SLOVAKIA

Slovak Republic

Slovenska Republika

COUNTRY OVERVIEW

LOCATION AND SIZE.

The Slovak Republic is a land-locked nation in the eastern portion of Central Europe, with access to the Black Sea via the Danube River. Its neighbors are the Czech Republic to the northwest, Poland to the north, Ukraine to the east, Hungary to the south, and Austria to the west. The country's total area is 48,845 square kilometers (18,859 square miles). Much of its northern and central terrain is composed of striking mountains, similar to the American Rockies. Terrain in southern Slovakia consists of plains in the west and rolling hills. Slovakia is about the size of South Carolina, and it does not border a sea. The capital, Bratislava, is located near the country's western border and is not far from Vienna, Austria. Other major cities include Košice in the east and Banská Bystrica in the center of the country.

POPULATION.

The population of Slovakia was estimated to be 5,407,956 in July 2000, an increase of 3.25 percent over the 1980 population of approximately 4,996,000. The birth rate stood at 10 per 1,000 in 2000, and the death rate was 9.29 per 1,000, resulting in a growth rate of .12 percent for 2000. Following this trend, the population for 2010 is projected at 5,473,203. The population has become increasingly urbanized, with 56.7 percent of Slovaks living in cities in 1999, up from 49.2 percent in 1980 and 32.8 percent in 1960.

Several ethnic groups make up the population. About 85.7 percent of the people are Slovak, and 10.6 percent are ethnic Hungarians. Although the census data registers 1.6 percent of the population as Romany (Gypsy), this figure is believed to be an underrepresentation, with some experts estimating as many as 500,000 Romany living in Slovakia. There are also small numbers of Czechs, Moravians, Silesians, Ruthenians, Ukrainians, and Poles. Approximately 60 percent of the population is Roman Catholic, about 10 percent is atheist, 8 percent is Protestant, 4 percent is Orthodox, and 17.5 percent list their religion as "other."

OVERVIEW OF ECONOMY

The nation that is now known as Slovakia was part of the Hungarian portion of the Austro-Hungarian Empire until the end of World War I in 1918. It then became a part of the new nation of Czechoslovakia. During the 1930s, Czechoslovakia was an industrial powerhouse in Europe. After World War II, Czechoslovakia fell under the political and economic influence of the Soviet Union, and Czechoslovak economic performance began to stagnate under communist rule, which mandated state ownership of enterprises, state-led central planning of economic activities, and artificial price controls . In 1968, after some Czechoslovak leaders attempted to introduce some political, cultural, and economic liberalization , the country was invaded by the Warsaw Pact troops of neighboring communist countries under the direction of the Soviet Union. This intervention put a stop to liberalization and introduced a period of "normalization" in which the government attempted to increase production of consumer goods in exchange for political compliance by the people. In spite of these efforts, the economy continued to decline, culminating in an economic crisis by the late 1980s that sparked more popular protests.

By late 1989, the more liberal policies of the Soviet Union toward Eastern Europe, as well as the weakening of communist governments in neighboring East Germany, Hungary, and Poland, made it harder for the Czechoslovak communists to retain power. In November and December of 1989, the communist government stepped down. Free elections for parliament were held in 1990, and Václav Havel was elected president. The government quickly embarked on a series of economic reforms aimed to reorient the economy towards free market principles. These reforms included economic restructuring and the elimination of government price controls. In addition, the government began the process of privatization .

From 1990 to 1992, these reforms were more popular in what is now the Czech Republic, which had a larger industrial base, than in what is now Slovakia, where several factories that had produced arms during the Cold War had been shut down. Under the country's federal structure, which gave each republic a measure of independent powers, the 1992 elections resulted in a governmental deadlock, and the newly-elected prime ministers of the Czech and Slovak republics began to negotiate the separation of Czechoslovakia into 2 independent states. The Czech Republic and the Slovak Republic became separate sovereign states on January 1, 1993.

Compared to the pre-1993 economic reforms in Czechoslovakia, the economic reforms that took place in Slovakia between 1993 and 1998 occurred at a slower pace. While the country registered continued growth in GDP during this time, international investment did not reach desired levels. In 1998, a more reformist government was elected and began to accelerate the pace of economic reforms. For example, as part of the privatization process, property was now being sold to qualified individuals at regular prices, putting a halt to the previous government's attempts to sell off property to unqualified friends of government officials at artificially low prices. Reforms also improved conditions for foreign investment in Slovakia, paving the way for increased employment and for future accession to the European Union.

