East, west and the gap between
http://economist.com/world/europe/displaystory.cfm?story_id=5214902
Nov 24th 2005 | TALLINN, VILNIUS AND WARSAW
From The Economist print edition
Assessing whether the poorest post-communist countries can ever catch
up
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; 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. They have got two big things right. The first is openness
to foreign trade, which is strongly associated with economic growth
(see chart 1). Competition from foreign firms, whether at home or in
export markets, sharply raises productivity.
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