What Bubble?

Image of the day at Bloomberg (growth in Eurozone's M3 since 1978; click for larger view).

Got numbers?

Kenneth Glenn Dau-Schmidt and Carmen L. Brun elaborated a paper dealing with different popularity of law and economics in Europe and USA. Amongst some of the major differences are common-law system, different peer-review tradition (journals reviewed by students), state-oriented (communitarian) society in Europe, rather rare mobility among academics, judiciary and practitioners, and a few other.

Trying to contribute with a nice informative article, I have discovered an additional cause (and effect as well) of the L&E underestimation in Europe (and Slovakia especially) - THE (inaccessibility of) numbers.

Based on the SLOVSTAT data, percentage of the closed cases have declined by 46,6 points from 1989* to 2006. This massive decline made me think about possible causes. I approached Slovak Ministry of Interior with an obvious question: "What was the number of police officers and police budget from 1989 to 2006?"

The answer, dear reader, is confidential (read "lost for good"), apart from years 2005-2007 (where we can observe 94 policemen and 1,025 million crowns salary costs increase) and if we do not want to end up being interrogated like Minin brothers, waiting ten years more seems to be a good idea.

Or maybe we could just develop some false memories about our crime rates. Whatever!

* I did not want to spare you the phony number from 1989. Communist duty to explain every crime committed made all the magic:) - or did you really believe those 46,6 percents? I understand both:).

TFP gaps in manufaturing: China, India & CEE

In their recent NBER paper, Chang-Tai Hsieh and Peter J. Klenow tried to quantify the extent of resource misallocation in the manufacturing sectors of China and India. According to the authors, if capital and labour were reallocated to eqalize their marginal products, the Total Factor Productivity would increase by 25-40% in China and 50-60% in India.

What does this mean for CEE manufacturing? If economic policies of these countries continue to apply the traditional approach to foreign investment (subsidies), it is questionable whether the returns on FDI in these countries together with the benefits of fiscal competition for manufacturing firms will continue to be motivating. While already facing a labour shortage, Central Europe has tough manufacturing competitors in China and India.
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Thanks to František Lipták for this post.

Slovak GDP grew by 9.45% in the last four quarters

Recent Statistical Office's report of 9.4% growth in GDP for 2Q2007 means that Slovakia has been growing at an average pace of 9.45% in the last 12 months (9.8 & 9.6% in 3&42006, and 9.0% in 1Q2007).
At that speed, with the whole EU growing at about 2.9%, Slovakia caught up in a single year more than 4 percentage points in its performance relative to the European Union's average (from about 60 to about 64% of the EU-25 average in GDP per person in PPS).

Catching up and Falling Behind

Eurostat launched a new tool allowing one to graph available data into a map. Here's a map of Europe showing the countries' economic performance between 2002-2006 relative to the EU-25 average (click for larger view).

Portugal, Italy and France have fallen behind relative to other EU member states; countries of the 'New Europe', on the contrary, are catching-up quite quickly.

Macroeconomic stability in the Czech Rep. and Slovakia

Three graphs from my MA thesis.

Draxler on globalization in FT

http://www.ft.com/cms/s/d7692fa0-3b26-11dc-8f9e-0000779fd2ac.html
Would the author be able to convincingly show how comparative advantages can be 'created'?

Is Hillary inspired by Slovakia?

In a provocative article, the president of the Cato Institute suggests that a well-known U.S. senator might be a nationalist, in spite of her party membership.

This rings a bell - perhaps it even sheds some light on the structure of the Slovak government, which should be unthinkable in theory but is alive and well in practice.

Is it a good thing that ideological differences seem to be getting smaller? Slovakia has been described as "lab" before and something tells me there will be a lot of evaluating to do after the present administration's term. Patience is required in the meantime.

IHT on Skilled Labor Shortage in Central Europe

An International Herald Tribune article based on a report by the Vienna Institute for International Economic Studies.

"Slovakia could soon become the world's biggest car producer per capita - if it can find enough skilled workers to assemble the vehicles." [...]

"The problem is particularly acute in the automotive industry in the Czech Republic and Slovakia, but it also affects segments of such high-skill service occupations as health-care personnel, architects, civil engineers and Internet technology experts, he [one of the report's authors] said.
In 2003, the Czech Republic began a program, appropriately called Selecting Qualified Workers From Abroad, which entails offering permanent residence permits to those who have lived and worked in the country for two and a half years. Poland said last month that it was introducing a similar program."

Perhaps a policy inspiration for the Slovak government? (The government recently made the requirements for obtaining citizenship tougher.)

Thanks to Michal Onderčo for this post.

PS: A careful observer might spot a mistake in the target year of euro adoption in Slovakia. It is not 2008, as in the article, but 2009.

Draxler on Globalization

A very intervention-leaning account by a Slovak CEPS research fellow, but still a nice overview of what is out there in this regard.

Update (21 September 2007): here's the complete report for the Directorate-General.