




































In ternationa l
Scholars
Journa ls

 

African Journal of Environmental Economics and Management Vol. 1 (4), pp. 097-105, November, 2013. 
Available online at www.internationalscholarsjournals.org © International Scholars Journals 

 

Author(s) retain the copyright of this article. 

Full Length Research Paper 
  

Synergies among different parts of sustainable 

development 
 

Art Kovacic 
 
Institute for Economic Research, Kardeljeva pl. 17, 1109 Ljubljana – Slovenia. E-mail: kovacica@ier.si. Tel: 386 1 5303 

868. Fax: 386 1 5303 874. 
 

Accepted 19 April, 2013 
 

Sustainable development became an important paradigm in new EU countries. In new member countries can 
be seen the development of tools for measuring sustainable development. Sustainable development can be 
measured on many ways. In the paper we will show the evaluation of main determinants of sustainable 
development. Normally more developed countries have a higher sustainability readiness. In the paper the 
next hypothesis will be tested: First hypothesis: we need a wider set of sustainable development indicators, 
if we want to measure synergies among different parts of sustainable development. Second hypothesis: land 
used policies have an important influence on sustainable development. Third hypothesis: by analysing the 
indexes of sustainable development we can find the main development steps for improving our position. In 
the paper it will be shown why we must analyse different parts of sustainable development. Sustainable 
development is usually measured by the system of indicators. We must take into account also the paradigm 
of the knowledge based economy. The creation of a knowledge-based economy and society, and the 
preparation of respective action plans presuppose that the situation of the developed economies be analysed 
and give deeper insights into the current basis of economic development gained. Only this basis can serve 
the planning of future in a way that would guarantee rapid economic development and the harmonisation of 
the average wage level with that of the European Union. This entails both economic and social objectives, 
according to which Europe seeks to become the most competitive and dynamic knowledge- based economy 
in the world, capable of sustainable economic growth with more and better jobs, and a better social 
cohesion. 

 
Key words: Economic development, benchmarking, development strategy, environmental economics. 

 
INTRODUCTION 
 
Sustainable development means integrating the econo-
mic, social and environmental objectives of the society, in 
order to maximize the people’s well-being in the present 
without compromising the ability of future generations to 
meet their needs. The management evaluation of sus-
tainability determinants will have an important new value 
compared to the existing studies about sustainable deve-
lopment on the European level. Some companies are not 
taking the sustainability concept in their programmes and 
policies. Many businesses are realizing benefits from cor-
porate social responsibility initiatives with quantified im-
provements in revenue and market access, productivity, 
and risk-management. While emerging-market compa-
nies tend to focus more on the short-term cost savings 
and revenue gains, intangibles, such as brand value and 
reputation issues, are more significant for the companies 

 
 
 
that try to increase the sustainable readiness. Companies 
create external effects through their operations or ac-
tions. These effects can be positive for example spill over 
effects from research and income multiplier effects in lo-
cal communities or negative, a classical example being 
pollution. It is expected that governments or other entities 
that are external to the market relevant costs if the impact 
of the externalities is not acceptable to important stake-
holders, for example the investment and the operational 
costs of pollution, control equipment (Steger, 2004). On 
the business level, we can see the balance between in-
vestors, suppliers, consumers, local community, and 
competitors. Being socially responsible is not only fulfil-
ling legal expectations, but also going beyond compliance 
and investing more into human capital, the environment, 
and the relations with stake-holders. The experience with 



Kovacic            097 
 
 

 
investment in environmentally responsible technologies 
and business practice suggests that going beyond legal 
compliance can contribute to a company's competitive-
ness. Going beyond basic legal obligations in the social 
area, for example, training, working conditions, or man-
agement-employee relations, can also have a direct im-
pact on productivity. It opens a way of managing change 
and of reconciling social development with improved 
competitiveness. The effects of corporate sustainability 
management are of great interest to both companies and 
society. In particular, its micro level economic effects are 
often the subject of debates and studies discussing the 
importance and robustness of a business case for corpo-
rate sustainability. In the paper the next hypothesis will be 
tested: First hypothesis: we need a wider set of sus-
tainable development indicators and indexes, if we want 
to measure synergies among different parts of sustain-
able development. Second hypothesis: land used policies 
have an important influence on sustainable development. 
Third hypothesis: by analysing main determinants of sus-
tainable development we can find the main development 
steps for improving our position.  

