Local roads drive national economy

Ljubljana, 10 November - In the run-up to every local election in Slovenia, dozens if not hundreds of new roads, sewage systems, schools and playgrounds are being launched, just in time to showcase the achievements of mayors seeking re-election. While these ceremonies have become part of national folklore, they also appear to be a significant driver of economic growth.

Renovation of Slovenska Street in the centre of Ljubljana.
Photo: Tamino Petelinšek/STA

Each local election contributes about half a percentage point of GDP, show calculations by the Chamber of Commerce and Industry. In good years, this constitutes a tenth of the entire GDP growth, in bad years much more.

The figure is derived from an analysis showing that over the past 18 years municipalities spent an average 39% of their budgets on investments, but in election years this share rises by 4.5 percentage points.

The trend shows no sign of letting up, as municipalities set aside 45% of their budget for investments in 2014 and 47% in 2010. The flip side of the spending is that in both those years they also registered the highest budget deficits.

"Every municipality wants to show good result to the voters. The electorate appreciates expenditure that results in physical infrastructure more than other types of spending," GZS chief analyst Bojan Ivanc said.

While the economy as a whole benefits, the main direct beneficiaries are construction firms. A recent report by the news portal Siol said that asphalt producers in central and western Slovenia were running out of asphalt because the demand is so high.

© STA, 2018