Slovakia's strongest economic sectors are industry and services. Its primary industrial products include iron and steel, machinery and equipment, motor vehicles, manufactured goods, plastics, chemicals, and armaments. The country's primary agricultural products are wheat, potatoes, barley, sugar beets, and grapes for wine-making. The Slovak Republic's primary mineral products include copper, iron, lead, lignite, manganese, and zinc. The vast majority of the country's energy is imported from outside sources, although there is some hydroelectric and nuclear power.

The Slovak Republic has applied for membership in the North Atlantic Treaty Organization (NATO) and is a prospective member of the European Union (EU). Its largest trading partners are the EU and the Czech Republic. It has received some aid, in the form of grants and loans, from international organizations such as the European Investment Bank, the European Bank for Reconstruction and Development, the International Monetary Fund (IMF), and the World Bank. Slovakia's external debt for 1999 was US$10.6 billion. Organized crime has been a negative factor in the development of the economy, as occasional violence between organized crime factions, such as car bombings, have deterred potential foreign investors. These gangs, composed of Slovaks and immigrants from the former Soviet Union, have in some cases also extorted payments from some small business owners.

POLITICS, GOVERNMENT, AND TAXATION

Slovakia is a parliamentary democracy with a directly-elected president. A unicameral (one-house) National Council of 150 members is elected via a proportional system in which voters indicate a preference for parties rather than for specific candidates. Each party that receives at least 5 percent of the vote is assigned a number of seats in parliament according to the percentage of ballots it receives. Terms are for 4 years. Judicial power is vested in a Supreme Court, elected by the National Council and a Constitutional Court appointed by the president from nominees approved by the National Council.

Although the president was initially elected by the parliament, the office of president has been chosen by direct election since 1999. The 1st president to be chosen by direct election, Rudolf Schuster, was elected in 1999 for a 5-year term. He succeeded Michal Kovac, who served as the 1st president after being elected by the parliament in 1993.

The 1st elections in the independent Republic of Slovakia took place in 1994. At that time, the Movement for a Democratic Slovakia (HZDS) emerged as a clear victor, as it had in 1992. This party, which is a weak supporter of free-market reforms, formed a governing coalition with the xenophobic (anti-foreign involvement) Slovak Nationalists (SNS) and the Slovak Workers (ZRS). In spite of a very slight victory for the HZDS in the 1998 elections, the party's inability to form a governing coalition gave power to a broad-based coalition that included the free-market reformist Slovak Democratic Coalition (SDK). Other significant political parties include the Slovak Communist Party (KSS) and the reformist Democratic Union (DU). There is also a new, centrist party called Smer (Direction).

The government has played a significant role in the economy during the process of changing from a centrally planned communist system to a market-based system. The HZDS-SNS government in power from 1994 to 1998 not only slowed economic reforms but also did some damage to the privatization process by selling direct shares of state industries instead of distributing shares through a voucher process (in which all citizens obtained vouchers to purchase shares in formerly state-run industries), as had been initiated under the Czechoslovak state. It had originally been intended that these sales would take place via public auction, but the HZDS-SNS government made the transfers independently of public discussion or knowledge. There have been allegations that the transfer of many of these enterprises occurred under dubious circumstances, especially between 1996 and 1998.

In spite of these setbacks, the economy is currently dominated by private activity, and the vast majority of economic activity originates in the private sector . The reformist government that took power in 1998 has actively attempted to implement numerous reforms at a rapid pace, with the goal of having Slovakia enter the European Union in the near future.

The Slovak Republic adopted the Commercial Code that was initially formulated in 1991 under the Czechoslovak state. It outlines legal protections for private property and business activities for both Slovaks and foreign persons. Government reforms have also stabilized the Slovak currency and made it convertible to other currencies on the world market. The government has effectively reoriented trade towards Western partners in an attempt to integrate with EU markets.

