The Economies in Transition: The Recovery

Project LINK, New York 2011

Robert C. Shelburne
Economic Commission for Europe
EiT growth was similar or above developing
countries pre-crisis, but significantly below
post-crisis. Downside risk: eurozone crisis
-8.000
-6.000
-4.000
-2.000
0.000
2.000
4.000
6.000
8.000
10.000
1
9
9
9
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
2
0
1
2
f
2
0
1
3
f
R
e
a
l

G
D
P

G
r
o
w
t
h

P
P
P

B
a
s
i
s
EiT Advanced Developing and Emerging
Real GDP Growth in Europe,
2000-2012
-8.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
R
e
a
l

G
D
P

G
r
o
w
t
h

R
a
t
e
SEE-6 EECCA-11 Russia NMS-12 EU-15 (Old)
SEE Quarterly GDP Y-O-Y
-6
-4
-2
0
2
4
6
8
2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2
Albania fYR of Macedonia Serbia
CIS: Quarterly GDP Y-O-Y
-20
-18
-16
-14
-12
-10
-8
-6
-4
-2
0
2
4
6
8
10
2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2
Armenia Georgia Kazakhstan Russia Ukraine
Comparison of Severity of
Crisis Using Time
Annual
Average
2003-2007
Annual
Average
2007-2011
Total
2007-2011
Years Lost
due to Crisis
SEE-6 5.3 0.6 2.6 3.5
EECCA-11 9.5 3.1 12.8 2.67
Russia 7.6 1.3 5.2 3.33
EiT (-T) 7.8 1.9 8 ~3 (2.9)
NMS 5.8 1.3 5.4 ~3 (3.1)
ECA (-T) 7.2 1.8 7.2 3
EU (15 Old) 2.5 -0.3 -1.1 5
Emerging &
Developing 8 5.6 24.5 ~1
GDP Growth
Level of GDP in 2011
Compared to 2007
The Great Recession: Bigger than
1998 currency crisis but insignificant
compared to transition crisis
Russia- Crises Compared
50
75
100
125
150
175
200
225
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Years After Shock
R
e
a
l

G
D
P

I
n
d
e
x
Transition 1998 Currency Great Recession
Real GDP in 2011 Compared
to 1989
0
50
100
150
200
250
300
T
u
r
k
m
e
n
i
s
t
a
n
T
u
r
k
e
y
U
z
b
e
k
i
s
t
a
n
A
z
e
r
b
a
i
j
a
n
P
o
l
a
n
d
B
e
l
a
r
u
s
A
l
b
a
n
i
a
S
l
o
v
a
k

R
e
p
u
b
l
i
c
K
a
z
a
k
h
s
t
a
n
S
l
o
v
e
n
i
a
C
z
e
c
h

R
e
p
u
b
l
i
c
A
r
m
e
n
i
a
E
s
t
o
n
i
a
H
u
n
g
a
r
y
R
o
m
a
n
i
a
K
y
r
g
y
z

R
e
p
u
b
l
i
c
B
u
l
g
a
r
i
a
L
i
t
h
u
a
n
i
a
R
u
s
s
i
a
T
h
e

f
Y
R

o
f

M
a
c
e
d
o
n
i
a
C
r
o
a
t
i
a
L
a
t
v
i
a
M
o
n
t
e
n
e
g
r
o
B
i
H
S
e
r
b
i
a
T
a
j
i
k
i
s
t
a
n
G
e
o
r
g
i
a
U
k
r
a
i
n
e
M
o
l
d
o
v
a
R
e
a
l

G
D
P

2
0
1
1

v
s

1
9
8
9
Convergence in Wider-Europe
2000-2011
1
1.5
2
2.5
3
3.5
4
4.5
0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 55,000 60,000
Per Capita Income PPP 2000
T
o
t
a
l

G
r
o
w
t
h

2
0
0
0

t
o

2
0
1
1
SEE CIS ADV NMS
EECCA (CIS) & SEE Are Slowly
Converging to Eurozone Per
Capita Income
0
0.2
0.4
0.6
0.8
1
1.2
1
9
9
8
1
9
9
9
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
2
0
1
2
R
e
l
a
t
i
v
e

