Investment aid hasn't reached underdeveloped regions, says IFP

Since 2002, Slovakia has provided €1.5 billion aid for 151 investment projects worth more than €7 billion, but the latest analysis by the Financial Policy Institute (IFP) indicates that the aid hasn't been consistently focused on supporting the most underdeveloped regions. IFP, therefore, has created its own model for comparing and evaluating the quality of investment plans. IFP notes that in the past two years €102 million has been approved for 541 projects worth a total of €541 million. Analysts note that the increasing share of state aid in total investment means an increase in the cost, which has grown by an average of 0.9 percent per year. "A major share of the aid was directed to western and central Slovakia, creating job opportunities. Despite the strong demand for job creation in the west, it's also the most costly. Even though aid per location has risen in eastern Slovakia since the recession in 2009, it is still lower than in regions with lower unemployment", said IFP analyst Juraj Mach. According to IFP, in addition to increasing cost effectiveness, the aim in particular should be to reduce economic disparities between regions and to support investment with innovation potential and those that generate positive effects. The evaluation model was drawn up based on these criteria. The model evaluates 11 characteristics of an investment and the state-offered assistance. Its outcome is a rating that assesses the aid's contribution to the country. Over the past two years of its use the average rating of potential projects has been 47 percent, while the highest rating stood at 68 percent. "While all projects can't be of that quality, if the hypothetical highest score could be achieved for all supported investments for each job vacancy, this would mean €49 million worth of savings with an unchanged number of jobs created", stated Mach. According to IFP, the consistent application of the model could make state decisions more transparent and predictable. This would contribute to the stability of the business environment and make the country more attractive to investors overall.