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Slovakia Aims To Be Europe's Most Business Friendly Country - 2004-06-16

In just six years, the Central European country of Slovakia has moved from near political isolation under authoritarian rule to being a member of NATO and the European Union. On top of that, it also has a booming economy. Slovakia's transformation was discussed Wednesday at a forum at Washington's Wilson Center for Scholars.

Analysts say Slovakia has made remarkable progress since the removal of authoritarian Prime Minister Vladimir Meciar in 1998. A center-right government has ruled Slovakia since then, and one of its top goals has been to make Slovakia the most business friendly country in Eastern Europe.

The government has some recent successes to point to. In the past 18 months, Slovakia overcame competition from Hungary, the Czech Republic and Poland to win two highly prized multi-billion dollar foreign investments. Automakers PSA Peugeot of France and Kia Hyundai of South Korea chose Slovakia to be their manufacturing centers in Central Europe.

Sharon Fisher, an economist at Global Insight consultants in Washington, told the Wilson Center that political factors were critical to the investment decisions.

"I think the main reason for Slovakia's success in that area is that the other three countries all have left wing governments at the moment," she said. "And they haven't been so reform oriented, while Slovakia has a center-right government and they've really been trying to implement big tax reforms and that is seen as very helpful to foreign investors."

To attract more investors, Slovakia recently lowered its corporate income tax to 19 percent and introduced a flat income tax. For the past three years it has registered the fastest economic growth in Central Europe and it is expected to have growth of four to five percent this year and next.