989. The smallest difference from this level is in the case of the pensioners, characterised by the derived consumption-pattern, with higher expenditures on foodstuff and beverages, relatively higher expenditures on housing and lower expenditures on non-foodstuff goods.
Lasting problem of the high share of the expenditures on foodstuff, beverages and public catering, is in average proper for every social group and is connected with real fall of consumption of foodstuff in natural units as well under the volume recommended as healthy almost in every foodstuff item. Gradually increasing share of expenditures on services in 1997 decreased, what with regard to the share of them on consumption expenditures does not seem to be a positive phenomena. In the groups of foodstuff goods and the non-foodstuff goods as well, the consumption has been decreased in comparison to the 1989. This process is accompanied by the ageing of household equipment’ s by durable over 5 years (washing machines, refrigerators, and cars).
Income level of population, formed during the period of transition, does not allow renewal of the equipment of households, restricts the consumption of foodstuff in natural units, and up to now even conserves the living standard and consumption patterns of the main part of the households on the low level.
Economic theory dealing with research of small and middle enterprises put stress on
innovation processes in this kind of enterprises. One of way how to do in reality is
promotion of spin-off organisations, phenomenon very popular in OECD countries. These
spin-off organisations are consultative and research firms which are totally independent
from universities or big enterprises and have a character of commercial firms.
Mostly these firms exist in neighbourhood of science parks or incubator centres or regional centres or big enterprises. In Slovakia there do not exist such spin-off organisations in a way how we can meet them specially in Nordic countries. Also the existence of science parks is based on different ideas in comparison with OECD countries. The only possibility to promote existence of such kind of organisations in Slovakia could be due to incubator centres and due to promotion of new regional and technology policy.
Specially recent development of many regional universities in Slovakia offers a challenge how to use human potential in their region, it means how to offer young students leaving universities new jobs and possibilities to find a qualified work in these spin-off organisations or regional centres which will be created near these universities. However to organise such kind of centres need a very elaborate regional policy and technology policy with strong support of Ministry of Economy and Ministry of Education of Slovak Republic.
Tatiana KLUVÁNKOVÁ – Ružena SPÁČILOVÁ
This paper forms a part of the research project oriented on the development and support
of the democratic decision making process and sustainable development at the local level
in transition economies. The main task was to show that environmental valuation form
crucial elements of a successful planning process especially when dealing with intrinsic
and philanthropic values associated with sustainable development.
Most critical problems in decision making and nature protection under the economy in transition are addressed in the introduction. Part two discuss theoretical and methodological premises of several fundamental approaches to valuation of environmental goods with special emphasis on direct measurement of individual preferences – contingent valuation. Finally, part three deals with the first application of this approach in the Slovak Republic. Case study is based on survey research where preferences of various stakeholders (visitors, residents, local enterprises, municipalities, state administration and others), were taken into account in the initial phase of the planning process.