The government obtains revenue through several different forms of taxes. There is a progressive personal income tax with 7 rates that ranges from 12 to 42 percent. The corporate income tax is 29 percent, although tax holidays or specific tax breaks for some businesses are offered as part of an effort to attract foreign investment. Other taxes include property taxes, road taxes for business vehicles, inheritance tax, and fees for administrative services. There is also a value-added tax on goods; excise taxes on alcohol, tobacco, and some fuels; customs duties ; and real-property transfer taxes. The court system enforces the commercial code, but as it is often overloaded, plaintiffs may experience significant delays. The military has little or no role in controlling economic development, except for the armaments industry.

INFRASTRUCTURE, POWER, AND COMMUNICATIONS

Given the former communist emphasis on public goods, Slovakia inherited an extensive network of public transportation, in the form of bus and train routes, from Czechoslovakia. Even some of the most remote locations may be reached by bus. One of the most significant changes of the post-communist era has been an increase in independent auto ownership. There are 17,710 kilometers (11,005 miles) of highways, including 288 kilometers (179 miles) of expressway, with only 177 kilometers (110 miles) remaining unpaved. A large-scale improvement is planned for the highway system with a cross-country expressway slated for construction. Continued improvements are planned for the railway system in order to bring it more in line with EU standards. The country now has 3,660 kilometers (2,274 miles) of railways.

There are 18 airports in the country. The largest public airports are in Bratislava and in Košice, the second-largest city. Many visitors also enter Slovakia via the Vienna airport, which is only 25 miles away from Bratislava. The 172 kilometers (107 miles) of waterway are provided by the Danube River, which gives Slovakia access to the Black Sea via ports in Austria, Hungary, the former Yugoslavia, and Romania. The 2 port cities are Bratislava and Komárno, both of which host shipping companies.

Electricity production stands at 20 billion kilowatt hours (kWh), and the country relies on a 220-volt power system. Most electricity is generated by nuclear power (56 percent), followed by imported fossil fuels (24 percent) and hydroelectric power (20 percent). One of the 2 nuclear plants was being upgraded as of 2000, and the construction of an additional hydroelectric power plant on the Danube has been delayed by a dispute with Hungary.

Slovakia's communications infrastructure is rapidly modernizing. In 2000, Slovak Telecom, the former state-owned communications monopoly , was largely privatized, and access to telephone service is easier. The increased entry of private telecommunications providers and the growing popularity of mobile telephones now provide more competition in this industry. There are 87 mobile phones per 1,000 people in the Slovak Republic, compared to 50 per 1,000 in neighboring Poland, and there are 2 providers of cellular phone service and 5 large Internet service providers. Internet cafes are readily available, which make up for the fact that relatively few Slovak households contain computers (65.1 per 1000 people in Slovakia, compared to 97.3 per 1,000 in the Czech Republic and 457 per 1,000 in the United States). Slovakia also lags behind the Czech Republic in the proportion of radios and televisions but is on a rough par with Poland in these categories.

ECONOMIC SECTORS

Since the 1990s, Slovakia has experienced a drastic production shift away from the industrial sector and towards the services sector. In 1998, the proportion of contributions to GDP from services, industry, and agriculture were 62 percent, 33 percent, and 5 percent, respectively. This change has not merely resulted from the 1993 separation of Czechoslovakia, since the Czech Republic has been experiencing similar dramatic shifts. Rather, it is a side effect of the transformation from the central planning of the communist system to a market-based system. The communist system created several large monopoly industries in specific sectors, such as pharmaceuticals and machine production. Once privatized, only some of these industries have been competitive in a free-market environment. While the service sector was given a low priority under the communist system, the free-market environment has demonstrated a strong demand for growth in this sector.

GDP showed generally continuous growth during the 1st decade of the transition. However, some irregularities in the privatization process were among the factors that prevented Slovakia from attaining levels of foreign direct investment (FDI) comparable to that of its neighbors. A restructuring of the government and economic policies in 1998 has brought renewed investor interest in Slovakia. The most famous Slovak industry to survive the transition process is the VSŽ Steel company in Košice, now a partnership with U.S. Steel. Volkswagen also set up operations in Slovakia in the late 1990s.

Under the communist system in Czechoslovakia, Slovakia produced 80 percent of the state's armaments, many of which were exported to eastern-bloc allies. With the end of the Cold War, these factories were shut down. This sector had at one time contributed 5 percent of total industrial production and 12 percent of exports, employing 80,000 people. The closing of the factories was highly unpopular in Slovakia, and played a contributing role to the eventual breakup of the Czechoslovak state. Some Slovak arms production has now been resumed.

