Monday, November 28, 2005

Is It Only About The Economy Or Wealth, Stupid?

"A dollar a day or less is the World Bank's standard definition of poverty. But in the cold ex-communist countries of central and eastern Europe, where more is needed for heating and clothes, $2.15 is the poverty line. Many people have now climbed above that level: between 1998 and 2003 alone, more than 40m moved out of poverty; but 60m remain. The best performer, Hungary, has almost no people living in poverty; in the worst, Tajikistan, the figure is 70%. But the bigger question is which post-communist countries stand a chance of catching up with the rich world within a generation, and which will stay poor for the rest of the century.

The sunniest outlook is in the countries that have done best so far: the eight new members of the European Union, plus Croatia, which hopes to join soon....

What about the even poorer countries farther east and south of the new EU members? There are a couple of bright spots. The 12 former Soviet republics are the fastest-growing bit of the ex-communist world. That is partly due to the windfall of high energy and commodity prices, and also because poor countries tend to grow faster. Unlike their richer counterparts, growth is creating more jobs than restructuring is destroying. The 12 are also doing better at keeping people in work. The poor are benefiting from the rebound more than the rich; wages and benefits may be meagre, but these are now mostly paid on time.

These modest pluses are, however, dwarfed by other problems. Public services are cash-strapped. Georgia spends under 1% of GDP on health; Croatia over 7%. Household utilities are becoming more costly as subsidies dwindle. In some countries, even such basics as water, electricity and universal education are starting to crumble.

The biggest immediate problem is a lack of good jobs." ...

The Economist "East European economies: East, west and the gap between" November 24, 2005.

Kyiv, Ukraine during its Orange Revolution, of 2004-05, which was about more than simply economics.

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