The Former Soviet Republics: A Recapitulation (Part Two)

 

One of the many fascinating subjects of analysis in globalization is how the former Soviet republics have evolved after the 1991 implosion of the USSR to this date.

Continued from Part One of this series, the table below summarizes some key information, an indispensable element in order to make an objective assessment based on the most relevant hard data available.

Former USSR Countries 2

 

Out of the 27 countries on the table, 7 have been highlighted in italics; they are the countries that were part of Yugoslavia. Two of these countries have already surpassed Russia in their GDP per capita, Slovenia and Croatia. From the remaining 20 non-Yugoslav nations, 7 of them already  have reached output per capita levels higher than those of Russia’s: Czech Republic, Slovakia, Estonia, Poland, Lithuania, Hungary, and Latvia.

What is the lesson to be learned from this most welcome development?

From my standpoint, the lesson to be learned is a simple one: Any nation, regardless of its size and natural resources, can accelerate its rate of economic growth while simultaneously enhancing its social fabric. This is particularly more so if the nation in question is far behind in economic development from the first tier countries (developed countries). There are only two indispensable prerequisites:

  • A genuine desire to fast-track the country’s development.
  • That desire has to be transformed into intensive work and order, of a creative and constructive nature, making the most of the country’s comparative advantages.

All former Soviet nations reconstructed their societies and economies essentially from scratch, once the USSR collapsed. They had plenty of headwinds working against them: they were financially broke, with negligible monetary reserves, and they had no capitalist nor democratic system in place. Their economies were mostly in shambles—or not far from it—after over four decades of being satellites of the Soviet Union. In some respects, they were in a worse shape than if they had just emerged from a military war.

If those 7 nations have been able to transit from such a deplorable socio-economic system as the Soviet one to a relatively high level of social and economic well-being in around 20 years, any other underdeveloped nation has no valid reason for not doing so.

During 2013, Russia’s output per capita ($17,920) was #77 in the world, just a notch below Argentina’s ($18,600, #75).

The merit behind those 7 nations cannot be overstated. Having been a part of the Soviet system and being able to surpass its former ruler was no easy task.

As for the rest of the former Soviet republics that are at the bottom of the table, the conclusion is the same as before: their economic output per capita is a fair reflection of the day to day capabilities each one of them has—or lack thereof—to properly organize themselves, implementing constructive structural reforms within a progressively decreasing corrupt sociopolitical system.

That simple, irrefutable truth is not fully understood; otherwise, constructive change would be at work at turbo speed everywhere.

That is the great challenge, yet the greatest opportunity of our generation, to implement the required structural reforms, creating the right incentives for  new jobs and wealth generation, to close the huge gap that separates all underdeveloped nations from the developed world. That challenge is worth several trillion dollars of wasted opportunities, as it is clearly explained in my book GLOBALIZATION.

The closer the political subjugation of any former soviet republic is to Russia, the poorer it is. In other words, the most independent, free-minded former soviet republics are, not coincidentally, the most affluent.

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About Martin Marmolejo

Global Investment Manager | Founder & Managing Director at MMA Global Investment Management | Proud husband and father | Follow me @globalmarmolejo.

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