THE REPUBLIC OF SLOVENIA
THE GOVERNMENT OF THE REPUBLIC OF SLOVENIA
Gregorčičeva 20–25, 1001 Ljubljana, Slovenia Phone: +386 1 478 1000
Fax: +386 1 478 1607
E-mail:
Number: 31000-1/2013/5
Date: 6February2013
SLOVENIAN INDUSTRIAL POLICY - SIP
TABLE OF CONTENTS
INDUSTRIAL POLICY FOR GROWTH AND DEVELOPMENT - SUMMARY
INTRODUCTION
1. VISION AND OBJECTIVES
2. COMPETITIVENESS OF THE SLOVENIAN ECONOMY......
2.1. The development of the Slovenian economy in the last decade
2.2. Slovenia's rankings in international surveys of competitiveness
2.3. Analysis of the implementation of measures in the field of entrepreneurship, competitiveness and R&D activities
3. SLOVENIAN INDUSTRIAL POLICY GUIDELINES FOR ECONOMIC DEVELOPMENT
3.1. IMPROVING THE BUSINESS ENVIRONMENT
3.1.1. Functioning of the rule of law
3.1.2. Friendlier administrative environment
3.1.3. A more flexible labour market and education adapted to the economy
3.1.4. Encouraging tax environment
3.1.5. Environmental, energy and spatial policy
3.1.6. Comprehensive supporting environment for business innovation
3.1.7. Improving access to finance
3.1.8. Environment promoting creativity, entrepreneurship and innovation (CEI)
3.1.9. Effective management of companies, especially state-owned enterprises
3.1.10. Corporate social responsibility
3.2. STRENGTHENING ENTREPRENEURSHIP AND INNOVATION - FOCUSING SUPPORT ON NEW, INNOVATIVE AND GROWING COMPANIES
3.3. RESPONSE TO SOCIAL CHALLENGES - ORIENTATION OF SUPPORT TO PROMISING INDUSTRIAL AND TECHNOLOGY AREAS
3.3.1. The environmental and energy challenge and the rational use of natural resources
3.3.2. The challenge of sustainable mobility
3.3.3. Food, health and ageing population
3.3.4. Potential of key enabling technologies - KET
3.4. ACTIVITIES FOR THE LONG-TERM DEVELOPMENT OF INDUSTRY
3.4.1. Promoting internationalisation and the utilisation of globalisation effects
3.4.2. Promoting industrial development and strengthening brands
3.4.3. Restructuring companies in all stages of development
4. EU INDUSTRIAL policy and financial framework for the implementation of development policy objectives
4.1. COSME
4.2. Horizon 2020
4.3. Cohesion Policy for the period 2014-2020......
CONCLUSION
ANNEXES
INDUSTRIAL POLICY FOR GROWTH AND DEVELOPMENT - SUMMARY
In order to maintain and improve economic competitiveness in this period of financial and economic crisis, which has hit Slovenia harder than most other European Union member states, it is important to strengthen the healthy core, represented by industryas the generator of innovation, growth and jobs. Industry, which in the strict sense means the manufacturing and processing industries, contributes 20% of total value added. In addition, more than a quarter of service activities are directly related to industry. As evaluated by the European Commission, every 100 jobs created in industry create 60 to 200 new jobs in industry related activities. It is also a fact that 80% of total private investment in research and development is made within the framework of industry. Industry, therefore, is the main source of innovation, while also providing solutions to the social challenges we are facing. Since industry is interconnected with other activities, the Slovenian Industrial Policy addresses the entire economy.
The purpose of the Slovenian Industrial Policy (hereinafter referred to as SIP) is to set thepriorities for the development of industry and the economy for the period of the next financial perspective 2014-2020. SIP sets directives that already contain a range of measures intended to increase the competitiveness in the business environment, to strengthen entrepreneurship and the innovative capability of the economy, to respond effectively to social challenges, as well as activities for the sustainable development of industry. SIP is one of the key policies created for achieving strategic development objectives and is an important element in the preparation of Operational Programmes for the 2014-2020 financial perspective, as well as a basis for the creation of 2-year programmes of measures in the fields of entrepreneurship, competitiveness and technology.
The vision of SIP is to improve the business environment, to support entrepreneurship and innovation, and to develop promising technological and industrial areas that correspond to social challenges, in order to create the conditions for the continuous restructuring of existing industries into energetically, materially, environmentally and socially effective industries of knowledge and innovation, leading to longer-lasting and better employment opportunities,as well as increased integration in international business. This is the main objective of SIP, which is reflected in the increase in value added per employee (productivity), and the increase in the number of jobs for highly educated and vocationally trained staff of all generations.
The basic condition for increasing investment in technological and economic development is the improvement of the business environment by respecting the principles of sustainable development. Improving the business environment refers to the rule of law, the administrative environment, labour market and education system, tax environment, environmental, energy and spatial planning policies, comprehensive environment supporting business and innovation, access to financing, environment supporting creativity, entrepreneurship and innovation, effective management of state-owned enterprises, and social responsibility of companies.
