Slovenia is a small open economy experiencing strong growth since the mid- 1990s. As in many economies in transition, inequalities have been widening; nevertheless, they remain below OECD standards. Despite its small size, Slovenia’s economy is very heterogeneous with low levels of demographic and economic concentration. During the past years concentration has been rising, driven mainly by the capital region’s economic expansion. Population density and urbanisation levels remain relatively low by OECD standards, indicating the productivity benefits of agglomeration in the capital region are far from exhausted. National growth depends on the capital region, but six-non capital regions still account for the bulk of aggregate growth. All Slovenian regions but one are growing faster than the average for OECD TL3 regions. The impact of the recent crisis was quite concentrated geographically: more than half of job losses (60%) occurred in only two of Slovenia’s twelve regions. Labour productivity growth appears the key driver of regional growth closely linked to improvements in educational attainments and innovation performance.