G
D
P

P
e
r

C
a
p
i
t
a

P
P
P
EECCA/Eurozone EECCA/World SEE/Euro Area 17 SEE/World
World
Eurozone
The EiT Account for 4.6% of
World GDP, EiT+NMS+T=8.3%
1998
1998
1998
1998
1998
2011
2011
2011
2011
2011
0
0.5
1
1.5
2
2.5
3
3.5
Russia EECCA-11 SEE-6 NMS Turkey
S
h
a
r
e

(
%
)

o
f

W
o
r
l
d

G
D
P

P
P
P
Unemployment in the CIS
2
4
6
8
10
12
14
16
18
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012f 2013f 2014f
Armenia Azerbaijan Georgia
Kazakhstan Kyrgyz Republic Moldova
Russia Ukraine
Unemployment in South-East
Europe: Over 10% in All,
Largely Structural
5
10
15
20
25
30
35
40
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012f 2013f 2014f
U
n
e
m
p
l
o
y
m
e
n
t

R
a
t
e
Albania Bosnia and Herzegovina
Croatia The former Yugoslav Republic of Macedonia
Montenegro Serbia
Unemployment in the NMS
Monthly 20008-2011
0
5
10
15
20
25
2
0
0
8
M
0
1
2
0
0
8
M
0
3
2
0
0
8
M
0
5
2
0
0
8
M
0
7
2
0
0
8
M
0
9
2
0
0
8
M
1
1
2
0
0
9
M
0
1
2
0
0
9
M
0
3
2
0
0
9
M
0
5
2
0
0
9
M
0
7
2
0
0
9
M
0
9
2
0
0
9
M
1
1
2
0
1
0
M
0
1
2
0
1
0
M
0
3
2
0
1
0
M
0
5
2
0
1
0
M
0
7
2
0
1
0
M
0
9
2
0
1
0
M
1
1
2
0
1
1
M
0
1
2
0
1
1
M
0
3
2
0
1
1
M
0
5
2
0
1
1
M
0
7
Bulgaria Czech Republic Estonia Hungary Latvia
Lithuania Poland Romania Slovakia Slovenia
Baltics&
Slovakia
Czech,
Romania,
Slovenia
Relationship between Change in
GDP and Unemployment in ECE
Economies, 2009 vs 2008
Inflation in SEE
4 of 6 Fixed to Euro (solid), 2 flexible (mixed)
-2
0
2
4
6
8
10
12
14
16
2
0
0
7
M
0
1
2
0
0
7
M
0
3
2
0
0
7
M
0
5
2
0
0
7
M
0
7
2
0
0
7
M
0
9
2
0
0
7
M
1
1
2
0
0
8
M
0
1
2
0
0
8
M
0
3
2
0
0
8
M
0
5
2
0
0
8
M
0
7
2
0
0
8
M
0
9
2
0
0
8
M
1
1
2
0
0
9
M
0
1
2
0
0
9
M
0
3
2
0
0
9
M
0
5
2
0
0
9
M
0
7
2
0
0
9
M
0
9
2
0
0
9
M
1
1
2
0
1
0
M
0
1
2
0
1
0
M
0
3
2
0
1
0
M
0
5
2
0
1
0
M
0
7
2
0
1
0
M
0
9
2
0
1
0
M
1
1
2
0
1
1
M
0
1
2
0
1
1
M
0
3
2
0
1
1
M
0
5
I
n
f
l
a
t
i
o
n

