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Crisis in Slovenia: Roots, effects, prospects

Kržan, Marko
The author examines the last 20 years of Slovenian economic history. He argues that export-led economic model based on depreciated domestic currency and capital controls enabled stabilization and convergence with developed EU economies until 2004. The period of debt-led growth characterized by instability and recurrent recession after 2008 is explained by dissolution of the earlier economic model after Slovenia’s accession to EU. A brief comparison is then made that reveals a striking resemblance with the case of Portugal which joined ERM about a decade earlier. From this it is inferred that the crisis is structural and that no simple return to earlier economic models could secure further convergence.