Poland and Ukraine, so close and yet so far apart.

Spoilers. In Poland, reforms of the economy were made even during Communist rule. Following the end of Communist rule, ambitions to join the EU and support from the EU and IMF gave further impetus to reform. As one of the earlier reformers, Poland has turned into a growth engine. Not being part of the Soviet Union was a bliss for Poland but being a Soviet republic turned out to be a curse for Ukraine. No reforms were made by its post-Soviet leadership during its first three years of independence.

Opaque liberalisations and privatisations that followed enriched former “Red directors”. During this time the oligarchs emerged. They have since not only dominated large sectors of the Ukrainian economy but also the political arenas. From then on, Ukraine’s people have been robbed and deprived of reasonable standards of living. While the influence from external factors, especially the EU, was beneficial for Poland, Russian influence and armed interventions have prevented Ukraine from growing.

 

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Life in liberal countries is more free and prosperous than in autocratic regimes

Updated post about institutions and prosperity.

In a previous post I showed how a future EU membership gave the Baltic countries, and East European countries incentives to reform their economic and political institutions which shape the behaviour of households, firms and politicians.

This post takes the relationship between institutions and growth beyond the EU.

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Why the EU really matters

Spoilers. The EU is a success with the perhaps most obvious example being the Single Market which has led to increasing living standards in the EU. But the most important reason for people from the Baltics and Eastern European Countries to join the EU were the EU values of respect for freedom, democracy and human rights. But the EU is not perfect. Once inside the EU, governments with autocratic ambitions as Orban’s Hungary can demount their citizens rights and violate EU fundamental values. 

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Prices in the EU – converging or diverging?

Spoilers. The Single Market and the Euro have decreased price differences within the EU. The process has been stronger for prices of goods than for prices of services. More can be done in EU to complete the Single Market for Services in order to increase competition and lower profits for the benefits of customers. If you agree with this, you should cast your vote on a party that wants to improve the functioning of the Single Market and increase trade within EU and with countries outside EU. 

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