Compared with other candidate countries, Slovakia has the highest competitive advantages in the EU market for raw material, energy and capital intensive goods, while Poland and Slovenia have a better position in labour intensive goods. As regards science and research intensive goods, from among candidate countries, Hungary, Slovenia and the Czech Republic are among serious competitors of Slovakia in EU markets. The low qualitative competitiveness is still reflected in unfavourable absolute terms of trade. Export unit values in 2000 were still lower than import unit values (i.e. in comparison with foreign economies), even though some improvements had occurred. The highest disparity has been recorded in energy and capital intensive commodities (basically goods with a low degree of processing), which is also evidence of their highest competitiveness through prices. It is pleasing that export and import unit values of sophisticated products became much closer in 2000.

This is possibly caused above all by companies with foreign participation, such as Volkswagen and others. Analyses of the competitiveness of the Slovak economy carried out so far have confirmed the hypothesis that labour productivity is the decisive determinant for increasing competitiveness. This means that the key problem of increasing the Slovak economy's competitiveness lies in the reduction of the lagging behind in labour productivity, combined with an increase in the share of value added in gross production. In 1997, for tradable goods (in industry) Slovakia reached only 32% of the labour productivity level in selected developed EU countries, when using value added as a measure. This was a result of the substantially higher productivity when using gross production as a measure (49%) and, contrarily, substantially lower value added rate (23% compared with 36%). Slovenia and the Czech Republic have the most favourable relation in this respect, when reaching a relatively higher value added rate, along with higher productivity when measured by gross production. As the trends in advanced economies show, the road to increasing labour productivity in the production of tradable goods goes above all through the international intrasectoral micro-specialisation. It is as yet insufficiently developed in the Slovak manufacturing, mainly in sophisticated productions, where it is most typical. As a result of changes in intrasectoral micro-specialisation, the nature of foreign trade relations is also changing. The weight of intersectoral foreign trade is declining and the importance of intrasectoral trade is rising.

Despite the fact that trade liberalisation was included in the Europe Agreement, it has not brought about any significant rise in intrasectoral trade between Slovakia and the EU in the recent past and intersectoral trade thus continues to prevail. In connection with low labour productivity and low value added rate in the Slovak industry compared with the EU average, Slovakia also records low per employee wages. In 1997, Slovak nominal monthly wages per employee in the production of tradable goods reached only 10.3% of the level in advanced EU countries, 11.1% of the level in Austria, 9.1% of the level in Germany, and 17% of the level in Spain. Obviously, real wages per employee (measured by PPPs) were higher. Yet they were still only 28% of the level in selected EU countries. The relatively low level of per employee wages in the Slovak industry is also reflected in the unit labour costs, which are lower than in other candidate countries, except Hungary. This again confirms that Slovakia succeeds in world tradable goods markets mostly thanks to competitive prices, in which low wages play an important role. Structure of the Slovak economy

The sectoral structure of the Slovak economy has changed substantially since 1989 and its proportions have become more similar to the proportions typical for EU member states; the differences found by a comparison with selected EU countries are no greater than those existing within the EU. However, if we divide the structure of production and services into more detailed layers, the lower share of modern technology and knowledge intensive activities is apparent, not only in comparison with developed EU countries, but also for instance in comparison with Hungary. The lower volume of foreign direct investment in the Slovak manufacturing with the other V 4 countries - in particular in the form of green field investments - has clearly led to a slower pace of qualitative structural changes in Slovakia. It can be expected that Slovakia's accession to the EU will bring positive changes in this respect. Slovakia achieves roughly a half of the EU labour productivity (which is several points less than in the Czech Republic and Hungary, but more than in Poland). In individual sectors, these relations are quite varied (compared with Austria). The highest relative level of labour productivity is in agriculture, which is mostly a result of the different size structure of agricultural companies in Austria and Slovakia, as well as the sharp decline in employment in the Slovak agriculture.