tion rate of 5.6% was the lowest among all transition economies (Embassy of the Slovak Republic). The decline in the inflation rate was due to developments in the capital markets and the banking sector, a decrease in food prices, price deregulation, and lower producer prices (Abizadeh, p. 172). Unemployment, on the other hand, is still a major problem in the Slovak republic. Since the end of the communist regime the rate of unemployment has been 10% or higher with no signs of improvement (Slovakia.Org, Slovak Economy). Unemployment is related to the consistent regional disparities and the inevitable restructuring of large companies (Embassy of the Slovak Republic). The most important part for Slovakia to convert to a market economy is to continue privatization of state-owned businesses and capital formation within the country (Abizadeh, p. 171). Although the privatization of small firms is complete, this sector still faces challenges such as government policy that favors large enterprises, obtaining financing at affordable interest rates, and an increase in corruption and organized crime (Tradeport). The privatization of large enterprises has also begun. Two major banks have been recently declared available for privatization (Tradeport). A government policy has also been approved that will allow the privatization of up to 25% of Slovak telecommunication (Tradeport). The governments efforts toward privatization have been limited by the amount of capital available in the Slovak economy (Tradeport). Unlike the past, the government is now encouraging foreign investors to participate in the privatization process to provide the needed capital (Abizadeh, p. 178). However, foreign investors seem to have a wait and see view involving changes in government policy that could open or close doors to industry growth and the return on investments (Tradeport).Structure of the Slovak EconomyThe three primary sectors of the Slovak economy ...