The business sustainability is an important challenge of 
sustainability research. Through their operations and ac-
tions, companies create external effects, which can be 
positive (e.g. spill over effects from research and income 
multiplier effects in local communities) or negative, a cla-
ssical example of which being pollution. It is expected 
that governments or other entities that are external to the 
market relevant costs if the impact of the externalities is 
not acceptable to important stake-holders, for example 
the investment and operational costs of pollution control 
equipment (Steger, 2004). It can be seen that the most 
competitive countries in the EU also have a good position 
in Sustainable Development. We cannot achieve a high 
sustainable position without favourable conditions for the 
business sector. The correlation between competitive-
ness and sustainable development is strong. The Scandi-
navian countries rank high by the IMD and WEF's compe-
titiveness index and by the ESI sustainability index. Ob-
serving the OECD countries only, it is obvious that the 
high performance of environmental quality, GDP per capi-
ta, and competitiveness, as defined by the WEF are con-
nected. Porter and Esty state that, ―The countries that 
have had the most aggressive environmental policies 
also seem to be the most competitive and economically 
successful‖.  

Needless to say, the economists starting from general 
equilibrium models do not agree with Porter’s hypothesis. 
In a general equilibrium model, there is no such thing as 
a free lunch, and Jaffe et al. (1995) conclude, ―Just as we 
have found little consistent empirical evidence for the 
conventional hypothesis regarding environmental regula-
tion and competitiveness, there is also little or no evi-
dence supporting the revisionist hypothesis that environ-
mental regulation stimulates innovation and improved in-
ternational competitiveness.‖ We believe that a more so- 

 
 
 

 
phisticated use of the environmental indicators and statis-
tical tools to develop systematic and objective ways to 
gauge results offers a constructive way out of the current 
stasis. This essay is built on our previous effort to statis-
tically investigate the underpinnings of environmental per-
formance, and on using the findings to rank countries in 
terms of environmental outcomes and policies. In particu-
lar, we seek to explain differences in national environ-
mental results—as measured by the levels of air pollution 
(particulates and SO2 and energy use—based on nation-
nal policy choices in environmental regulation as well as 
in broader economic, political, and legal structures). We 
also empirically explore the question of whether strong 
environmental performance must come at the expense of 
competitiveness and economic development, as traditio-
nal economic theory has suggested (Jaffe et al., 1995). 
More broadly, we aim to put the environmental decision-
making on a firmer analytic grounding, and to encourage 
further efforts to generate better data and improve statis-
tical methods. Although hampered by imperfect data, a 
lack of time series data that would permit more definitive 
tests of causality, and the need to use relatively crude 
methods, we find substantial evidence that environmental 
performance varies systematically with both the quality of 
a country's environmental regulatory regime and its broa-
der economic and legal context. We use our model to 
create a framework for measuring the quality of national 
environmental regulation, and to rank countries on both 
the quality of regulation and environmental performance. 
We find a significant correlation between income and en-
vironmental performance, suggesting that alleviating 
poverty should be seen as a priority for environmental po-
licymakers. However, dramatic differences in environ-
mental performance occur even between the countries 
with similar economic levels. This finding implies that en-
vironmental improvement is not merely a function of eco-
nomic development, but benefits from carefully construc-
ted policy choices. Our analysis also suggests that a 
country's broader economic, legal, and other institutional 
underpinnings are also important determinants of envi-
ronmental performance. On the trade-off between being 
green and being competitive, we have found no evidence 
that improving environmental quality compromises eco-
nomic strength. In fact, higher levels of environmental 
performance appear to be correlated positively with com-
petitiveness. 

Sustainable development stands for meeting the needs 
of present generations without jeopardizing the ability of 
futures generations to meet their own needs – in other 
words, a better quality of life for everyone, now and for 
generations to come. It offers a vision of progress that 
integrates immediate and longer-term objectives, local 
and global action, and regards social, economic and envi-
ronmental issues as inseparable and interdependent 
components of human progress. Sustainable develop-
ment will not be brought about by policies only: it must be 
taken up by society at large as a principle guiding the 



 
 
 

 
many choices each citizen makes every day, as well as 
the big political and economic decisions that have. This 
requires profound changes in thinking, in economic and 
social structures and in consumption and production pat-
terns. The European Council of June 2006 adopted an 
ambitious and comprehensive renewed SDS for an en-
larged EU. It builds on the Gothenburg strategy of 2001 
and is the result of an extensive review process that star-
ted in 2004. The renewed EU SDS sets out a single, co-
herent strategy on how the EU will more effectively live 
up to its long-standing commitment to meet the challen-
ges of sustainable development. It recognises the need to 
gradually change our current unsustainable consum-ption 
and production patterns and move towards a better 
integrated approach to policy-making. It reaffirms the 
need for global solidarity and recognises the importance 
of strengthening our work with partners outside the EU, 
including those rapidly developing countries which will 
have a significant impact on global sustainable develop-
ment. 