The sectors that are projected to have particular growth potential are pharmaceuticals, infrastructure, information technology, equipment and equipment services, business services, and tourism.

AGRICULTURE

The agricultural sector is the smallest in the Slovak economy, making up approximately 5 percent of the GDP, although some sources argue that this proportion is higher. According to 1994 figures, the agricultural sector employs 8.9 percent of the labor force , or 295,480 people. More than one-third of Slovakia's territory is cultivated, and the primary agricultural products are sugar beets, potatoes, wheat, barley, fruit, forest products, corn, pigs, cattle, poultry, and sheep. Grapes for wine production are grown in some hilly areas, and tobacco is cultivated in valleys. Animal products, including oils, represent over 80 percent of all agricultural receipts.

Under the communist economic system, much of Slovakia's agriculture, particularly on the plains, was collectivized, meaning that small private farms were taken by the government in order to create state-owned cooperatives. Under this setup, individuals who lived in a village would be employed by the nearby collective farm. After the collapse of communism in 1989, these cooperatives were transferred to private owners, often by the direct sale of the farm as a unit, though some lands were also restored to their former owners. The government has embarked upon a long-term agricultural policy in an effort to modernize this sector for the world market.

Food consumption has diversified with the introduction of the free market system , and food items that are not produced domestically, such as tropical fruits, are easily imported. These items were more difficult for individuals to obtain under the communist economic system.

INDUSTRY

Industry is a large but declining sector of the economy of Slovakia. According to 1998 data, industrial production made up 33 percent of the country's GDP and employed 37 percent of the labor force, or 1,238,360 people, in 1994. Slovakia is experiencing a long-term decline of industrial production as fewer unnecessary products are being produced under capitalism as were produced under communism. There has also been a reduction of heavy and light industry and a move toward services. In the first decade of the free-market economy, employment in the industrial sector shrank, with the most significant job losses in the areas of construction, machinery and equipment, metals and fabricated metal products, and mining and quarrying. The only increase came in the area of textile production. In spite of this decline, industry continues to produce a significant portion of exports from Slovakia to other countries.

While the majority of large and medium-sized enterprises have been privatized, some companies remained in government hands until as late as 1999 and 2000. Some of these companies had significant debts, making their privatization politically unpopular because of potential job losses. Other companies were initially categorized as strategic enterprises and were left out of the first efforts of privatization. In 1998, Slovak Telecom and SPP, the Slovak gas company, were privatized.

MANUFACTURING.

Many of the remaining manufacturing plants that were privatized after communism included outdated equipment. Thus, foreign direct investment has been extremely important in determining which industries survive the transition to a market economy. Foreign investment was particularly helpful in the areas of transport machines, auto production, and steel production. The most sizable investments were made by the German company Volkswagen and by U.S. Steel, which purchased the large East Slovakia VSŽ Steel plant in the late 1990s. Automobiles and steel are among Slovakia's most successful exports. Chemical production has recently averaged approximately 18 percent of total industrial output and includes chemical fibers and plastics. Other important sectors are the production of textiles, clothing, and leather products such as footwear, fuel and power production, and construction.

The late 1990s saw some decreases in the production of manufactured products, as well as in chemicals, while exports of crude materials remained at steady levels. According to employment figures for 1999, employment trends in various manufacturing sectors varied widely. There have been significant declines in employment in the areas of basic metals and fabricated metal products, machinery and equipment, and construction. The following manufacturing areas registered positive increases between 1998 and 1999: textiles, electrical and optical equipment, pulp and paper products, leather products, and transport equipment.

MINING.

Approximately 4.6 million tons of coal are mined in Slovakia each year. Other significant minerals include iron, copper, lead, manganese, zinc, mercury, and lignite. Employment in the mining sector declined during the 1990s.

CONSTRUCTION.

Construction levels initially increased dramatically after 1989, and building materials represent over 3 percent of industrial output. However, at the end of the 1990s, construction began to experience some fluctuations in employment.

SERVICES

As part of the general transformation of the economy in the transition from a communist to a capitalist system, the service sector in Slovakia has experienced sizable growth while the industrial and agricultural sectors have declined. In 1998, the services sector accounted for 62 percent of total GDP, and, as of 1994, it employed 54 percent of the labor force, or 1,786,160 workers. Significant increases in employment in the late 1990s were located in the service sector, in the areas of wholesale and retail trade, repairs, and hotels and restaurants.

