Ülo Ennuste Economics

papers and articles in wordpress

The Economist (17.XII 09) sends seasonal suggestions/recommendations to the EU-Eastern-European economic policy makers

First of all, the paper copy gives even in very short note “World GDP” especially  straightforward interpretation to the situation in the Baltic States:
“But some of the world’s most troubled economies are in eastern Europe. The three Baltic countries – Estonia, Latvia and Lithuania, suffered the biggest falls in GDP.”

– By the way, these countries are also among 52 countries in coming year in the group of five-six probably continuing decline, so The Economist forecast Table is claiming.  Of course, these countries also have differentiating  important nuances, but, as Samuelson (successor of Polish emigrants) had argued that in the economy nuances are also important: for example, Lithuania’s external debt burden and the Russian Diaspora is significantly lower than in Estonia and Latvia and so on.

Article in the Economist.com “Looking to the stars: A little wisdom for the seasonal east”, also 17th Dec 2009, is particularly significant for us in Estonia, especially the following statements:

a) “The virtuous circle of low labor costs, foreign investment and export-led growth is outdated too. The region has lost some of its competitiveness. And it should not only aim to stay as a low-cost provider of goods and services for the rich west.”
– This claim can not be disproved really any way and undermined on the Estonian data, especially with respect to the Estonian foreign direct investment flow out ff country being grossly in excess of a half year already of respective incoming flows, and the fact that Estonian exports weights share may still look impressive in GDP, but this is illusionary largely due to the fact that GDP over the last two years has nearly 20% fallen.  

b) “Any new presents from the European Commission are to be cloudy and ill-chosen disappointing.”
– Apparently, the talk goes about new Commission’s “gifts”, which sounds rather dismally, especially when you consider that the new Commission will soon weigh up our ripeness for euro-area, including the economic aspects of sustainability – politically and economically very vague indicators by the way. But we here have hardly about the new Commission as much inside information as e.g. Edward Lucas could have, to refute this hypothesis. By the way, the picture in the article is not showing no gifts all to see near by Father Christmas – although the very impressive large sophisticated hook stick is on the fore.

c) “The ex-communist countries to show them that their brainpower, creativity and innovation Deserve a place at the top table. A big asset is that people in the region are used to radical change in a way that the old, tired countries of Western Europe can hardly imagine.”
– This is a really nicely suggested, if not utopian, either: in Estonia in the coming year will inevitably be the top concern totally be focused to the huge increase in unemployment (over 15% already), despite the fact that the budget for the coming year lay-off hundreds of millions for new unemployed compensation, and capital flight braking, braking plight of experts etc, and to rescue households falling into household debt poverty etc.

d) “Some politicians have put national interest above their own short-term popularity.”
– It would have been nice directly to say that Polish politicians, apparently, it is clear from the context, as Poland is the only eastern European country where the crisis has been avoided, thereby accounting for the lion’s share of  Poland in the region’s economy. But, however, in a number of eastern European countries, in particular dominating politicians macro-economic incompetence my be more detrimental to the economies? in particular? Personally, I am afraid that most of them do not even know how to read the  proficient FT and The Economist, by the way, what thing has been seen also among of the universities’ economic professors.

e) “the reindeer are straining at the harness, the sledge is packed and snow is falling softly all over central and eastern Europe. So what should Santa bring the region? ”

– This section may be the only wrong and misleading: 1) “the sledge is packed” – does not meet to the added  picture where Santa Claus is not equipped  with sledge but with very intimidating hook, and 2) “The reindeer”? – Perhaps in Helsinki – east of Tallinn – they still operate animals, here ATV is the main modus operandi.

December 19, 2009 - Posted by | Uncategorized

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