 
Land used policies 
 
Land used policies (housing, agriculture, forests and 
urbanization) are becoming more important by imple-
mentation of sustainable development concept. Before 
implementation of sustainable development the land used 
policies were created on their own. Now they have to put 
into account the social and also the environmental deve-
lopment. They are created from the long term pers-
pective. European integration process has fostered the 
privatization process of stated owned companies. Privati-
zation process of stated owned companies has changed 
the land responsibility in new member countries. Deve-
lopment process is different in urban areas than in rural 
areas. Without efficient use of land we cannot reach the 
sustainable development. One goal of sustainable 
development is to balance the competing demands for 
the finite quantity of land available. We have to minimize 
the loss of rural land to development and to maintain the 
vitality and viability of towns’ centres with people living 
close to work place. The sustainable development as-
sessment could be the basis for land used policies. Land 
used policies are taking the sustainable development 
concept hardly into account. As a source of sustenance, 
resources and wealth, land is the basis upon which all 
human societies are built (Caldwell and Shrader -Fre-
chette, 1993). Most of the profound changes in the phy-
sical and social conditions of human existence have had 
important land-use dimensions, including, over a long 
time span, the shift to sedentary agriculture, large scale 
urbanization (strongly associated with the rise of formal, 
public, land-use planning) and the globalising influence of 
information technology. Land has been the subject of per-
sistent political struggle, and we might expect the gover-
nance of land use change to present a challenging set of 
issues for the practice of sustainable development. Land 

098         Afr. J. Environ. Econ. Manage. 
 
 
 
used policies are becoming an important part of sustain-
able development in recent years. Development must 
take into account the qualitative view of improvement. It is 
a process of human improvement. It deals with the quality 
of life. Quality of life is becoming the important ob-jective 
of each country. Assessing the development posi-tion of 
countries takes more in the view the quality of life, 
because the people needs are the motor of development 
process. There are many possibilities to measure quality 
of life, especially in the last years. So, it is not just the en-
vironment-economy relationship, but also the social de-
velopment. Sustainable development means integrating 
the economic, social and environmental objectives of 
society, in order to maximize human well being in the pre-
sent without compromising the ability of future genera-
tions to meet their needs. Our sensibility is that we need 
a more encompassing definition of sustainable develop-
ment. It would include programs and policies that pro-
mote a more equitable distribution of new jobs and in-
come while boosting a national capacity to innovate. It 
would foster economic stability and increase the econo-
mic and political empowerment of the citizenry. It includes 
more equal roles for women and minorities, improved 
health and raised levels of educational attainment, ac-
cess to better housing, a more effective public transport 
system, safer workplaces, greater energy and minerals 
efficiency, and decreased toxics usage among producers 
(Pyle and Forrant, 2002). If we observe the national com-
petitiveness from a wide perspective, the most important 
weights have management and government, because 
they have an influence on other determinants. With a 
higher weight of sustainable development the theory con-
cept of national competitiveness is observed from the 
long term view. We can explain this by analysing compe-
titiveness by main groups as domestic economy, interna-
tionalization, government, financial markets, infrastruc-
ture, management, science and technology, human capi-
tal and environment conservation. All groups have the 
same weight. From a long term perspective, qualities of 
government and management have a stronger weight, 
because they influence on other determinants. Policies 
and strategies on governmental and enterprise level are 
becoming more important.  