FINANCE, BANKING, AND INSURANCE.

As insurance was not provided under the communist system, there was significant growth in this area during the 1990s. Financial services and consulting companies experienced similar growth. Although foreign companies initiated growth in this sector, they now have some domestic competitors. An increasing number of commercial banks are under private and/or foreign ownership.

RETAIL.

The retail portion of the service sector has undergone dramatic changes since 1989. Under the communist economic system, retail was limited to state-owned shops where product shortages were common and the displays unattractive. In an effort to promote full employment , these stores maintained a complicated point-of-purchase system that required several steps with different clerks at each level (selecting the product, paying for it, and receiving it). Retail stores were privatized as part of the process that took place under the Czechoslovak state before 1993. The current retail sector consists of privatized, restructured stores as well as completely new stores that have adopted capitalist marketing methods. Among the most popular products for consumer consumption are automobiles and foreign-produced appliances, such as televisions, VCRs, and stereos. The repair sector is also growing.

TOURISM.

Tourism has increased significantly since 1989, and it is targeted as a primary sector of growth. Slovakia's chief urban attractions are its largest cities, the capital city of Bratislava and Košice. The country's best known feature is the striking High Tatra mountains, comparable to the American Rockies, which offer numerous opportunities for outdoor tourism such as skiing, hiking, mountain climbing, and cave exploration. Visitors are also attracted by the region's historic spas and castles. Slovakia hopes to make a bid to be a site for a future Winter Olympics.

The number of tourists visiting Slovakia steadily increased after 1989, with the majority of visitors coming from Western Europe and neighboring countries. The dramatic increase in tourism has led to an increased need for tourist services, particularly hotels, and hotel accommodation income increased from 1.1 billion korunas in 1993 to 1.8 billion korunas in 1995. In 2000, some 2.8 million tourists spent US$431 million in Slovakia. Unlike the situation under the communist system, which featured a state-run, monopolistic tourist bureau, the majority of tourist facilities have now been privatized.

INTERNATIONAL TRADE

Since it became an independent state in 1993, Slovakia has had a trade deficit , meaning that it imports more than it exports. The former Czechoslovak state also consistently registered a negative trade balance between 1975 and its separation into the Czech and Slovak Republics. In 1999, it exported US$11.2 billion worth of goods and services while importing US$10.1 billion.

Slovakia's primary industrial exports are various manufactured goods, among them metal products and wood products, such as paper, as well as machinery and transport equipment. In 1998, these categories comprised 43 percent and 37 percent of all commodity exports, respectively. Other significant exported commodities were chemicals, which made up 9 percent, and raw materials, which amounted to 4 percent. Of the EU countries, Germany and Austria are the primary consumers of Slovak exports (at 29 and 7 percent of exports, respectively), but the Czech Republic (with 20 percent) also consumes a significant volume of Slovak products.

Some 40 percent of all of Slovakia's imports for 1998 were classified as machinery and transport equipment. Other imports included intermediate and miscellaneous manufactured goods, which comprised 28 percent of imports, chemicals (11 percent), and fuels (11 percent), although increasing fuel demand makes this a rapidly-growing import sector. The primary sources of imports from EU countries are Germany (26 percent) and Italy (6 percent), with the Czech Republic (18 percent) and Russia (10 percent) also serving as important importers.

In the early 1990s, the Czechoslovak state made a concentrated effort to shift trade away from the former Soviet Union and former Soviet Bloc countries and to the European Union and the United States. In contrast to the previous Slovakian government, the government elected in 1998 began to actively encourage this shift in an effort to improve the country's chances for entry into the European Union. Trading patterns now show increased volume in trade with the European Union and the United States and decreased volume with other eastern European countries and the former Soviet Union. As one result of this shift, trade with the Czech Republic has been in decline, in spite of a favorable customs union between the 2 countries. The Czech Republic made up 39 percent of Slovakia's foreign trade turnover in 1993, but, by 1999, it was about half that (18 percent). Both countries have instead been registering increased trade with the European Union, which now accounts for approximately 56 percent of Slovakia's foreign trade.

