Re: [A-List] The Exodus from Eastern Europe

[Michael Hudson <michael.hudson@xxxxxxxxxxxxx>]

Actually, Latvia is losing 60,000 PER YEAR, not total to date.
    Working conditions in Latvia are the worst in Europe, unionization among
the lowest, health conditions worst, education worst, et al.
    the post-Soviet economies are an entirely new kind of formation, not
like the West, but with structural trade deficits (they must import all
their manufactured consumer goods and capital goods), financed by borrowing
against their real estate and public utilities as collateral (on private
account, not gov't account). As the real estate bubble slows, the influx of
foreign exchange for loans will decline, and the currency will plunge. But
the mortgages (75% in Latvia) are denominated in euros and other foreign
currencies, not lats.
    It's a neoliberal paradise.
Michael Hudson


On 7/25/07 8:50 PM, "Yoshie Furuhashi" <critical.montages@xxxxxxxxx> wrote:

> FULL TEXT: <http://hir.harvard.edu/articles/print.php?article=1515>
> At a Loss
> The Exodus from Eastern Europe
> From Ethnic Conflict, Vol. 28 (4) - Winter 2007
> 
> Kiran Bhat is a staff writer for the Harvard International Review.
> 
> . . . . . . . . . . . . . . . . . . . .
> 
> The Exodus
> 
> Since accession to the European Union, about 60,000 able-bodied
> working-age Latvians left their homeland for better opportunities,
> many as mushroom pickers in Ireland or laborers in Britain. While many
> were skilled professionals at home, they had the chance to receive
> higher wages abroad doing work that requires much less skill. As a
> result, Latvians have left their homeland in droves.
> 
> At first the number does not appear that striking. But upon further
> scrutiny, realizing how small Latvia's economy is, the impact of
> having 60,000 fewer workers is disconcerting: that number constitutes
> two percent of the Latvian population. A study by the Latvian National
> Bank postulated that the country's population could be half of what it
> is now by 2050. This population loss has left entire villages in the
> Latvian countryside devoid of any working-age inhabitants, crippling
> the rural economy and limiting the government's ability to collect
> revenue by destroying the tax base.
> 
> The problem is not restricted to Latvia. Neighboring Lithuania has
> lost three percent of its population, over 100,000 people, to foreign
> markets as well. A 2006 report by consultant John Salt for the Council
> of Europe, a 46-member European entity, listed Poland, Lithuania, and
> Latvia among countries with consistent population loss due to an aging
> public and net emigration.
> 
> Immigration does not look as if it will stop anytime soon. The
> economic incentive to leave Eastern Europe for better opportunities in
> Western Europe exists. Unemployment rates in Poland and Slovakia, two
> leading Eastern economies, hovered around 15 percent in 2006, meaning
> that a very sizeable portion of the working-age population cannot find
> work under the current structure. In contrast, the unemployment rates
> in Britain, Ireland, and Sweden stayed closer to five percent,
> implying that migrating to a more dynamic economy in which one can
> find a good, high-paying job is much easier than finding a
> comparatively bad, low-paying job at home. As long as an economic
> incentive exists for emigration, Eastern Europeans will emigrate.
> 
> . . . . . . . . . . . . . . . . . . . .
> 
> An article in the December 2005 edition of The Economist entitled "The
> brain-drain cycle" cited Ali Mansoor, an economist at the World Bank,
> as claiming that it may take ten years to see the full effects of
> migration on the Polish economy, but eventually it may shift up the
> average age of Poland's residents significantly. Without as many
> workers to support the elderly and create the next generation, the
> productivity and economic growth of countries such as Poland could
> stall considerably.
> 
> The same article condemned many Eastern European countries to the sad
> fate of having a "rich-country age and poor-country economy." Already
> older on average than Western Europe and most of the world, the exodus
> from the region could exacerbate an already existing problem to the
> extent of debilitating the economy.
> 
> Potential Brain Drain
> 
> While population loss in Eastern Europe has been empirically
> established, a brain drain, in which skilled professionals leave in
> large quantities to work in other countries, would have detrimental
> ramifications from both an economic and social perspective. While
> approximately 12 percent of those who leave Eastern Europe are in the
> skilled labor force, most emigrants are working-age laborers with
> little or no post-secondary education or college students looking to
> study abroad.
> 
> However, there is brain drain to some extent. One in ten doctors left
> Poland, and about 20 percent of Polish emigrants work in jobs that
> require considerably less skill than they possess, but most studies
> show that Poland retains more than enough doctors and teachers for its
> populace. And while to some extent smaller countries such as Latvia
> and Lithuania are losing workers and the economic gains that their
> presence brings, brain drain itself is not yet having any measurable
> impact on the economy of either.
> 
> Another phenomenon, termed "brain waste," occurs when skilled workers
> leave their home countries to take on jobs in the West that require
> much less training. Some 12 percent of Eastern European workers in the
> United Kingdom are working as unskilled laborers despite having had
> some tertiary education in their homelands. Such "brain waste" reveals
> the inherent weakness of Eastern European economies in comparison to
> more established markets. It is hard to compete when your market for
> skilled labor offers trained professionals fewer opportunities than
> foreign unskilled labor markets offer.
> --