Spoiler: The rumoured success of the Belarussian economy spells Russia gas and oil subsidies. The subsidies have propped up the Belarusian economy. Refining subsidised imported oil from Russia and selling it at world market prices provided Belarus with revenues. Much of these have been used to sustain the inefficient State-Owned Enterprises (SOEs).

The oil revenues were also used to decrease poverty and provide the citizens with a decent health care. But Lukashenka’s economic model is not sustainable. For a decade now, growth has been disappointing. The reduced subsidies from Russia has not been helpful but the main cause for stalling growth is the low productivity growth.

A planning-type economy where capital and labour are allocated by bureaucrats according to development plans have preserved the inefficient industry structure. Administered prices and wages have worked in the same direction and prevented renewal of the economy towards a more productive industry structure. Most of Belarusian GDP growth is due to increased amounts of input while contribution from total factor productivity growth is low and practically absent since 2010.

The Belarusian people which already was frustrated over the lack of civil rights, would have been better off if Belarus had joined the EU. The people in the former communist countries, which are now EU members, are not only freer but also more prosperous than Belarusians.

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Spoiler: In yesterday’s post, I showed the obvious in a graph. Lukashenka doesn’t care about individual rights and Belarus is far from the ideal of liberal democracies. People living in liberal democracies are protected from persecution and harassments of the state. The institutions in liberal democracies provide people possibilities to change governments through free and fair elections and hold their politicians accountable. All this was summarised into a graph showing the absence of liberal democracy in Belarus and Russia. It also showed how the Baltic countries’ people enjoy the rights in associated with liberal democracy.

Lukashenka has turned to Putin to help and, maybe to please him, has begun to talk about Ukraine in a negative way to put it mildly. This post elaborates on the concept of liberal democracy. And why not add Ukraine to the countries that were displayed yesterday? And that shows that even though it is far from perfect, conditions of Rule of Law is better, the judiciary is more independent, the media is more free and civil society organisations are less repressed in Ukraine than in Belarus and Russia. Maybe that’s why Lukashenka bashes conditions in Ukraine.  But the Belarusian people would be better off if their country would turn to the west or the south instead of the east.

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