6 Main analysis
6.1 Structural breaks and turning points
Source: Eurostat; AMECO; author’s calculations.
The interest-rate series is shown as a vertically aligned mini-panel rather than on a secondary axis: the two series measure different things and share only the time axis, so overlaying them (or a dual scale) would invite a spurious visual correlation. It is a euro-area average because the investment aggregate covers the broader EU.
Source: Eurostat; author’s calculations.
Source: Eurostat; author’s calculations.
Slovenia’s position among its peers inverts after the crisis. In the two pre-crisis regimes it ranked 2nd of six – just behind the Baltics, well above the CEE (non-Baltic) group it would otherwise belong to (about 26 percent of GDP versus 24 percent in 2000–05, and 29 versus 27 percent in 2006–08). From 2012 onward it falls to 5th of six, ahead of only the Southern group (19.0 versus 16.5 percent of GDP in 2012–18; 20.7 versus 19.4 in 2019–25) – consistently below the CEE (non-Baltic) group average it used to lead. The pattern reinforces the country-level view in Panels B–F: Slovenia’s investment weakness after the global financial crisis is not just an EU-wide phenomenon but a fall relative to its own regional peers.
Source: Eurostat; author’s calculations.
Panel A. Bai–Perron breakpoints split the EU mean into five regimes – roughly 23.4 percent of GDP (2000–05), 25.7 (2006–08), 21.5 (2009–11), 20.4 (2012–18, the trough), and 22.0 (2019–25). The euro-area real interest rate below tracks the same timeline: it was low in the mid-2000s boom, spiked in 2009 and stayed high through the 2010–13 sovereign-debt regime (the deepest investment trough), turned negative during the 2014–21 recovery as inflation picked up and policy eased, and fell sharply further in 2022–23 before normalising – consistent with financing conditions being tight exactly when investment was weakest.
Panels B–F. The regime means hide wide cross-country heterogeneity. In the 2006–08 boom the Baltic economies (filled triangles) sat far to the right – investment rates near or above 30 percent of GDP – while the Southern group (filled squares) was already at or below the EU mean; by 2012–18 the ranking had inverted, with the Baltics and much of the CEE group falling below the line and only a handful of Western/Core and Nordic countries clearly above it. The spread within each period is 10–15 percentage points of GDP throughout, and individual countries move across the distribution between regimes.
At country level, the global financial crisis is the dominant common break (most countries break in 2008–10), with a secondary cluster in 2015–17.
6.2 Convergence or divergence?
Source: Eurostat; author’s calculations.
Source: Eurostat; author’s calculations.
| Window | n | Slope (beta) | HC3 s.e. | p | R-squared |
|---|---|---|---|---|---|
| 2000–2025 | 25 | -1.020 | 0.227 | 0.00 | 0.641 |
| 2000–2007 | 25 | -0.839 | 0.297 | 0.01 | 0.264 |
| 2007–2019 | 25 | -0.838 | 0.112 | 0.00 | 0.593 |
| 2013–2025 | 25 | -0.522 | 0.098 | 0.00 | 0.501 |
| Source: Eurostat; author’s calculations. |
- Sigma-convergence is cyclical, not trending: dispersion widened in the 2000–08 boom, widened again in the divergent 2009–13 recovery, and only genuinely narrowed after 2014. Intellectual-property investment is the exception – its dispersion has risen since about 2013.
- Beta-convergence is negative and significant in every window (full-period slope about –1.0): the countries that started with higher investment ratios fell most. This “catch-down” is driven by the boom–bust of the high-flyers, which is why beta-convergence coexists with weak sigma-convergence.
- Slovenia sits essentially on the beta-convergence line – its fall of about 6.5 percentage points is close to what its high (about 27 percent) starting point predicts.