O
v
e
r

P
r
e
v
i
o
u
s

Y
e
a
r
Albania Bosnia and Herzegovina Croatia
Montenegro Serbia TfYR of Macedonia
Inflation in the CIS; back to
5-15%
-5
0
5
10
15
20
25
30
35
2
0
0
7
M
0
1
2
0
0
7
M
0
3
2
0
0
7
M
0
5
2
0
0
7
M
0
7
2
0
0
7
M
0
9
2
0
0
7
M
1
1
2
0
0
8
M
0
1
2
0
0
8
M
0
3
2
0
0
8
M
0
5
2
0
0
8
M
0
7
2
0
0
8
M
0
9
2
0
0
8
M
1
1
2
0
0
9
M
0
1
2
0
0
9
M
0
3
2
0
0
9
M
0
5
2
0
0
9
M
0
7
2
0
0
9
M
0
9
2
0
0
9
M
1
1
2
0
1
0
M
0
1
2
0
1
0
M
0
3
2
0
1
0
M
0
5
2
0
1
0
M
0
7
2
0
1
0
M
0
9
2
0
1
0
M
1
1
2
0
1
1
M
0
1
2
0
1
1
M
0
3
2
0
1
1
M
0
5
Armenia Azerbaijan Belarus Georgia Kazakhstan
Kyrgyzstan Moldova Russia Tajikistan Ukraine
Belarus Currency Crisis
Inflation in the ECE: Higher
growth is associated with
higher inflation
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
20.0
-4.0 -2.0 0.0 2.0 4.0 6.0 8.0 10.0 12.0
Real GD P Gr o w t h 2011
I
n
f
l
a
t
i
o
n

2
0
1
1
SEE NMS Ad v an c ed EC E EEC C A
Exchange Rates: General Nominal
Depreciations vs US$
But Russia has had inflation of over 30%
0.4
0.5
0.6
0.7
0.8
0.9
1
1.1
1.2
2
0
0
8
M
0
1
2
0
0
8
M
0
4
2
0
0
8
M
0
7
2
0
0
8
M
1
0
2
0
0
9
M
0
1
2
0
0
9
M
0
4
2
0
0
9
M
0
7
2
0
0
9
M
1
0
2
0
1
0
M
0
1
2
0
1
0
M
0
4
2
0
1
0
M
0
7
2
0
1
0
M
1
0
2
0
1
1
M
0
1
2
0
1
1
M
0
4
D
e
p
r
e
c
i
a
t
i
o
n

/

A
p
p
r
e
c
i
a
t
i
o
n
Al bani a Armeni a Azerbai j an Bel arus
Bosni a and Herzegovi na Croati a Georgi a Kazakhstan
Kyrgyzstan Mol dova, Republ i c of Montenegro Russi an Federati on
Serbi a Taj i ki stan The fYR of Macedoni a Turkmeni stan
Ukrai ne Uzbeki stan
Real Trade-Weighted
Exchange Rates (BIS)
Jan 2008=1
0.6
0.7
0.8
0.9
1
1.1
1.2
J
a
n
-
0
4
A
p
r
-
0
4
J
u
l
-
0
4
O
c
t
-
0
4
J
a
n
-
0
5
A
p
r
-
0
5
J
u
l
-
0
5
O
c
t
-
0
5
J
a
n
-
0
6
A
p
r
-
0
6
J
u
l
-
0
6
O
c
t
-
0
6
J
a
n
-
0
7
A
p
r
-
0
7
J
u
l
-
0
7
O
c
t
-
0
7
J
a
n
-
0
8
A
p
r
-
0
8
J
u
l
-
0
8
O
c
t
-
0
8
J
a
n
-
0
9
A
p
r
-
0
9
J
u
l
-
0
9
O
c
t
-
0
9
J
a
n
-
1
0
A
p
r
-
1
0
J
u
l
-
1
0
O
c
t
-
1
0
J
a
n
-
1
1
A
p
r
-
1
1
J
u
l
-
1
1
Bulgaria Croatia Latvia Russia United States
Current Accounts: Reduced
Imbalances in the EiT & NMS
Russian Surplus & NMS/SEE Deficits Reduced
-16
-14
-12
-10
-8
-6
-4
-2
0
2
4
6
8
10
12
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
C
u
r
r
e
n
t

A
c
c
o
u
n
t

P
e
r

C
e
n
t

o
f

G
D
P
NMS 10 ECCAA-11 Russia SEE-6
FDI: Solid Growth Pre-crisis,
But Down 50% Post-crisis
FDI Inward Stock FDI Inflows
2000 2010
Per Cent
Increase
2000 to 2010 2008 2009 2010
Per Cent
Change
2008 to
2010
SEE-6 5.7 76.4 1,245 12.6 7.8 4.1 -67
Turkey 19.2 181.9 847 19.5 8.4 9.1 -53
Russi a 32.2 423.2 1,214 75.0 36.5 41.2 -45
EECCA-11 23.0 188.3 720 33.4 27.3 22.9 -31
EiT 80.1 869.7 986 140.5 80.0 77.3 -45
NMS 103.1 639.4 520 64.1 28.4 28.5 -56
ECA 183.2 1,509.1 724 204.6 108.4 105.7 -48

