Making the Most of Public Investment in the Eastern Slovak Republic

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The Slovak Republic joined the European Union in 2004, the Schengen area in 2007 and the euro in 2009. These events, coupled with decentralisation reform and the creation of administrative regions, have brought significant change. While overall growth has been impressive compared to OECD countries overall, benefits have not accrued equally across the country. Public investment could potentially improve regional conditions and attract private funding, but governance bottlenecks stand in the way. This case study shows that the main obstacles to effective public investment are linked to high local fragmentation as well as the challenges national and subnational administrations face in designing and implementing investment strategies that correspond to local needs. Drawing on a detailed set of indicators, the study provides recommendations to address these challenges and make the most of public investment in the Slovak Republic.



Sub-national public investment

Total private and public investment made by the business sector, households and the general government has been declining over the past years in the Slovak Republic. Nationally, public investment both as a percent of GDP and per capita in the Slovak Republic is well below the OECD average. Although the Slovak Republic’s share of sub-national investment is low compared to other OECD countries, it grew tremendously since the early 2000s. In the Slovak Republic, municipalities are by far the biggest sub-national public investors compared to the regional governments. In eastern regions (Východné Slovensko), the role of municipalities is slightly higher, as municipalities in Košice and Prešov accounted for 87% and 86% of direct public investment in their regions, respectively. The Eastern Slovak Republic faces challenges to invest in transportation infrastructure, human capital development and innovation. The density and quality of much of the region’s hard infrastructure lags behind other regions, creating bottlenecks to job creation and raising costs for firms that may wish to locate there. The Eastern Slovak Republic also needs to boost educational outcomes. Finally, Východné Slovensko has a relatively underdeveloped regional innovation system.


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