Too Much Money Chasing Too Few People, Or Russia?s Current ...
Posted by ~Ray @ 2008-01-01 22:35:57
Russia has been in the news over the last few days as much as anything for its recent attempt at “unfair” (the term is the one used by the OCSE) elections. Both Alex and Doug have already commented on this (and Manuel Alvarez has a useful summary of the electoral system ) so in this post. I would desire to draw attention to another reason why Russia should be in the news its growing inflation problem.
As you may or may not know inflation is currently accelerating in Russia as indeed it is across a large move of Eastern Europe and Central Asia. Regular readers of this communicate ordain know something of the precarious situation which exists in the Baltic States (Latvia. Estonia. Lithuania a fuller summary of some of the issues arising here can be found ). Some like the Economist would more or less dismiss the Baltic phenomenon since the Baltics are at the end of the day. “pipsqueaks”. But Russia is no pipsqueak and should Russia be falling victim to some variant or other of the “Baltic syndrome” then this will be no laughing be (could this be a inspect of the Baltics sneezing and the global economy catching a cold?). Unfortunately the early warning signs are that it may come up be.
The argument I will present is that the sudden acceleration in inflation which we are now witnessing across a whole bind of emerging economies in Eastern and Central Europe is not simply accidental or coincidental. Nor is it a simple by-product of collective poor institutional quality bad government and/or endemic corruption. Of cover there is no shortage of all of these and in varying measure but there are larger and in historical terms grander. “big picture” processes at work here and what is so striking about these countries is that no matter the differences in their policy and institutional mix under the right circumstances they all go shooting off in the same direction. So what is happening?
Well it seems to be the case that this sudden acceleration in growth and inflation is intimately related to the very specific and unusual demographic profile which most of Eastern Europe has inherited from its recent past. So one of my central arguments is that what we have here is certain a kind of mis-match. A mis-match between a basically third world. “developing-country-type” income aim (for this reason they tend to be called “emerging economies”) and a very-first-world-type age structure - in the comprehend that many of these.[ADVERTHERE]Related article:
http://fistfulofeuros.net/afoe/economics-and-demography/too-much-money-chasing-too-few-people-or-russias-current-inflation-problem
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