Russian Capital Flight:
Net Private Capital Outflows
-150
-125
-100
-75
-50
-25
0
25
50
75
100
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
U
S

$

B
i
l
l
i
o
n
s
Net Private Capital Flows
Russias International
Reserve Assets
0
100
200
300
400
500
600
700
2
_
2
0
0
8
4
_
2
0
0
8
6
_
2
0
0
8
8
_
2
0
0
8
1
0
_
2
0
0
8
1
2
_
2
0
0
8
2
_
2
0
0
9
4
_
2
0
0
9
6
_
2
0
0
9
8
_
2
0
0
9
1
0
_
2
0
0
9
1
2
_
2
0
0
9
2
_
2
0
1
0
4
_
2
0
1
0
6
_
2
0
1
0
8
_
2
0
1
0
1
0
_
2
0
1
0
1
2
_
2
0
1
0
2
_
2
0
1
1
4
_
2
0
1
1
6
_
2
0
1
1
8
_
2
0
1
1
B
i
l
l
i
o
n
s

o
f

U
S

$
Wealth Fund Reserve Fund CB Assets
Trade in the CIS: Solid
Growth in 1st Half of 2011
0
10
20
30
40
50
60
70
A
z
e
r
b
a
i
j
a
n
A
r
m
e
n
i
a
B
e
l
a
r
u
s
K
a
z
a
k
h
s
t
a
n
K
y
r
g
y
z
s
t
a
n
M
o
l
d
o
v
a
R
u
s
s
i
a
T
a
j
i
k
i
s
t
a
n
U
k
r
a
i
n
e
C
I
S
P
e
r

c
e
n
t

C
h
a
n
g
e

Q
1
-
2

2
0
1
1
/
Q
1
-
2

2
0
1
0
Exports Imports
Geographical Distribution
of Trade of ECA Economies
Exports
To (Across) \
From (Down) Russia CIS-11 SEE-6 NMS-10 Adv EU ROW
Russia 14.9 0.7 14.0 45.6 24.8
CIS-11 15.1 8.5 0.8 8.0 41.7 25.9
SEE-6 2.4 1.2 28.6 15.5 44.3 8.0
NMS-10 4.5 3.5 2.5 20.0 60.0 9.5
Share of Exports Going to Each Sub-Region
Based upon 2008 Trade
Trade Developments
WTO Accession (10 EiT not members)
Membership for Russia is imminent-the rush before Putin
Good progress is being made for BiH
EU-Ukraine Association Agreement may be concluded by end
of 2011
Belarus-Kazakhstan-Russia customs union moving forth with
additional initiatives, ie economic space
EU Eastern Partnership (with Bel, Ukr, Mol, Arm, Aze, Geo)
going nowhere; objective was to be trade and visa liberalization.
Political problems as CIS becomes less democratic.
EU Accession: Croatia in 2013, Montenegro & FYRM are
candidates, Serbia maybe by year end. All have visa free travel to
Schengen area except Kosovo.
CEFTA increasing integration & promoting EU accession
Dependence on foreign capital should/must decline. Promoting
export-led growth requires supply-side policies (R&D, vocational
education) and macro policies (raising domestic private savings,
reducing public dis-saving, controlling credit growth and avoiding
housing booms).
Government Fiscal Position:
The end of Russian surpluses and
larger deficits in SEE
-8
-6
-4
-2
0
2
4
6
8
10
2006 2007 2008 2009 2010 2011 2012 2013 2014
G
o
v
e
r
n
m
e
n
t

