Will Slovakia's SMEs pass the quality test?

This paper assesses trends and policies in Slovakia up to 1999 in the conte xt of evidence about the development:of, and the problems faced by, SMEs th roughout East-Central Europe, The new evidence about the wider East-Central European situation is from interviews in 1997 with 400 young (aged up to 3 0) self-employed people, and parallel studies of the support being offered to the self-employed by state services and non-governmental organisations ( NGOS), in four East-Central European,countries (Bulgaria, Hungary, Poland a nd Slovakia). The samples were representative of the New East's better-esta blished young business people, Nevertheless, nearly all their enterprises w ere very basic. Such small businesses were the main source of employment gr owth in East-Central Europe in the 1990s, but they have simultaneously beco me part of the region's main labour market problems, Unemployment remains s tubbornly high largely because many of those concerned are reluctant to acc ept and settle in the low quality jobs that small businesses offer, The evi dence presented in this paper explains why, in turn-of-the-century conditio ns, the New East's new businesses are in danger of becoming locked into low -productivity, low wage niches. It is argued that the prospects of the new market economies in the twenty-first century depend partly on their ability to promote the development of their more capable SMEs into quality busines ses, The measures required to achieve this are identified, and are used as benchmarks for assessing Slovakia's progress.