In the independence research among determinants of 
sustainable development we have created and own sy-
stem of indicators. In the research we found the biggest 
development gaps of Slovenia to EU average. In the 
Slovenian, system of indicators has an important share. 
Land presents problems for the more sanguine, ecomo-
dernist interpretations of sustainability, which see salva-
tion in improving eco-efficiency, or »doing more with 
less«. While it is demonstrably possible to reduce the 
energy or materials intensity of the economy, relation-
ships between economic activity, land and environmental 
change make analogous assertions about land-use 
intensity much more problematic (Owens and Cowell, 
1994). One aspect of the growing interest in land use pla- 



Kovacic 099 
 
 
 
nning as an instrument of sustainable development has 
been the expanding range of social, ecological and politi-
cal objectives that planning systems are deemed capable 
of promoting. Seen collectively, these aspirations amount 
to a potentially overwhelming brief for institutions with 
something of a mixed record in meeting public and politi-
cal desires (Cullingwirth, 1997) . Land-use policies can 
sometimes provide a reassuring institutional alternative to 
measures with more immediate effect, such as green tax-
es; and when they do bite, local authorities, rather than 
central government, face the political repercussions. In 
such circumstances, it is convenient that advocates of 
sustainable development call for greater local autonomy. 
Planning undoubtedly has been, and continues to be, 
used in such ways, as we show in relation to environ-
mental assessment, transport and other issues. 

 
Measuring sustainability 
 
Benchmark selected countries by economic, social, envi-
ronmental and institutional indicators show us where we 
have to act in the way of improving competitive position. 
By acting as if all regions and countries must follow basi-
cally the same stages on their route towards perfection, 
policy makers do, for instance, sometimes try to enhance 
the economic development of an area by producing an 
imitation of the local capabilities, not of the laggards, but 
of what they believe to be the economically most ad-
vanced regions or countries, thereby hoping to become 
attractive themselves to more lucrative and rewarding 
industries. Productivity growth will be further enhanced by 
the transition of new member states to a knowledge-
based economy, which is at the centre of the EU Lisbon 
strategy. Also, the European initiative for growth under-
lines the importance of investments in networks and in re-
search as crucial steps to boost growth, better integrate 
an enlarged Europe and improve productivity and com-
petitiveness. For the new member states, R and D diffu-
sion and technology transfers are as important as R and 
D investment as a tool for accelerating the transition to-
wards higher value-added activities. Sustaining a high 
level of foreign direct investment is essential in this en-
deavour, as is an increased responsiveness of the edu-
cation and training systems to the changing needs of the 
labour market. Reforms of the education and training sys-
tems would also help to encourage the move to more 
innovative and knowledge intensive activities. In our pa-
per we will made an impact assessment of land used po-
licies (housing, agriculture, forests and urbanization) on 
sustainable development. The evaluation of sustainable 
development is the basic approach to the assessment of 
the development path of the particular country. The se-
lected indicators serve the government/society as the 
framework for long term policy making. Environmental, 
social, institutional and economic developments are 
strongly linked. They are crucially important for the well 
being of the current as well as future generations. But 

 
 
 

 
environmental and social policies are sometimes formula-
ted without due regard to their economic consequences. 
The term sustainability evokes the image of an economic 
system able to evolve without deterioration from its cur-
rent state into the long term future, being in balance with 
nature. This balance may be as much psychological as 
material and energetic (O'Connor, 1998). Lee (1991) has 
remarked: 
 

Sustainable development has become the watch-
word for international aid agencies, the jargon of 
development planners, the theme of crowded confe-
rences, the topic of learned papers, and the slogan 
of developmental and environmental activists. It 
appears to have gained the broad-based support 
that earlier development concepts such as eco-
development lacked, and is poised to become the 
developmental paradigm for the 90s. 

 
One of the main theories is that we must be first compe-
titive if we want to reach sustainable development. Euro-
pean Union has made its view on sustainability. Measur-
ing sustainability reduces to the problems of measur-ing 
quality of life or human welfare and of measuring environ-
mental impact. We can also plan the sustainable position 
in the future. A planning and control system is essential 
for the diffusion of the principles of sustainability. The 
majority of those systems, today, do not seem to have 
fully embraced the philosophy of sustainable develop-
ment. For some, it is because they are limited by mea-
surement systems that were developed to gauge econo-
mic/financial performance, and are not equipped to mea-
sure social and environmental performance like the Ba-
lanced Sco Other frameworks, while accepting all three 
dimensions as equal, continue to favour the economic/fi-
nancial performance dimension over the environmental 
and social dimensions. Over the last years the modelling 
approach is very common. But we cannot measure the 
sustainable development with modelling approach. We 
can plan some development years in the energy sector. 
We have to recognize that the relationships between dif-
ferent parts of development process (Figure 1). 