S
u
r
p
l
u
s
/
D
e
f
i
c
i
t

%

o
f

G
D
P
Russia EECCA minus Russia SEE-6 (Ex Turkey)
Eurozone Crisis Has Not
Infected the EiT
While the US and several Eurozone
economies have recently had sovereign
credit rating downgrades, there have
been upgrades in the Czech Republic,
Hungary, Latvia, Romania, Serbia.
Nevertheless SEE likely to impacted by
negative developments in Greece and
NMS by financial turmoil in eurozone, as
a result growth for 2012 likely to be lower
Yield Spreads Have
Remained Moderate
Despite Eurozone Crisis
0
200
400
600
800
1000
1200
2
0
0
6
Q
4
2
0
0
7
Q
1
2
0
0
7
Q
2
2
0
0
7
Q
3
2
0
0
7
Q
4
2
0
0
8
Q
1
2
0
0
8
Q
2
2
0
0
8
Q
3
2
0
0
8
Q
4
2
0
0
9
Q
1
2
0
0
9
Q
2
2
0
0
9
Q
3
2
0
0
9
Q
4
2
0
1
0
Q
1
2
0
1
0
Q
2
2
0
1
0
Q
3
2
0
1
0
Q
4
2
0
1
1
Q
1
2
0
1
1
Q
2
E
M
B
I

Y
i
e
l
d

S
p
r
e
a
d
B ulgaria Hungary Lithuania P oland C roatia
S erbia1 Turkey G eorgia R us s ia Ukraine
Debt Service Percentage of
Exports of Goods, Services,
Income
0
10
20
30
40
50
60
70
80
90
B
i
H
K
o
s
o
v
o
M
a
c
e
d
o
n
i
a
,

f
Y
R
S
e
r
b
i
a
T
u
r
k
e
y
A
r
m
e
n
i
a
G
e
o
r
g
i
a
K
a
z
a
k
h
s
t
a
n
K
y
r
g
y
z
s
t
a
n
M
o
l
d
o
v
a
R
u
s
s
i
a
T
a
j
i
k
i
s
t
a
n
U
k
r
a
i
n
e
B
u
l
g
a
r
i
a
L
i
t
h
u
a
n
i
a
D
e
b
t

S
e
r
v
i
c
e

P
e
r
c
e
n
t
a
g
e

o
f

E
x
p
o
r
t
s
,

2
0
0
9
Source:WB
Remittances: Percentage of
GDP in 2006, 2008, 2010
0
5
10
15
20
25
30
35
40
45
50
A
l
b
a
n
i
a
A
r
m
e
n
i
a
A
z
e
r
b
a
i
j
a
n
B
e
l
a
r
u
s
B
i
H
B
u
l
g
a
r
i
a
C
r
o
a
t
i
a
G
e
o
r
g
i
a
U
N
M
I
K
/
K
o
s
o
v
o
K
y
r
g
y
z
s
t
a
n
L
i
t
h
u
a
n
i
a
M
a
c
e
d
o
n
i
a
,

F
Y
R
M
o
l
d
o
v
a
M
o
n
t
e
n
e
g
r
o
R
o
m
a
n
i
a
S
e
r
b
i
a
T
a
j
i
k
i
s
t
a
n
U
k
r
a
i
n
e
R
e
m
i
t
t
a
n
c
e
s

%

o
f

G
D
P
2006 2008 2010
Russian Remittances,
1995-2011
0
5,000
10,000
15,000
20,000
25,000
30,000
1
9
9
5
1
9
9
6
1
9
9
7
1
9
9
8
1
9
9
9
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
e
M
i
l
l
i
o
n
s

U
S

$
Total Outflows
CIS Outflows
Total Inflows
CIS Inflows
Non-Performing Loans:
Reasonable Threat and Little Improvement
What constitutes excessive NPL? Sweden in 1990s had NPL of 12% which required 5 of
7 banks to be rescued
0
5
10
15
20
25
30
35
40
B
u
l
g
a
r
i
a
H
u
n
g
a
r
y
L
a
t
v
i
a
L
i
t
h
u
a
n
i
a
P
o
l
a
n
d
R
o
m
a
n
i
a
A
l
b
a
n
i
a
B
i
H
C
r
o
a
t
i
a
M
a
c
e
d
o
n
i
a
,

f
Y
R
M
o
n
e
n
e
g
r
o
S
e
r
b
i
a
B
e
l
a
r
u
s
K
a
z
a
k
h
s
t
a
n
M
o
l
d
o
v
a
R
u
s
s
i
a
U
k
r
a
i
n
e
P
e
r
c
e
n
t
a
g
e

