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World Bank Says Reforms Nearly Done
The World Bank, in its latest review of the transformation of the economies and governments of Eastern Europe and the former Soviet Union, has acknowledged that, at least in several European countries, market reforms have led to the creation of economies that differ very little from those in the West. The authors of the report note that, in spite of substantial differences in the financing of business there and in developed countries, particularly the smaller role of banks and larger role of family capital, for the fastest transforming economies, there are already no characteristic differences between recently founded and privatized companies. And they are significantly less than in their Western counterparts. That shows that the process of consolidation is irreversible.
The report avoided mentioning specific companies. Nonetheless, the analysis makes it clear that they are talking about the Czech Republic, Estonia, Hungary, Poland and Slovakia. The World Bank authors also mention the raw materials orientation of the countries of the CIS and the slowness of innovation and productivity of labor growth. Integration into the world economy and the creation of market institutions is going slower here.
An analysis of the attraction of direct foreign investment shows that that indicator may depend on the share in export of high technology. That was seen in South Korea, Malaysia and Mexico. Although direct foreign investment per capita in Russia is higher than in China, Ukraine and the Philippines, most transforming countries, including Belarus, Georgia, Thailand and Kyrgyzstan, surpass Russia in the share of capital-intensive products requiring specialized labor in their export. Raw materials are not an example of such production.
Analysts warn, however, that all of the transforming economies still face the last step, transforming the demographic situation into one resembling that in the West, with sharp growth of the elderly in the population and a burden on the pension and tax systems.
www.kommersant.com
All the Article in Russian as of July 21, 2008
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