How can Slovakia contribute to global prosperity after #AllForJan?

How can Slovakia contribute to global prosperity after #AllForJan?

Slovakia is a relatively young country, still in its twenties. For most of our recent history since the late 1990s we prided ourselves in being a “Tatra Tiger”, a fast growing emerging economy with a strong manufacturing base (think Volkswagen) and highly skilled and productive workers at business process offshoring centers (think Accenture).

We were the country that entered EU, NATO and now produces more cars per capita than any country in the world. We offered our know-how from successful transformation towards market economy and EU access, and democratization process after socialism and after Meciar’s “illiberal democracy” period to other countries, especially in the Western Balkans (Serbia, Moldova, etc.) and Eastern Europe (Belarus, Georgia, Ukraine).

This included know-how (and how-no) from our economic reforms, judicial reforms, security sector reforms and open data transparency. We were one of half dozen countries globally that published all state contracts online. We were home to big ideas like Aeromobil, we were the “Good Idea Slovakia” country. And then a young investigative journalist Jan Kuciak and his fiancé Martina Kusnirova were murdered in February 2018.

Time for soul-searching and setting new priorities

Imagine Finland. If one asks which country has the best school system in the world, this is the country that pops in your mind. They sell their know-how to countries such as India. Their experience with school reform started in the 1960s, but Finland is able to live off this process until now, and nurture their country brand around education. Never mind that times are rapidly changing and the “broadcast” model of education built around highly competent teachers might become obsolete. Never mind that e.g. India has majority of people living in generational and near-extreme poverty, whereas in Finland very few people, if any, live without running water, electricity and toilets.

Slovakia is sliding in educational performance according to our PISA results. At the same time, Slovak students at private schools are performing on par with general population of Finish students. One of the most likely culprits of worsening school performance is generational poverty and our marginalized Roma population.

The generational poverty is a long-term problem, but I argue, also a neglected opportunity. Generational poverty is a global problem, affecting rich and poor countries alike. If we manage to a) reduce the number of Slovaks living in generational poverty and b) increase the number of so called resilient students (students in the bottom socio-economic quartile but in the top education performance quartile) we will not only improve our domestic educational performance, but also build our knowhow for technical assistance and development cooperation with countries all around the world and this can help build and improve our country brand for decades to come.

After #AllForJan it is clear that we need to “clean our room first”, and do some active soul-searching before being able to lecture other countries in democracy and serve as a positive example again. So financial crime would be my second pick for a deep problem where Slovakia can and should contribute globally. More effective tax collection and fewer funds stolen from state coffers will reduce tax burden for everyone, will improve doing business rankings and overall environment (rule of law) and assure more funds for social causes.

On one level there are many unexplored technical solutions (blockchain, automatic tax returns from local banks, etc.) and theoretical frameworks (complexity science – power law hypothesis – half of apartments in Bratislava might be owned by the square root of real estate owners). Some of these big owners might be companies engaging in money laundering.

On another level it is difficult to destroy evolutionary niches of very powerful people and their interests that might extract rent from the society and economy and have a lot of resources to fight to preserve their money-making capacity (e.g. VAT carousel frauds).

On yet another level, both problems of generational poverty and financial crime require a change of mindsets for the overall system to improve. Generational poverty needs to be separated both from temporal poverty and from the notion of Roma ethnicity. Financial crime needs to be taken more seriously and a change of mindset here would be a zero tolerance to tax avoidance among general population. If the general population is more or less ok with cheating a bit – this opens a niche for organized crime to hide and profit in this ambiguity.

Are these two priorities the best ones for Slovakia in the upcoming decade?

Actually I don’t know and we all need to do this prioritization exercise and then compare results. I might have some availability bias or confirmation bias, or might have skipped some steps, or made some miscalculations or have a mistaken theory of change. One can go a level deeper and choose “effective prioritization” itself as a cause to work on.

Put differently, we can focus on e.g. “solutions journalism” to support the “generator function” of better solutions. We can support the startup ecosystem to support the generation of better and more viable, sustainable, responsible… startups. And the overall higher capacity in STEM fields (Science Technology Engineering Mathematics) might be crucial in that. But we can go beyond that and support a capacity to reason about prioritization or solutions – and marry STEM to Liberal Arts (Philosophy, Humanities, Art…) – an abbreviation called STEAM. We can observe that one gets better by practice – e.g. from manufacturing one can progress to research and development. A country gets better education by becoming richer and not (just) vice-versa. For example, the US has some very poor performing high schools, usually in the neighborhoods affected by generational poverty. But on average the US is a very rich country, so it has also the best and most elite schools, such as MIT. 