If the countries can go in the step with productivity of 
main competitors, some results can be seen in incomes 
level. The modern countries are oriented on the new de-
velopment paradigm. Concept of sustainable develop-
ment brings the long term view on development determi-
nants. Measuring CSR (Corporate Social Responsibility) 
implementation by questionnaires is from the view of fu-
ture expects very understandable. The combination of 
statistical and questionnaire indicators give us the best 
evaluation of sustainable readiness. Measuring sustaina-
bility reduces to the problems of measuring quality of life 
or human welfare and of measuring environmental im-
pact. We can also plan the sustainable position in the fu-
ture. A planning and control system is essential for the 
diffusion of the principles of sustainability. The wellbeing 
of a community or nation can be measured in many 



Kovacic 005 
100 Afr. J. Environ. Econ. Manage. 

 
 
 
 
 

Structure of economy 
 
 
 

 
Internacionalization 

 
Management 

 

  Science and     
 

  technology     
 

          
 

   

Infrastructure 
   

 

      
 

          
 

    

Human capital 
   

 

       
 

         
 

     

Environmental 
  

 

Government 
      

 

    protection  
 

      
 

        
 

      Environmental  
 

       
 

      policies  
 

          
 

 
 
 
 
 
 
 

SUSTAINABLE  
READINESS 

 

 
Figure 1. Model of the influence of government and management on long term sustainable 

development determinants. Source: Own model. 
 

 
ways. Traditional measurements often analyze a single 
issue by itself, such as the number of new jobs in a 
particular com-munity. But such an approach is one-
dimensional, and does not reveal the quality of those jobs 
or their impact on the local economy. More meaningful 
than simply new jobs, measuring the number of children 
living in poverty indicates the relationship of social health 
to local econo-mic performance. As Staher (1995) has 
pointed out, when we speak of sustainable development, 
we have to not only consider the material and economic 
aspects, but the multidimensional and multifaceted 
conjunct that com-poses the development phenomenon: 
its political, social, cultural, and physical aspects. The 
sustainability of the whole can lean only upon the 
combined sustainability of its parts.  

These factors and their respective balances rely on 
qualitative factors, as the degree of social and political 
polarization, the values of society and the level of system 
entropy. Based on experimentation and lessons from the 
field, the SD approach has been operationalized in some 

 

 
interactive steps: 
 
1) Identification of the risks, assets, entitlements, lively-
hood activities, and knowledge bases of communities and 
individuals through the use participatory research techni-
ques.   
2) Analysis of macro, micro and sectorial policies which 
impinge on people's society.  
3) Assessment and determination of key technology con-
tributions to SD.  
4) Identification of existing investment (e.g., micro-fi-
nance) opportunities.  
5) Making sure that the Lisbon strategy and the national 

development strategy are implemented.  
 
A framework is needed; one which brings together SD's 
various elements: coping and adaptive strategies, poverty 
reduction, sustainability and issues of process. The 
framework which emerges can then be treated as a heu-
ristic tool or template (by the actors involved in implemen- 



Kovacic 101 
 
 
 
ting the SD approach) for identifying the linkages bet-
ween the different elements, developing indicators for 
them, and evaluating outcomes. A possible option for a 
conceptual framework within which to place SD concept 
is the building the own system of indicators. Such a 
framework integrates the concepts of sustainable deve-
lopment and sustainable society. It is best conceptualized 
as a diagram merging two interactive triangles, one re-
presenting the cornerstones of sustainable development 
(economic efficiency, environmental integrity, and human 
well being) and the other showing those of sustainable 
livelihoods (local knowledge, science and technology, 
and policy structures). It is opined that elements and is-
sues that make for sustainable society lie at the critical in-
terface of human-environment interactions. Political, cul-
tural, religious, social, economic, biological and geo-phy-
sical factors simultaneously interact with and in combina-
tion with each other to produce a variety of functions, pro-
cesses and products, which shape the way a community 
makes a living in a given ecozone. Analysis of these fac-
tors allows policy-makers and practitioners to formulate 
appropriate and context-specific programmes and pro-
jects that aim to promote the sustainable development. 
Having made the case that one way for devising an SD 
programme or creating indicators for sustainable lively-
hoods is by outlining vulnerable livelihoods, we need 
some kind of theory to ground the variability and dyna-
mism of livelihood systems and adaptive strategies.  

