dimecres, 31 d’agost del 2011

Education+Middle Class: Road to success

When analyzing the evolution of the economy in the last 20 years in the countries of the former Eastern bloc, we see that the countries that have been most successful have been those which, regardless of major corporations,  have created a network of medium and small companies, backed by a population with a high rapid adaptation to new technologies and a great interest in opening to the outside. As a result of this evolution, appeared a middle-class, which is the engine of growth in the country and main responsible of growth in domestic demand. Slovenia, Czech Republic, Estonia, Lithuania as opposed to countries that have not been able so far to establish a middle-class. 

 While these countries have devoted their efforts to create conditions to facilitate that middle-class could create new companies and projects in a supportive, friendly environment with clear legislation, a simplified bureaucracy, infrastructure and adequate security in some countries, we have seen as power groups, the old Soviet /communist burocracy took control of wealthness of the country and have raised a number of structures in place to discourage investment and initiative in the country, which have been blocked, hindered and even extorted.  

 We should not be surprised that some countries in Eastern Europe, as referred before, show much better figures than countries from Meriodional Europe such as Greece or Portugal. Higly skilled populations with strong  willing to face the challenges of what we call  'global economy'.  

 However, other countries have established and attracted investment from big corporations, but have been unable to create a dynamic and open country. As a result, social differences have become larger, the middle- class virtually does not exist, and future growth prospects are much more limited. Romania and Bulgaria, although EU countries,- had all the tools and support for the transition-, today, are clearly not progressing as expected due to problems realted basically to corruption in political and judicial level. Others, such as Belarus or Ukraine, unfortunately, consolidated power structures not interested to develope freedom and democracy and create simple state structures to serve the population.

 This list of 'winners' would place countries such as Slovenia, Estonia, Czech Republic. In a second group could include countries such as Latvia, Lithuania, Hungary, Slovakia, Poland, Serbia, Croatia, Montenegro. Already in another category, for social, cultural, political, historical etc. .. would be a group of countries such as Romania, Bulgaria, Belarus, Ukraine, Moldova, Macedonia, Albania.  In a special category, we would locate Kosovo as 'pseudo-country' controlled by criminal gangs which will obviously in the coming years remain isolated.  
 
 At a time when some people are calling for policies which will mean low wages, less welfare state as a recipe for overcoming the crisis, a look at Eastern Europe shows that only with education, reasonable wages  and strong-efficient states structures, we can expect to have a stable economic growth at mid-term that comes accompanied by an improvement in living conditions of the population of these countries. Otherwise, what shall we need growth of a country for ? 
 

 It is not difficult to forecast that those countries that have adopted the prescription of more education, order, prosperity and less bureaucracy+corruption in the coming years,  no matter international background, will consolidate its model with strong middle classes and stable growth.  
 

dimecres, 24 d’agost del 2011

Short and Sharp

I have been out for 5 months...which is actually a lot for a blog. No excuses. I did not write as I really had not much  to comment.

Actually, my general perception of overall situation has not changed. Anyway, I will make some remarks, just for you to be sure that blog is still alive as blogger keeps on breathing.

Regarding Ukraine, I have to say that our worst forecast have been confirmed. Any remarkable change has been introduce in the country, except new regulations which have create an atmosphere of panic and demotivation to invest and launch any new business except for those which are very close to structures of politicial power. Nothing has been done to reduce corruption and private money is not flowing on to the economy but just looking for 'short-term operations' in Ukraine. Some civil works, infrastructure construction is being done to make-up the country before Euro 2012. That should be over in few months. That's all.

  The confidence between consumers, the purchase power has not improved except for those appointed as new 'public servers' in the new administration.I have to say that either Goverment changes it orientation and attitude towards its own people and economical situation or country will continue to slip down towards a dark future. Social, political unrest will damage even more economical growth...and State Budget can not be longer relaying on foreign loans to execute its payments. It has to get income from big corporations which are operating in the country and stop pushing on small and middle size business which is trying to recover after 2009 crisis. It has to control customs as it is not doing ( nothing has changed from previous days ) and has to crack on 'law kaos' as regulations are not enforced and corruption is fully spread in the law system.

  There are some good signs of recovery on construction, on the lower residential segment, where 'cash' operations allow market to be more active than in middle and high class segment which are not showing signs of recovery as financial sector is not providing the required financing for middle and high amount operations.

 Agriculture is showing strongly and investment on this sector, based on the plans for land privatization which this goverment is going to undertake, should allow this sector to show the strongest growth in the country.

 Equipment seems to be sold at good pace to Russia and other CIS countries.

 Anyway, as it is mentioned on the link I enclose above, unfortunately, we can not say that things have improved in terms of  'business friendship' in Ukraine.

http://www.domik.net/novosti/kak-inostrancy-ocenivajut-ekonomiku-ukrainy-n136778.html



As I promised when I started this blog, from now on I will try to focus my attention on other former USSR republics, while Ukraine takes its time to decide to move on the direction to prosperity or it finally consolidates as the eastern border of EU and the 'eternal promised land'.