Labor Productivity in Slovenia: What is the Role of Intangible Investments?

Slovenia’s labor productivity growth has slowed since the late 2000s, weakening the country’s prospects of catching up with more advanced EU members. In addition to the gap in business investment, the composition of investment is also important as intangible investments are increasingly driving productivity in knowledge-based economies. This paper examines the investment gap using the extended definition of intangible investments from the Corrado-Hulten-Sichel (2005) framework, and discusses options for closing the gaps relative to the EU average and EU innovation leaders, highlighting the need for expanding access to finance for intangible investments, strengthening the innovation ecosystem, and enhancing overall business environment.