The identification of human well being as the goal of 
sustainable development requires indicators which point 
to how well policies in the economic, environmental, so-
cial fields are performing in relation to the main goal. The 
first step of summarising existing information that focuses 
on well being is to select a core set of indicators address-
ing key issues of sustainable development. This core set 
approach has the benefit of using indicators that are com-
mon to different countries, that respond to different uses, 
and that be meaningfully compared across countries. 
Despite the fact that the choice of indicators may be 
somewhat subjective, this approach does allow key as-
pect of sustainable development to be considered in a 
simple way. However, aggregating a variety of indicators 
from the various dimensions, it becomes difficult to cha-
racterise whether overall economic developments are 
sustainable or not. The criteria of sustainability suggest 
that unique advantages of location, which have a charac-
teristic of a public good for local firms but are scarce from 
the perspective of firms located in other systems, can 
provide a sustained competitive advantage for local firms. 
Such hard work imitate framework conditions may involve 
any parts of competitiveness and growth framework; pro-
ductive resources (unique education system), technolo-
gies (national innovative system), organizational arrange-
ments (national networks or organising principles), pro-
duct market structures (unique demand or supply condi-
tions), international business activities (historical network 
of foreign contracts), institutional framework (unique re- 

 
 
 

 
gulatory framework and culture) and the government poli-

cies (special support and policies) and the land used poli-

cies (housing, agriculture, forests and urbanization) . Des-

pite many of its failings, conventional poverty lines conti-nue 

to be the conceptual and operational foundations for current 

anti-poverty policies. This being said, however, there are a 

number of alternative measures of poverty that are gaining 

momentum. These methods look more at the social and 

human dimensions of poverty as opposed to economic 

imperatives. At the heart of this process is the recognition 

that people go in and out of poverty and it is essential to look 

at the causes of poverty in addition to its measurement. 

Human development is defined by the expansion of 

capabilities. Unlike income, capabilities are ends, and they 

are not reflected in inputs, but in human outcomes-in the 

quality of people's lives. Human depriva-tion should not be 

defined in terms of all capabilities, but only essential or 

"foundational" capabilities. Capability po-verty occurs when 

people are unable to reach a certain level of essential 

human achievement or functioning (that is, malnourishment, 

illiteracy, poor health). Examples of ba-sic capabilities are 

leading a life free of avoidable morbid-dity, being informed 

and educated, well nourished and having access to 

satisfactory levels of resource and asset bases. Being able 

to function on the basis of these es-sential capabilities is an 

objective, observable phenol-menon; it is not a matter of 

subjective perception, nor is it culture specific. Measures of 

capability should be used to complement an income 

measure of poverty, but should not be aggregated as 

conventional poverty lines because of the dimensions of 

deprivation (i.e., different levels of deprivation between 

different individuals). A potential so-lution is to use the 

percentage of the population below an expenditure-based 

poverty line as a point of reference, and compare this to the 

percentages of the population deprived in other non-income 

dimensions. For example, the percentage of people who are 

illiterate could be con-siderably higher than the percentage 

of those below the poverty line. 
 

 
Sustainablity indexes 
 
The EU countries have accepted concept of sustainable 
development in their documents and also in programme 
directions (Strategy of sustainable development). For 
accession some countries means the EU accession also 
the implementing the strategy of competitiveness and 
sustainable development. New members have imple-
mented the all acquis communautaire. The most develop-
ed part of EU finances now the development process of 
the other one. New member countries are forced to 
implement the higher cultural and ecological standards. 
EU is mounting pressure on new members in many ways. 
Building new infrastructure and improving the quality of 
business development are the basic elements for econo-
mic growth. Market must be integrated with some ele-
ments of regulation, which takes into account the human, 



Kovacic 007 
102 Afr. J. Environ. Econ. Manage. 

 
 

 
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 Finland  Irland  Netherland  Portugal  Greece  Slovenia 
 
Figure 2. Position of countries by indexes. Source: own calculation. 

 
cultural and environmental field. Eco-social model of eco-
nomy is the most important element of sustainability. 
Slovenia has implemented not only the European legal 
system, but also the eco-social model of economy. En-
largement of the EU has bought the current priorities and 
future direction of EU environmental policy sharply into 
focus. Achieving enlargement while ensuring high stan-
dards of environmental protection and social develop-
ment is the ultimate objective and failure is not an option. 
Significant environmental investments are necessary and 
the new members need to speed up their preparation to 
implementing the Gothenburg strategy "sustainable stra-
tegy". Future index is calculated by standard method of 
deviation. It measures the relative difference between the 
economies' performances; therefore, each country's rela-
tive position in the final rankings is more accurately as-
sessed. First, for each criterion, the average value for 
each population group is being computed. Then the stan-
dard deviation is calculated using the following formula:  

S  
(x  x)

2  
N 

 
The STD is calculated by subtracting the average value 

of each population group from the economy’s original va-
lue and then dividing the result by the standard deviation. 

