Determinants of Producer Services Development in Slovenia

Abstract

A knowledge and understanding of the role played by services in economic development have traditionally been lacking in transition economies and continue to be so today. This underappreciation of the role of services stems from the Marxist emphasis on material products. As a result, industry dominated all economic policy considerations, as well as in investment. As a consequence, most services were considered unproductive and their contribution to the efficient functioning of the economy was neglected. Intensifying with technological development, the increasing interconnections between industry and services and, in particular, the role of producer services were overlooked.' The scope for their development was additionally narrowed by the nonexistence of markets for producer services. It is not surprising that the inadequate development of producer services in transition economies in the past had strong negative effects on the efficiency of the entire economy. After the introduction of market-oriented reforns in Slovenia in the late 1980s, the perception of the role played by services in the economy improved. However, the importance of producer services has not yet been properly evaluated and fully understood. The transition toward a market economy and the implementation of related reforms require a strong, efficient service sector in which producer services play a critical role. To upgrade the level of development of producer services in Slovenia, as well as in other transition economies, the key factors determining the future development of producer services in Slovenia must be identified.