Another important area is strengthening entrepreneurship and innovation, which is the key to expanding productivity, employment and the economy. The role of the government in this area is to improve the framework conditions for innovation and entrepreneurship by means of horizontal measures, which especially refers to the promotion of closer contact between the public research and education sector and the economy, the promotion of development activities and technological investments in companies, the promotion of non-technological innovation, employing developers in companies, the mobility of highly skilled workers to the economy, and the encouragement of innovation in companies. Given the fact that innovative and emerging companies contribute the most to achieving the objectives of higher value added per employee and at the same time to an increase in employment, special attention will be paid to the promotion of such companies.
The horizontal measures will not be enough for economic recovery and the achievement of development objectives.Therefore, it is necessary to findnew sources of economic growth and development which are based on smart specialisationthat takes into account previous investments and competencies. New sources of growth are represented primarily by responses to social challengeswith the introduction of a new paradigm of development, resulting from concepts of green growth (OECD), the green economy (UNEP) and a materially-efficient and low carbon society (EC), which are based on improving efficiency (energy, material, environmental and social) instead of relying on increasing consumption of space, raw materials and energy. Therefore, SIP defines priority areas based on the challenges, opportunities, existing competencies, capabilities and natural resources, in order to promote the development of technologies and their application in industrial sectors.
These priority areas within the challenge are as follows:
Challenge / Priority technology areas* / Key industrial sectors*Environmental and energy challenge and the efficient use of natural resources based on sustainable production and consumption / Environmental technologies (technologies for the efficient use of energy, including the economical use of energy, renewable energy technologies, technologies for increasing material efficiency etc.) / Energetics / ‘Smart’ systems
Sustainable construction
Manufacturing (especially wood-processing, metal and electrical industry and electronics)
Chemical and process industry
Sustainable mobility / Technologies for sustainable mobility / Automotive industry
Food, health and ageing population / Biotechnology and other challenge-related technologies / Pharmaceutical industry
Food-processing industry and sustainable food production
Sustainable tourism
Potential KET - Key Enabling Technologies / Nanotechnology, micro- and nanoelectronics, photonics, biotechnology, advanced materials, advanced manufacturing and process technologies / ICT
Electrical industry and electronics
New materials
Metal-processing industry, engineering and tool-making
NOTES:
* All areas of technology and industrial sectors are interconnected and there is no clear division between them. These technologies also support other industrial sectors; therefore, only key sectors of applications are stated within the framework of specific technologies. Industrial sectors do not relate to the definitions according to the SKD, but are implicit in a broader view.
Source: Ministry of Economic Development and Technology
SIP also defines activities for the long-term development of industryand the economy, which include the promotion of internationalisation and the use of the effects of globalisation to increase the involvement of the economy in international business, the promotion of industrial design, which focuses on strengthening brands, and encouraging the restructuring of companies in all stages of development, in order to make it easier to accommodate to the rapid changes we are witnessing in the world today.
In view of the fact that national development funds are increasingly limited, the efficient withdrawal of European funds is crucial for acquiring the development funds needed. Therefore, the conclusion of the document contains a presentation of the main financial resources of the EU for the implementation of development policies in the next financial perspective, including the Programme for the Competitiveness of Enterprises and SMEs - COSME, the Framework Programme for Research, Development and Innovation - Horizon 2020, and Cohesion Policy.
SIP will help strengthen the competitiveness of the economy and promote structural change, but it is necessary to be aware that companies and the economy are the real agents of change and development.
INTRODUCTION
More than other EU member states, Slovenia is facing a recession, with the slowdown in the global economy and a decline in international competitiveness rankings. Faced with the challenges of globalisation created by the global financial crisis, the governments of EU member states and the European Commission have realised that in order to maintain the stability of the EU economies, it is necessary to maintain a healthy core, represented by industry as a generator of innovation, growth and jobs.
The European Commission has defined the guidelines of the Integrated Industrial Policy for the Member States to incorporate into national development documents in the context of national strategies for achieving the strategic objectives known as Europe 2020. The guidelines were formulated on the basis of a thorough analysis of the strengths and weaknesses of individual sectors of European industry,which intensified inthe 15 years prior to the onset of the financial and economic crisis[1], but still requires active measures and incentives to face global challenges.
The objective of the Integrated Industrial Policy of the EU is to strengthen the innovative capacity of industry. The measures are aimed at the more rapid development and commercialisation of products and services, as well as ensuring that the economy and societyfocus on the inclusive and effective use of resources. At the same time, it points out the need toencourage the creation, growth and internationalisationofsmall and medium-sized enterprises, which, in the broader context of European industry, provide jobs for almost two thirds of employees and a large proportion of potential for growth and jobs.
Like other countries effected by the recession, Slovenia is also facing the challenge of how to proceed. The economic impetus we received due to the expansion of markets after accession to the EU and the stabilisation of the Western Balkans has faded; competition in global markets by emerging economies (BRICS[2]) is becoming stronger, while limited access to strategic, personnel, financial and other resources dictates the need for more effective management. The economic crisis has also led to a change in the global agenda, in which the environment no longer appears as a limitation on growth, but finding green solutions offers development opportunities. The previous traditional passive industrial policy, which focused on horizontal measures, the reduction of the role of the state and anti-trust policy, is no longer appropriate or sufficient to ensure rapid growth.