The STD value for criteria is calculated as follows: 

(STD value)i   
x

 


 
x

  
S 

 
Where:  
x = original value  
x = average value of population group 
N = number of economies  
S = Standard Deviation 

 
Future index is calculated as an average of ten subin-
dexes: (1) index of economic activity, (2) index of infras-
tructure, (3) index of information society, (4) index of en-
trepreneurship and technology (5) index of health, (6) in-
dex of education, (7) index of labour force, (8) index of 
environmental condition, (9) index of environmental deve-
lopment and (10) index of environmental policies (Figure 
2). 

 
Index of economic activity 
 
This is calculated by aggregation of three indicators: GDP 
per capita, GDP per capita and share of investment in 
GDP. The higher GDP per capita level shows that econo-
my has better starting point for reaching the sustainabi-
lity. This also brings the higher level of consumption be-
haviour. Investments in buildings, machines and in equip-
ment are very important for maintaining the wealth. If the 
managers of companies are optimistic about a future than 
the share of investments is higher. 

 
Index of infrastructure 
 
This is calculated by aggregation of three indicators: den-
sity of railroad network (survey), maintenance and deve-
lopment of infrastructure (survey) and efficiency of infras-
tructure (survey). Sustainable infrastructure is the effi-
cient infrastructure which takes into account the environ-
mental problems. From this point of view we must put 
more weight on qualitative than on quantitative part of in-
frastructure development process. 

 
Index of information technology 
 
This is calculated by aggregation of four indicators: num-

ber of hosts per 100 inhabitants, user of internet per 100 



Kovacic 103 
 
 
 
inhabitants, users of mobile phones per 100 inhabitants 
and availability of IT experts (survey) . Companies that 
want to have high prosperity in near future needs an 
internet strategy. Information technology allows us to use 
human knowledge more usefully. By exploitation of infor-
mation technology possibilities we can increase the value 
added in companies. Availability of IT experts in some 
countries shows the qualitative progress to sustainable 
community. 

 
Index of entrepreneurial activity and technology level 
 
This is calculated by aggregation of four indicators: num-
ber of patents in force per 100.000 inhabitants, manage-
ment ant the entrepreneurial orientation (survey), availa-
bility of venture capital (survey) and expenditure on R and 
D as percentage in GDP. If we want to reach the su-
stainable development then we must change the struc-
ture of economy. 

 
Index of health 
 
This is calculated by aggregation of four indicators: ex-
penditure for health as percentage of GDP, quality of 
health infrastructure (survey), number of physician per 
100.000 inhabitants and life expectancy at birth. By age-
ing of population we need a higher level of health system. 
So the health system can provide the balance between 
generations. 

 
Index of educational level 
 
This is calculated by aggregation of four indicators: edu-
cational system and the needs of the competitive econo-
my (survey), university education and the needs of eco-
nomy (survey), higher education achievement and public 
expenditure on education as a percentage in GDP. Today 
is the really challenge to bring the educational system 
closer to economy. 

 
Index of labour force 
 
This is calculated by aggregation of four indicators: share 
of employment in service sector, youth and older persons 
unemployment. The sustainable economy needs a higher 

share of services. So the labour market must transform to 
satisfy the needs of modern economy. 

 
Index of environmental position 
 
This is calculated by aggregation of four indicators: the 
industrial pollution of water, emission of SO2, emission of 

CO2, emission of NOx and communal waste. The envi-
ronmental degradation is the threat for future genera-
tions. So we must preserve the environment from nega- 

 
 
 

 
tive damage from economic and human activity. 
 
Index of environmental development 
 
This is calculated by aggregation of three indicators: 
production of energy from renewed sources, ISO 14001 
certifications, share of agriculture land under the organic 
use). By this indicator we can measure the environmental 
capita that is important for development process. 

 
Index of environmental policies 
 
This is calculated by aggregation of three indicators: 
share of protected land, collaboration with economy (sur-
vey) and transparency of environmental policy (survey). 
Environmental policies must do more for the competitive 
economy. Environmental regulation can increase the 
competitiveness of business. 

