Slovenia was long the butt of jokes made by its Yugoslav neighbours about its small size and orderly ways. And George W. Bush once publicly mistook its prime minister for the leader of Slovakia.
But the tiny Alpine state joined Nato and the European Union in 2004 and is now likely to become the first former communist country to adopt the euro next year.
Analysts say history and temperament have played a part in making Slovenia, which won independence in 1991, a front-runner.
"Slovenia was the most prosperous of all republics in socialist Yugoslavia and more advanced than any other communist state in the world," said US journalist and film-maker Michael Benson, who came to Slovenia 15 years ago and stayed. "Following independence, it immediately charted its own course, not falling for certain big-name Western economists who came into to the rest of Eastern Europe and gave advice that was not necessarily the best for a specific economy," Benson said.
Most other former communist countries, like neighbour Croatia, took their cue from the International Monetary Fund and quickly sold their state assets. Slovenia ignored Western urges to speed up privatisation and open markets.
The Slovenian state still owns the national telecommunications company and a majority or large stakes in major banks. It has sold few companies to Western investors.
It met the criteria for adopting the euro ahead of the other nine countries that also joined the bloc in May 2004.
"We have a restrictive public finance policy, we make sure that salaries grow at a slower pace than productivity, we managed to stabilise the tolar exchange rate and we restrict growth of government-controlled prices," Finance Minister Andrej Bajuk told Reuters.
Thanks to economic growth of 3.9 percent last year and 4.2 percent in 2004, unemployment has remained relatively low, standing at 7.2 percent in late 2005, compared to a euro zone average of 8.3 percent around the same period.
Slovenia has kept a tight grip on public finances and the exchange rate two sources of frustration for many ex-communist economies.
It met euro entry requirements for public debt, budget deficit and interest rates several years ago and joined the ERM-2 euro waiting-room in June 2004. As the last step, it managed to cut inflation to a tolerable level last November.
"The economy is growing strongly. Inflation is falling and I see no reason why it should rise again," Gerhard Lehner, an analyst at Austria's Raiffeisen Zentralbank, told Reuters.
The government forecasts gross domestic product growth at 4 percent in 2006 and 2007. In December, it named a new minister for reforms, to privatise companies, cut red tape and taxes, simplify the tax system and increase labour flexibility by reducing benefits.
These are expected to significantly increase economic growth and improve living standards. GDP per capita in purchasing power is about 79.5 percent of the EU average.
However, there are issues that Slovenia will have to address to safeguard growth, analysts say.
"Among the challenges facing the country in the longer term is coping with unfavourable demographic developments, as the low birth rate and ageing population put strain on the pension system," Darren Middleditch, senior economist at credit-rating agency Dun & Bradstreet, said.
"Others are the need for accelerating state divestment as productivity in private sector companies is higher than in state entities, and encouraging higher investment to help maintain stable, sustainable real economic growth rates."
History has helped Slovenia, which was always a world apart from other Yugoslav states. It had few ethnic minorities, a different language and a strong economy. Its people were known as hard-working and polite, if somewhat thrifty.
"I came to Slovenia because it was more neat and calm than my homeland and had a cultural scene that suited me. I never wanted to go back," said Predrag Subotic, 47, a Bosnian Serb living in Slovenia since 1982.
"It is the high level of political culture that enabled Slovenia to prosper. Political transition was peaceful, with no shocks," added Subotic, an official at Ljubljana city council.
Slovenia avoided the Yugoslav bloodshed mainly because it is ethnically homogenous -- 90 percent of its population are Slovenes. Its independence declaration was followed by a 10-day war with the Yugoslav army in which 64 people were killed.
Slovenia also coped well, economically, with the collapse of Yugoslavia. Initially, it lost access to markets in the former federation, and several large companies went bankrupt.
But it had already begun tapping EU markets during Yugoslavia's economic crisis and it built on this until the Balkan wars ended. Then, Slovenian firms returned to regional markets, using fresh cash and know-how to sell well-known food products and household appliances.
As it gears up to adopt the euro, Slovenia is again showing its ability to anticipate: the government has ordered all shops to display prices both in euros and in the tolar from this month so that prices cannot be hiked when the euro is introduced.
Slovenia hopes to get the green light in July to join the euro zone early next year.
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