[LINK] Post-Communist Europe's problem

[rfmcdonald]

From Business Week, the article "Eastern Europe Might Never Catch Up":

Central and Eastern Europe states are in danger of never catching up with Western Europe, as the long term economic growth potential in the region is undermined by a widening human capital gap with the west of the continent, a report has warned.

The report -- called the European Human Capital Index -- ranked eastern EU members and candidates on their ability to develop and sustain their human capital, and was released by the Brussels-based Lisbon Council think tank on Monday (15 October).

Since the collapse of communism, economic growth in the former communist states is far above growth seen elsewhere on the continent, narrowing the difference in economic wealth between the two halves of the continent.

But researchers now fear that a continuation of this performance is unlikely, unless certain problems are urgently addressed.

"The entire study shows a closing of the gap in the last 15 years, but now it could widen again," Peer Ederer, the lead author of the study warned during the report's presentation.

"An economy does no longer only have to be efficiency-driven. If you want to be able to compete with Western Europe and Asia, you have to become an innovation-driven economy," he said later on.

In particular, the report highlights the region's shrinking population, continuous brain-drain, chronically high unemployment and inadequate investment in education and skills - especially in workers aged 45 or more -- as the main problems.

"Stop early retirement schemes, reduce unemployment, stimulate part-time employment. Keep them in the job, get them in the job, in every way possible," Dr Ederer said.

The Lisbon Council's website is here, and the report in question ("The Challenge of Central and Eastern Europe") is here.