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The East: Drawing Pictures Of A Region In Economic Transition

  • Robert Lyle

Washington, 17 April 1998 (RFE/RL) -- By one measure, the size of the economies of Central and Eastern Europe and Central Asia, figured per person, is $2,200 per year, or only 8.5% of the per capita figure in the richest nations.

But that is the traditional measure calculated at official exchange rates, which the World Bank says doesn't accurately reflect the situation of real people. The bank works out a figure it calls Power Price Parity (PPP), which uses real local wages and prices in local currency, then converts it to dollars in a more accurate reflection of true purchasing power.

The bank's PPP shows that the per capita economy among the nations in transition is really twice the official figure -- $4,310 yearly -- or nearly 20% of the high income countries.

That puts the region just below the center of middle income countries around the globe.

Of course, the figures vary widely within the region -- Uzbekistan is half the regional average even with the PPP figures while the Czech Republic is 60% higher than the average.

But the World Bank says it is yet another example of how different facts and statistics can paint more complete pictures of nations around the globe. The facts and figures are assembled in the bank's yearly World Development Indicators report, which was released Thursday in Washington.

In the broad sweep, the figures show that the number of people in the region living on one dollar a day or less -- the bank's definition of abject poverty -- was 14.5 million in 1993, 3.5% of the population. To reduce that poverty by half by the year 2015, the bank says the region must have annual growth rates of real consumption of at least 0.8% every year from 1997 to 2000.

That shouldn't be any problem, it says. The region's actual real consumption growth rate from 1997 to 2000 is projected to exceed 2.4% per year.

Overall economic output growth is projected to hit three percent for the region this year, four percent next year and exceed five percent by 2000.

But the region's financial depth and efficiency is still low, with such measures as domestic credit provided by the banking sector at a weak 31.9% of GDP, the lowest figure of any region in the world. At the same time, integration with the global economy, as measured by such things as trade and gross foreign direct investment, puts the region solidly among the middle income nations.

Employment in the region is still heavy in agriculture and industry -- 23% of the male work force and 22% of the female work force were still employed on farms in 1994, while 43% of men workers and 30% of women were in industry that year, compared to levels 10 to 15% lower in the advanced economies.

Still, the bank say the employment trend in the region is like the rest of the developed world, shifting to service companies providing the vast bulk of employment.

In health care, the region spent an average of 5.4% of GDP -- or around $315 per person per year PPP -- in the first half of this decade, slightly above most other middle income countries and a bit more than half as much as the rich nations.

Life expectancy in the region was at 64 for men and 73 for women in 1996, about average for middle incomes nations as a whole but significantly below the figures for high income countries -- 74 years for men and 81 years for women.

The region has moved into the information age. In 1996 in the region there were six mobile phones for each 1,000 people, 1.2 fax machines, 17.4 personal computers and 350 television sets. That's fairly average for middle income countries, but well below the high income nations. In the rich countries, for example, there were 224 personal computers per 1,000 people in 1996, 47.5 fax machines, 131 mobile phones and 611 television sets.

World Bank Chief Economist Joseph Stiglitz acknowledges that changes are happening rapidly in the region, so many of the statistics are out of date.

But, he says, they draw a valid picture of certain periods of time. More importantly, he adds, they show that there is a lot of diversity among the nations in transition. The Central Asian nations in the region are very poor, he says, while Russia has its own diversity, such as a high level of education but slow economic growth.