MONEY

Since 1995, the Slovakian koruna has been generally convertible to other currencies on the world market for trading purposes. In January 2000, it was being exchanged at the rate of 42.059 korunas to the U.S. dollar, up from 29.713 in 1995. The Slovak National Bank serves as the country's central bank and sets monetary policy . It is designed to be autonomous from political structures. In spite of the bank's generally responsible policies to curb inflation , the currency has been in a slow state of decline for several years. As a result, imported products are becoming increasingly harder for Slovaks to afford. In addition to the central bank, there are 2 agencies to assist banks and companies through the bankruptcy process.

The privatization of banks in Slovakia has been a complicated process, and the state retained shares in the 3 strongest banks as of 1999. In that year, the government began a program to reduce the amount of state ownership in the banking sector (a holdover from the communist system) and to increase the amount of private ownership of banking. This restructuring is understood as a crucial step in the transition to a market economic system. There is also a growing amount of foreign investment and ownership in the banking sector. This process corresponds with the country's efforts to prepare for future integration into the financial structures of the European Union.

The Bratislava Stock Exchange is the seat of much of the securities trading in the Slovak Republic. There is also an electronic exchange market called the RM-system, also for the trade of securities. A database of all listed companies is maintained by the Center of Securities of the Slovak Republic, a joint-stock company.

POVERTY AND WEALTH

In 1998, GDP per capita was US$3,822 in Slovakia, as compared to $5,142 in the Czech Republic, US$2,900 in Poland, and US$23,200 in the United States. Four decades of communist rule in Czechoslovakia (1948 to 1989) had a strong and enduring effect on the distribution of incomes in Slovakia. Under communism, wages were artificially kept at similar levels, so professionals such as doctors earned wages similar to those of factory or construction workers. Because property had belonged to the state and housing was distributed through state channels, those individuals who obtained large homes often did so through political means, such as good standing with the Communist Party.

By 2000, with the privatization of property, home ownership is increasingly becoming a privilege of financial success. However, the Slovakian government that administered the privatization process throughout most of the 1990s did so in a non-transparent (secretive) way, making it clear that political affiliation mattered for the acquisition of property at reduced rates. Such instances of corruption have allowed a few individuals to improve their economic standing through dubious means.

Although the social structure is rapidly moving toward a hierarchical class system, as of the late 1990s, income distribution and consumption in Slovakia remained more equalized than in the United States. In the United

States, the richest 20 percent of people earn and consume 46 percent of available wealth, as compared with Slovakia, where the richest 20 percent earn and consume only 31 percent of available wealth. In the United States, the poorest 20 percent earn and consume only 5 percent of available wealth, but in the Slovakia, the poorest 20 percent earn and consume nearly 12 percent.

Under the communist system, higher education and health care were freely provided by the state. Slovakia has been implementing reforms that require individuals to pay for these services. These reforms have been difficult for average individuals because institutions such as a comprehensive student loan system or health insurance have not yet been fully developed. The state does provide a social security system and some social assistance.

WORKING CONDITIONS

Slovakia's labor force is 3.32 million. Because the previous communist system required women to work outside the home, many are now choosing to remain at home when they have children, in contrast to trends in the United States. In 1999 and early 2000, the rate of unemployment, which registers those actively looking for work, reached

nearly 20 percent. It now appears to be declining, with unemployment for late 2000 at 16-17 percent. Many experts believe that high levels of unemployment are difficult to avoid in the ongoing transition period. The government has focused its energies on improving foreign investment and business possibilities in an effort to promote new jobs, and unemployment benefits are available, as well as progressive provisions for paid maternity leave.

Unemployment is at the lowest level in the capital of Bratislava, where wages are at the highest level in the country, and in the eastern region of Košice. In 1994, the majority of those employed, 53.8 percent, worked in the service sector. Industry employed 37.3 percent of the workforce, and the remaining 8.9 percent worked in agriculture. Given the importance of foreign investment in the economy, those workers who speak English and German have an advantage in the labor market.

There is an active confederation of trade unions, with the largest single union being the Engineering and Metal Union. The majority of all workers are union members. Slovakia has instituted a system of laws that prohibits employment discrimination on the basis of race, sex, language, religion, faith, and political views. However, discrimination against the hiring of Romany people (Gypsies) persists in practice.

COUNTRY HISTORY AND ECONOMIC DEVELOPMENT

500 A.D. First Slavonic tribes appear in region.

830-900. Period of the Great Moravian Empire.