o
f

N
P
L
2009 2010 2011
IMF Data: 2011 latest available
Foreign Currency Loans
Remain a Vulnerability
0
10
20
30
40
50
60
70
80
Hungary Poland Bulgaria Romania Albania Croatia Serbia
P
e
r
c
e
n
t
a
g
e

o
f

L
o
a
n
s

D
e
n
o
m
i
n
a
t
e
d

i
n

F
o
r
e
i
g
n

C
u
r
r
e
n
c
y
Croatia: Bank Credit to the
Private Sector: 3/4 in
Foreign Currency
Change in Net Borrowing of
Household Sector in
Hungary
Financial Sector Development
Financial sector still underdeveloped in
central Asia: many have no bank account
Related party lending (RPL) has been and
remains widespread in the CIS
Created problems during crisis as solvency of
banking system was uncertain
Recent problem in Russia with VTB purchase of
Bank of Moscow
41% of all Russian loans in 2010 were RPL
Bank lending is rebounding, but credit growth
muted. As in the advanced economies, SMEs
still not able to get credit
IMF Credit, Outstanding
and Undrawn for ECA
GRA-General Resources Account, PRGT- Poverty Reduction Growth Trust
G RA P RG T
To t a l
O u t s t an d in g
A v ai l ab l e
Un d r aw n
A l b a n i a 8.1 24.1 32.2 0.0
B o sn i a & H er zeg o vi n a 338.2 0.0 338.2 676.0
U NMI K / K o s o vo 18.8 0.0 0.0 74.0
S e rb i a 1,367.7 0.0 1,367.7 0.0
T h e f Y R o f M ac ed o n i a 197.0 0.0 197.0 216.0
T u r ke y 2,966.7 0.0 2,966.7 0.0
S E E 4, 8 96 . 5 24 .1 4 , 90 1. 9 96 6. 0

A r m e n i a 402.9 106.7 509.7 158.0
A z er b a ij a n
0.0 22.2 22.2 0.0
B el ar u s 2,269.5 0.0 2,269.5 0.0
G e o r g ia 577.1 92.2 669.3 0.0
K yr g y z R ep u b l i c 0.0 112.6 112.6 57.0
M o l d o va
80.0 229.8 309.8 150.0
T aj i ki st an 0.0 78.3 78.3 26.0
U kr ai n e 9,250.0 0.0 9,250.0 7,750.0
EE CC A 1 2, 5 79 . 5 64 1. 9 13 , 22 1. 4 8 , 14 1. 0


H u n g ar y 7,637.0 0.0 7,637.0 0.0
L at v i a 982.2 0.0 982.2 539.0
P o l an d 0.0 0.0 0.0 19,166.0
R o m an i a
10,569.0 0.0 10,569.0 3,091.0
NMS 1 9, 1 88 . 2 0 .0 19 , 18 8. 2 22 , 79 6. 0

E i T To t a l 1 7, 4 76 . 1 66 6. 0 18 , 12 3. 3 9 , 10 7. 0
E CA To t al 3 6, 6 64 . 3 66 6. 0 37 , 31 1. 5 31 , 90 3. 0
Per capita Income and
Government Effectiveness,
late 2000s
Source: UNECE MDG 2011 Report
R
2
= 0.6524
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5
Government effectiveness index
G
N
I

p
e
r

c
a
p
i
t
a

(
P
P
P

$
)
EECCA NMS OTHER SEE Expon. (OTHER)
EiT Longer Run Economic
Objectives/Considerations
Increase the size of high-technology sectors
and innovation
Increase foreign investment inflows
Frozen conflicts in Caucasus and central Asia
limits attractiveness of the regions
Need to increase the size of the tradeables
sectors
Liberalization progress has slowed down
Energy exporters need to diversify to Asian
markets
Demographic problems are especially acute for
an emerging market
Main Lessons for EiT from the Global
Financial Crisis
Limit the overall level of exposure to external capital
markets, especially portfolio and bank loans
Limit the domestic growth of credit to reasonable
levels
Limit the degree of foreign currency denominated
loans
Consider the benefits of exchange rate flexibility
Minimize government fiscal deficits
Diversity production and exports; develop
manufacturing and services sectors
Develop and improve the governance of domestic
financial systems
Although those economies with a large export sector
were more exposed, limiting trade integration is not a
recommendation