Distinguished guests, ladies and gentlemen,
I am very pleased to have this opportunity to once again visit the beautiful city of Zagreb. A city that has long acted as an engine for development in the wider region. When I was growing up in the former Czechoslovakia I knew Zagreb (and Croatia) only as constituent elements of Tito’s Yugoslavia. But now, as a former Prime Minister of an independent Slovakia, I am happy to share the experiences Slovak policy makers gained in our economic transformation.
The example of Slovakia
I was deeply involved in Slovakia’s transformation process. We not only had to replace the system of centrally planned economics but also to facilitate a major industrial transition. We promoted a radical transformation from armaments to auto-production and the development of electrical engineering expertise. We shifted emphasis from traditional industries into services sectors that make full use of the latest technologies.
Today, Slovakia is a stable and successful economy operating with a European and global footprint. The European Commission forecasts economic growth of up to 3.2% per annum in the coming years. Our overall national debt has been stabilized at around 55% of GDP. Slovakia produces the highest number of cars per head of population in the entire world. This is an industry not built on one single manufacturer, but based on attracting global brands to a competitive and flexible industrial environment. An industrial base which then stimulates growth in local service providers and the wider economy.
I am confident that there are real lessons for Croatia from the Slovakian example.
The importance of investment in start-ups and entrepreneurs
The accession of Croatia to the EU affords a wide spectrum of opportunities for the Croatian people. That is not to say that these opportunities come without challenges. Far from it. But the experience of Slovakia and other states show that the long term benefits of completing economic reforms far outweighs any short term challenges posed by the transformation process.
At this point, I want to highlight the potential of the Juncker Investment Plan launched by the European Commission in November 2014. This plan provides a framework for investing in all member states of the European Union. A key focus of this investment strategy is to fund projects which will add real jobs and growth to European economies.
For all members, including Slovakia and Croatia, this plan represents an opportunity to invest in the talent of our people; to support those entrepreneurs willing to establish new start-up companies and therefore bring new innovation and energy to our economies. From investment in digital networks, to providing funding for small and medium sized companies, this plan provides the basis upon which an economic transformation can be based.
Today, more than any other stage in my lifetime, it is so important to invest in new technologies. It is my understanding that here in Croatia you have a vibrant and lively start-up environment. This is important as start-ups represent the most promising sector in terms of potential growth. Moreover the European Commission through its 2014 industrial guidelines points out that European companies must inevitably turn to innovation and high-added value practice in order to compete in global markets.
Role of the government
So what actions should national governments prioritise in attempting to forge a new economic environment? An environment that will enable smaller states – such as Slovakia and Croatia – to compete successfully in Europe and globally? Of course, having a renewed industrial base is not just a matter of helping start-ups. In this context, I highlight two important priorities:
- The creation of a friendly and responsive business environment. This is a very easy phrase to say, but in reality it reflects a wide range of administrative, political, economic and even cultural issues. However, I will just mention a couple of key points. First, it is important to create a stable and transparent legal framework that will create a credible business environment. Second, other public administration procedures (such as registering a new business or filing taxes) should be simplified as much as possible with the goal of providing these services in a transparent and accessible way.
- The development of a long term plan to support education, science and R&D (research and development). The role of the government in these areas is twofold. First, to provide the underlying support that, in effect, lays the foundations for the further, longer term development of these areas. In addition and as already noted, the Juncker Investment Plan offers real opportunities to develop R&D and innovation capacities in the SME sector in the short to medium term. Second, the role of the government is to create the environment necessary to allow private businesses, entrepreneurs, research institutes and universities to collaborate, strengthen and develop new relationships. This is often one of the hardest actions for governments to undertake as it is a long term process. However, it is also one of the most important actions any government can undertake. For a climate that supports innovation, entrepreneurship and collaborative research is a key characteristic of all successful economies.
To conclude, I simply want to thank the organisers for inviting me to speak here today. For me, the continued development of the Croatian economy remains an important priority. A priority that I will continue to address as President of the Wilfried Martens Centre for European Studies.