We can start from the question: What are the biggest problems of Slovaks? What are the biggest problems in Slovakia? We can use external benchmarks, indexes and rankings to find answers. High numbers of people in informal settlements and generational poverty – mostly marginalized Roma. Worsening PISA performance (affecting our future workforce). High corruption perception (with a lot of direct harm, but also indirect effects of reducing our ability to collect taxes and attract foreign investment). Many young people leave abroad to study (But this might be an effect of Czech being very similar language and historically Czechia being more developed). Low effectiveness of our health system and high numbers of avertable deaths (this might be affected by generational poverty, but also due to “diseases of despair” by communities affected by industrial decline). Slow courts and declining trust in public institutions. A rise of populism, extremism and frustration from unsolved problems. We could continue, but these are some of the big problems.

We can use SDG Index to spot pressing issues 

We can choose from various indexes that rank Slovakia in many dimensions. For example, SDG Index 2018 ranks country performance according to Sustainable Development Goals, and if we are on track to progress both domestically and if we are contributing abroad. In SDG2 Zero Hunger we perform poorly on the prevalence of obesity and our performance is worsening. Obesity is itself linked to many bad health outcomes but also to generational poverty. In SDG3 Good Health and Wellbeing we perform poorly on daily smokers’ indicator, and also this performance is worsening. Again smoking is linked to generational poverty, anxiety and “disease of despair” such as addictions, due to industrial decline in some regions. In SDG4 Quality education we perform poorly in majority of indicators, but two worst ones are – science performance below level 2 and percentage of resilient students. In SDG5 Gender Equality we could improve by having more women in parliament and reducing gender pay gap. In SDG6 Clean Water and Sanitation we slide in performance due to more households without clean water and sanitation. In SDG9 Industry, Innovation and Infrastructure we could improve in research and development (spending, number of researcher and patents) and reduce the gap in internet connection according to income.

There is a whole range of environmental issues we could improve according to SDG Index, and these are effected also by our energy intensive manufacturing. One issue sticks out – annual change in forest area, that can be connected also to organized crime and corruption.

In the SDG16 Peace, Justice and Strong Institutions our performance worsened in two indicators – Government Efficiency and Property Rights. In SDG17 Partnerships for the goals, we could improve in development cooperation spending and in financial secrecy.

Consider possible problems of the near future too

If we take a static view, a snapshot of the present, we can see that many problems in health (smoking, obesity…), water and sanitation infrastructure, and declining education performance, are connected to generational poverty. Other issues, such as inefficient governance, corruption, even reduction of forest areas are somehow linked to financial crime, or white-collar organized crime.

If we take a dynamic view, a possible rendering of the near and far future, we can ask what changes will affect Slovakia in a most profound manner. Here we can see automation disrupting the car industry and threatening us with “Detroitization.” We can see generational poverty reducing skilled worker pool that could “compete” in the global economy. And we can see corruption scaring away investors and exacerbating inequality.

We can go further and see that if we are stuck in this static view – we don’t see the proverbial pie growing and this supports a fixed mindset, a transactional mentality and zero-sum thinking. Both generational poverty and financial crime encourage this type of short-termism and resource extraction.

What we need is to focus much more on a dynamic view and find ways how to “bootstrap the desired future” by investing our mental and financial capacity in future industries – for example a space industry in a very broad sense – including smart materials and circular economy solutions. Imagine rethinking housing, energy and infrastructure with circular economy in mind and centered around the needs of people in generational poverty.

So from a static point of view of our current problems I would pick two – generational poverty and financial crime. Because they are quite central nodes in a network of inter-related problems. Innovations in eliminating generational poverty area will improve education and can make us a leader in this space. Innovations in fighting financial crime will improve governance, trust building and can boost the digital economy of the future.

From a dynamic point I would pick space industry together with innovations in circular economy as key areas that can bring new paradigms and technology solutions that can position us as an industry leader but also help us solve the problems of scarcity economy and move us on a trajectory towards the economy of abundance.       

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