863. Christianity enters the region, brought by the monks Cyril and Methodius.

907. The Moravian Empire is overthrown by the Hungarians (Magyars), leading to rule by various Hungarian kings.

1526. The defeat of Hungarians by the Turks in a battle moves the administrative seat of Hungary northward, to what is now Slovakia. This situation lasts until the late 1600s.

MID-1800s. Increasing Slovak national identity is particularly centered around language.

1867. The Austro-Hungarian Empire is divided into 2 parts. The Slovaks remain under the rule of the Hungarians, based in Budapest, while the Czechs are under Hapsburg rule.

1918. The Austro-Hungarian Empire disintegrates at the end of World War I and Czechoslovakia becomes an independent nation.

1938. Adolf Hitler's Germany is given a piece of Czechoslovakia by the Munich Agreement.

1939. Germany attacks Czechoslovakia at the start of World War II. Czechoslovakia is dissolved and Slovakia becomes a puppet state allied with Hitler's Germany. Many Jews perish in camps during the war.

1944. Approximately 60,000 Slovak troops engage in the Slovak National Uprising against German rule, a resistance that is put down by the Nazis.

1948. The Communist Party takes over Czechoslovakia's parliament. A communist political and economic system dominates for the next 4 decades.

1968. The Soviet Union and Eastern Bloc nations invade Czechoslovakia to counter reform attempts during the "Prague Spring" of Premier Alexander Dub ek.

1970s. Strict repression and control of the population by the Communist Party.

1977. Some political dissidents, emboldened by principles of human rights, begin to visibly resist the communist leadership.

1980s. Worsening economic conditions lead to increasing numbers of protests against communism.

1990. The first post-communist parliamentary elections are held in Czechoslovakia, and the new government embarks on a series of reforms to replace the communist economic system with a capitalist system.

1992. The second post-communist elections result in a leadership stalemate between the Czech and Slovak republics under the federal Czechoslovak state.

1993. The Republic of Slovakia is constituted on January 1. In February, it establishes a separate Slovakian currency.

2000. Slovakia is invited to begin accession talks with the European Union, of which it is already an associate member.

FUTURE TRENDS

Slovakia has come a long way since its founding in 1993 and its first decade of transition from a communist to a capitalist economic system. It is a member of several international organizations, including the United Nations, the IMF, the World Bank, and the World Trade Organization (WTO). It is also an associate member of the European Union. It aspires to become a member of NATO and is working to update its military infrastructure for this purpose. The government's primary focus in recent years has been the preparation of legislative and regulatory structures for future EU membership, for which it has made a formal application.

In spite of the enormous changes that Slovakia has successfully undergone in its first few years of independence, and particularly since 1998, more remains to be done. Some areas for improvement include: some restructuring of the enterprise sector after the negative results of corrupt "insider" privatization by the first Slovak government, increased foreign investment, a reduction of high unemployment levels, and further reforms of legislation to incorporate EU standards. Although the Slovak economy faces many difficulties, the EU has responded favorably to the economic reforms initiated by the reformist government. Whether the country is able to complete its reform process and attain membership in the EU will depend largely upon the fate of the reformist government in the next elections.

DEPENDENCIES

Slovakia has no territories or colonies.

BIBLIOGRAPHY

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U.S. Central Intelligence Agency. World Factbook 2000. <http://www.odci.gov/cia/publications/factbook/index.html>. Accessed August 2001.

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—Sherrill Stroschein

CAPITAL:

Bratislava.

MONETARY UNIT:

Slovenská koruna (Sk). One koruna equals 100 hellers. There are coins of 10, 20, and 50 hellers, and 1, 2, 5, and 10 korunas. There are notes of 20, 50, 100, 500, 1,000, and 5,000 korunas. The koruna came into being with the division of Czechoslovakia into the Czech and Slovak Republics in 1993 and is now valued at a different rate than the Czech currency.

CHIEF EXPORTS:

Machinery and transport equipment, intermediate manufactured goods, chemicals, raw materials.

CHIEF IMPORTS:

Machinery and transport equipment, intermediate manufactured goods, fuels, chemicals.

GROSS DOMESTIC PRODUCT:

US$45.9 billion (purchasing power parity, 1999 est.).

BALANCE OF TRADE:

Exports: US$10.1 billion (f.o.b., 1999 est.). Imports: US$11.2 billion (f.o.b., 1999 est.).