Source: The Encyclopedia Britannica

The brevity of the fanfare that greeted the rebirth of Slovakia in 1993 was largely an acknowledgement of economic reality. Slovak political autonomy was a popular idea, but many Slovaks viewed the pursuit of it outside the relative security of a Czechoslovak federation as potentially disastrous. Others argued that the conversion to a market economy in a federated Czechoslovakia would favour the Czech region. Geographic and historical conditions, including the central planning of the communist era, had left Slovakia more rural and less economically diversified than its Czech neighbour, which had roughly twice Slovakia's population. Indeed, the process of privatization undertaken after the fall of the communist regime in 1989 had proceeded much more slowly in Slovakia than in the Czech Republic. Furthermore, since Czechs had long dominated the federal leadership of Czechoslovakia, the Slovak regional leaders lacked experience at the national level. These factors only compounded the burden of Slovak independence.

Initially, the engineers of the political separation of Czechoslovakia had assumed that the nascent economies of the two independent republics could share, for a limited period, the existing monetary system. Such an arrangement quickly came to be perceived as untenable: Czechs foresaw a contagious inflation in Slovakia, and Slovaks feared economic "shock therapy" by the Czechs. The plan that finally emerged--in an atmosphere rife with rumour, denial, false starts, and delays--prescribed a stepped transition in which each republic would recall a portion of its Czechoslovak currency supply for stamping with a country mark, and newly printed bills would gradually replace the stamped ones. The agreement established an initial exchange rate of one to one for the new currencies.

The apportionment of government assets posed another vexing challenge. Primary among these were the former Czechoslovak military facilities. Although Slovakia had in the last years of the Czechoslovak federation accounted for as much as two-thirds of the federation's armament production, this industry was in severe decline. The majority of army bases, aircraft, and associated equipment remained on Czech soil, where the frontiers with western Europe had been more heavily protected. The complexities of partition aside, both the Czech and Slovak economies felt the drag of economic downturns in the early 1990s. Acceleration of the privatization program appeared the most promising means of increasing foreign investment.

Most Slovak employees are members of trade unions, which prior to the events of 1989-90 were controlled by the Communist Party of Czechoslovakia. With the economy in a period of transition, so, too, were the unions; their main concerns were burgeoning inflation and unemployment. The 1992 constitution guarantees the right to form unions and the right to strike.