To ensure its economic and political sovereignty, Slovenianeeds the economy, particularly export industries. It needs a clear development strategy (Slovenia's Development Strategy - SDS), directed towards resolving current and expected social challenges, andrealistic policies, particularly the comprehensive Slovenian Industrial Policy (SIP), which will strengthen the global competitiveness of the economy. The prerequisites for the effectiveness of the industrial policy are the following: a different development paradigm (based on improving energy, material, environmental and social efficiency, rather than on the use of space, raw materials and energy), implemented structural reforms, consolidation of public finances, and a functioning legal and banking system.
SIP encompasses a range of directives and measures intended to increase the competitiveness of the business environment, to strengthen entrepreneurship and the innovative abilities of the economy, to respond effectively to social challenges, as well as activities for the sustainable development of industry. As one of the key policies for achieving strategic development objectives, it is also one of the frameworks for coordinating the policies of industry-related activities[3]. At the same time, SIP is an important element in the preparation of Operational Programmes for the 2014-2020 financial perspective (especially the parts that refer to strengthening research, technological development and innovations, and increasing the competitiveness of SMEs), as well as a basis for creating 2-year programmes of measures in the fields of entrepreneurship, competitiveness and technology.
The central challenge of maintaining economic growth and competitiveness, which countries, including Slovenia, are currently facing, is how to ensure the development of competences and how to respond to social challenges that require immediate action. The concept of ‘smart specialisation’, using national and regional competitive advantages, features, knowledge and competences, is now coming to the fore. Based on the existing economic infrastructure and knowledge acquired during previous periods, it is possible to start new development and improve competitiveness in both the domestic and international environment, by making changes to the development paradigm, and integrating policies, also in terms of the concept of a lead market[4], with revitalisations, updates, and innovative approaches.
A decisive step in the direction of smart specialisation is represented by three complementary development policy instruments, introduced in 2009 and 2010: Slovenian Economy Development Centres, Competence Centres and Centres of Excellence. The Development Centres are the incubation entrepreneurship environment intended for the integration and growth of young and technologically advanced companies with large and established companies in crucial areas (automotive and electrical industry, electronics, energy, pharmaceuticals and biotechnology, information and communication technology, wood processing industry, logistics, new materials). The partners of the Competence Centres are the leading Slovenian companies. There are seven Centres, established with the purpose of strengthening the competitiveness of Slovenian industry in international markets the long term. This is based on the sustainable development of technological and non-technological competences (new business models, productivity and value added) crucial to the introduction of new products and services into the market. The Centres of Excellence are led and managed by public research organisations. Their main concern is the creation of environments and consequently new knowledge, which are the foundations for applied research and for the development of potential for its use, in both domestic and foreign markets, while the Centres' horizontal priority is to accelerate the transition to an energy-efficient economy with low greenhouse gas emissions. Centres of Excellence, Competence Centres and Development Centres together form a harmonised and connected chain of value added to key strategic and priority areas for Slovenia. In an oriented and targeted way, through applied and R&D solutions, these centres all promote knowledge and technology to enter existing and new markets and market niches in the form of innovative products and services. These then provide a solid foundation for new, better and more sustainable jobs and results in a nationwide increase in prosperity. Industrial and related policies must take into account the current investments in these instruments and upgrade them accordingly, in order for the best possible joint effects of these investments to be achieved.
The competitiveness of the economy is influenced by a range of national policies, which requires a high degree of harmonisation of the development objectives and implementation measures of the industrial policy with other structural policies. First, to increase competitiveness, it is essential to consider basic business terms and conditions which actualise the fundamental principles of sustainable development, such as encouraging a legislative environment without unnecessary bureaucratic hurdles, the effectiveness of the rule of law, efficient and highly professional public administration which actively promotes sustainable consumption and production, the improvement of business and production-technological infrastructure, improved access to finance and the responsible drawing of European funds (by taking advantage of numerous opportunities to support the green economy measures), efficient and gradually greener public procurements, and labour market flexibility. The second set of policies includes those that directly affect the growth and development of companies and the economy. These are policies for research, development and innovations, entrepreneurship policy, internationalisation policy and the policy of foreign direct investment. The third set consists of policies with a strong component of the industrial policy, such as environmental, traffic, energy, regional, tax and education policy. The condition required for greater competitiveness is an effective coordination and planning of the links between the individual policies, with a well considered exploitation of the full potential in these areas, which shows as emphasised support for measures leading to the simultaneous achievement of goals in various areas.
In the last decade, the implementation of the industrial policy in Slovenia was incomplete and not integrated between individual ministries, and thus, it insufficiently improved the poor state of the fields of material and energy intensity in industry. The Programme of Measures for Promoting Entrepreneurship and Competitiveness 2007-2013 is more focused, especially in regards to financial incentives in the form of non-refundable and refundable funds for companies in all stages of growth and development. These are horizontal measures, without predetermined priority technological or industrial areas.