Slovakia’s successful export‑driven growth model is under pressure from global shifts, technological change, and a weakening productivity trend. Sustaining convergence will require structural reforms to improve the business climate, boost innovation, and address skills gaps.
By Erik Frohm, OECD Economics Department
For much of the past two decades, EU accession and large inflows of foreign direct investment have helped turn Slovakia into a major manufacturing hub deeply connected to European and global value chains. Strong export performance has supported job creation, rising incomes and steady convergence toward OECD living standards.
That model is now being tested. Geopolitical tensions are reshaping global supply chains, the net-zero transition is transforming energy systems, while digitalisation and artificial intelligence are changing the nature of work and productivity. At home, the automotive industry – long the backbone of Slovakia’s export-led growth – faces a structural shift as electrification, new technologies, and intensifying competition alter how production is organised and where value is created.
With productivity growth weakening, the investment climate becoming less favourable, and skills shortages increasingly constraining expansion, Slovakia faces a decisive question: how to turn a successful past growth model into a stronger one for the future.
The 2026 OECD Economic Survey of the Slovak Republic outlines the key policy reforms needed to reach these goals. This demands renewed attention to structural reforms that better adapt the economy to structural change, boost business dynamism, and sustain economic convergence with more advanced OECD economies:
- Improving the business climate requires improving public integrity, removing entry barriers and reforming taxes. Increasing the independence of the judiciary, including by introducing sufficient guarantees of impartiality in relation to the dismissal of members of the judicial council would reduce risk of corruption. Reducing the time, procedures and required capital for starting a limited liability company and harmonising uneven capital tax rates, as well as removing of the financial transaction tax (FTT) would help spur growth and investment.
- Incentivising business R&D expenditure, which is lagging behind peer and OECD averages (Figure 2), including among SMEs, could foster innovation, support knowledge spillovers and diversify the sources of growth. Accelerating the absorption of EU funds through better project planning and execution would help scale up investments that meet well-defined priorities.
- Continuing to improve the education system, facilitating life-long learning, and increasing the use of active labour market policies that focus more on re-training and upskilling, as well as facilitating skilled immigration – including the return of Slovaks living abroad – would reduce pressing labour and skills shortages and make the economy more adaptable to structural change.
The government has recently approved a package of 49 draft measures aimed at improving the business environment. They include steps to reduce administrative burdens, raise support for innovation and investment, and ease labour-market bottlenecks through faster recognition of foreign qualifications. This indicates welcome policy advances in areas highlighted in the 2026 Survey, but the impact will depend on timely implementation. Future measures should further address barriers to investment and business dynamism, including the financial transaction tax and broader tax reform. Reforms in these areas would make the Slovak economy more dynamic, with more diversified sources of growth. Increasing the adoption of digital technologies and developing skills would allow companies to better draw on the gains from scientific advances, including AI, and position the country to become a key manufacturing location for the net-zero transition.
References
OECD (2026), OECD Economic Surveys: Slovak Republic 2026, OECD Publishing, Paris, https://doi.org/10.1787/ada964c8-en.