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The East: Economists Surprised By Transition Countries' Progress

  • Ben Partridge

London, 21 June 1999 (RFE/RL) - The Organization for Economic Cooperation and Development (OECD) has produced a table measuring the real gross domestic product per capita of a group of 52 countries. The 52 include the transitional economies of Central and Eastern Europe and the nations of the former Soviet Union.

Economists were surprised by the big differences between the wealth of countries at the top and bottom of the table. They were also surprised by the sharply contrasting performances of the transition economies.

For the first time OECD economists have measured the output of good and services per capita in the 52 countries based on purchasing power parities rather than currency exchange rates. Economists say this method gives a clearer picture of actual wealth.

The numbers are somewehat dated -- coming from 1996 -- but they are seen as dependable indicators of the rankings of the various states.

The study was produced after calculating purchasing power parities for some 200 categories of goods and services, including basic foodstuffs, clothing and household goods.

The survey, released earlier this month, shows that Luxembourg, the U.S., Norway, Switzerland and Japan have the highest real GDP per capita among the 52 nations. The bottom five slots were occupied by Uzbekistan, Armenia, Azerbaijan, Mongolia and Tajikistan.

For all of the almost 30 OECD countries, including the Czech Republic, Hungary and Poland, real gross domestic product per capita in 1996 averaged nearly $20,000 U.S. -- or, for statistical purposes, 100.

Taking this figure of 100 as a benchmark, average GDP for the 10 Central and East European countries seeking membership in the European Union was just 38. In other words, their output of goods and services was only just over one-third of the OECD average.

The best-performing economies in this group were Slovenia (67) and the Czech Republic (64). Other EU candidate members trailed in the following order: Hungary (47), Slovakia (45), Poland (35), Estonia (33) and Romania (33), Lithuania (29), Latvia (25) and Bulgaria (25).

OECD economist Seppo Varjonen, who helped compile the survey, told our correspondent today that the survey is not just an academic exercise. He says it is an important indicator of the readiness of the 10 transitional Central and East European countries to join the EU.

"But in Europe, the main user may be the [European Union]. It's important to see at which level countries are."

The average score for the former republics of the Soviet Union was just 25 -- lower than for Eastern and Central Europe.

Varjonen says the big surprise was the relatively high ranking of the Russian Federation which was given a 34 score in the list, ahead of all the other former Soviet republics, including the Baltic states, a ranking that was not expected by economists.

"For me it has been a surprise that Russia is so high compared with many other countries."

However, the survey was undertaken before last year's financial collapse in Russia.

Because detailed data is needed for compiling such comparative statistics, they will unavoidably fail to incorporate the latest developments.