Benchmarking the Slovenian sustainable level is done 
with five countries: Finland, Ireland, Netherland, Portugal 
and Greece. These countries have the size that is close 
to Slovenia. It can be thought that Slovenia can reach the 
higher sustainable level than Portugal and Greece. Fin-
land and Ireland economies have reached the higher sus-
tainable progress in last ten years. Netherland is close to 
EU average. Finland is the most sustainable country un-
der calculations, with higher ranges in the index of infor-
mation technology, by index of entrepreneurship and 
technology and by index of environmental development. 
Finland ranks low by index of health, by index of labour 
force and by index of infrastructure. Ireland ranks the 
highest by index of education and by index of economic 
activity. The Ireland ranks low by index of infrastructure, 
by index of health and by index of environmental policies. 
Slovenian readiness for the future in comparism by 19 EU 
states is not satisfactory. Slovenia ranks well by in-dex of 
entrepreneurship and technology, by index of in-
frastructure and by index of environmental position. From 
the view of future readiness is Slovenian position low by 
index of economic activity (-0, 94) by index of labour force 
(-0, 79), by index of information technology (-0,81) by 
index of health (-0,79) and by index of environmental 
policies (-0,68) (Figure 3).  
The calculation of indexes has shown that Finland is the 

best prepared for the future (index 0, 97). After Finland 
are Denmark (index 0, 57) and Sweden (index 0, 54) The 
Finish position on the first place can be explained as a 
well developed system of information technology, high 
entrepreneurship and technological level and a high level 
of environmental capital. On the other side are Poland 
(index -0, 70), Slovenia (index -0, 50) and Czech R. (in-
dex -0,46) states that are not well prepared for the future. 
Slovenia has some problems on the sustainable way that 
are connected with low level of economic activity, slow 
development of information society, low functioning of en-
vironmental policies and low balancing of the environ-
mental capital with economic and social development 



                   
 

1.2                    
 

1                    
 

0.8                    
 

0.6                    
 

0.4                    
 

0.2                    
 

0 

P
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la
n

d
 

S
lo

v
e

n
ia
 

C
z
e
c
h

 R
 

P
o

rt
u

g
a

l 

H
u

n
g

a
ry

 

G
re

e
c
e
 

G
re

a
t 
B

ri
ta

in
 

It
a
ly
 

S
p

a
in
 

Ir
la

n
d
 

F
ra

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G
e

rm
a

n
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e

lg
iu

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w

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-0.4  
 

-0.6 
 

 

                   
 

-0.8                    
 

-1                    
 

 
Figure 3. Index of future readiness. Source: own calculation. 

 

 
Conclusions 
 
In the next years the system of indicators will improve. 
Questionnaire will be more common tool for sustainability 
evaluation. Questionnaire indicators give a more quali-
tative view on competitiveness. The modern way of mea-
suring national competitiveness by using questionnaires 
allows us to evaluate the dynamic evolution of one 
economy, the qualitative competitiveness and the expec-
tations of the business managers. Managers often evalu-
ate the quality of business environment in which they 
operate. They also try to forecast the economic situation 
of the country in the near future. The concept of sustain-
able development is hardly integrated in national deve-
lopment policy. The implementation of the Lisbon's stra-
tegy will also improve some parts of sustainable develop-
ment. Slovenian system of indicator has shown the most 
important development steps in the future. From the sy-
stem of indicators can be seen that our progress is not 
integrated enough. Indicators serve as valuable tools for 
sustainability benchmark. An indicator is something that 
helps you understand where you are, which way you are 
going and how far you are from where you want to be. 
This is the main reason why we are going to select indi-
cators for five years period. Indicators allow you to see 
where the problem areas are and help show the way to 
fix those problems. Sectors of the economy generate 
wealth and welfare for households. Enterprises, govern-
ment and other actors, economic activity, and indeed 
households themselves, can however create pressure on 
the environment, through consumption of resources and 
output of pollutants. The quality of the environment in turn 
can impact on the welfare households and individuals 
and other actors. The actors respond to changes in the 
state of the economy and of the environment, through be-
havioural and policy changes which either directly affect 

 

 
the environment, or alter the pressures on it from the eco-
nomic sectors. Rather than developing a single index of 
sustainability, for which important measurement difficult-
ties exist, the identification of a confined set of indicators-
focusing on each of the three pillars of sustainable deve-
lopment and linked through an organising framework ap-
pears as a more useful approach. 

 
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