5/29/16

Strong leadership or democracy?



The figure below is self-explanatory. This is the cumulative real GDP growth in the former socialist countries (FSC) after 1990 (i.e. the past 25 years) as presented in the Total Economy Database.  The most successful (>60%) countries are Armenia, Azerbaijan, Belarus, Estonia, Kazakhstan, Poland, Slovakia, Turkmenistan, and Uzbekistan. Three to four of them are recognized democracies and the other five are under strong leadership (euphemism for pure economic discussion).  The absolute losers are Tajikistan and Ukraine (the winner with -26.2%), Serbia and Montenegro, with Moldova being still below the 1990 GDP level. All four countries have quite a controversial political configuration. Other FSC are above the zero line ranging from Croatia (4%), Kirgizia (7%) and Georgia (10%) to Latvia (55%), Bulgaria (44%) and Slovenia (43%).
It is hard to deny the general observation that strong leadership was able to create better economic conditions for growth in the countries of the former Soviet Union, except Baltic countries. Political turmoil is not creative, but we know it very well.  
I would not invest in a country without a stable political configuration.




Figure 1. The cumulative real GDP growth between 1990 and 2015 in the former socialist countries


Figure 2. The evolution of real GDP in the FSC

1 comment:

The Fed rate will not likely be falling soon and fast

In 2022, we  wrote in this blog  about the strict proportionality between the CPI inflation and the actual interest rate defined by the  Boa...