What a particular country’s GDP per capita will be in the future, depends on its value at the point of departure in 2000 and the pace of growth over the next decades...

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Smutek to uczucie, jak gdyby się tonęło, jak gdyby grzebano cię w ziemi.

Assuming that the GDP per capita, on a PPP basis, in the most advanced industrial countries—that is in the EU and USA—is approximately 30,000 dollars, we ask how many times the current level of GDP per capita in transition economies must increase to match the former.
The specter of the multiplying factor with this regard is quite vast—from about two times in the case of the most advanced postsocialist economy, that is, in Slovenia, with the GDP per capita at around 14,800 dollars, to about as many as thirty-nine times in the case of the most underdeveloped 11. However, it is more rational, for the purpose of catching-up, to consider the GDP
measured in terms of purchasing power parity. Therefore, in the example of Hungary, the respective values would be 57,000 and 35,000 dollars.
12. For instance, if the one-point difference is between the annual rates of growth of 1 and 2 percent, the difference after fifty years accumulates to about 170 percentage points. However, if it is between 6 and 7 percent, than the cumulative difference is as large as 1,100 percentage points.
76
Globalization and Catching-up in Transition Economies Figure 5: Catching-up with the Developed Countries Slovenia
2.0
Czech Republic
3.1
Estonia
3.1
Slovakia
3.4
Hungary
3.5
Croatia
3.5
Poland
4.0
Latvia
4.5
Belarus
5.7
Russia
6.4
Bulgaria
7.6
Lithuania
7.7
Romania
9.6
FYR Macedonia
9.9
Armenia
10.0
Turkmenistan
10.0
Uzbekistan
11.2
Kazakhstan
11.6
Ukraine
12.7
Kyrgyzstan
13.2
Yugoslavia
14.2
Azerbaijan
14.3
Georgia
14.3
Moldova
16.6
Albania
19.1
Tajikistan
39.0
5
10
15
20
25
30
35
40
45
How many times the output should rise to catch up with $PPP 30,000 GDP per capita?
Source: Author’s calculation.
country, that is Tajikistan, with the GDP per capita at about 770 dollars.
Whereas for only eight countries the ratio is not larger than five to one, in twelve cases it is believed to be no less than ten to one (Figure 5).
Indeed, there are certain methodological concerns about the relevance of the data used for the purpose of this comparison. The evaluation of GDP
based on purchasing power parity ought always to be looked at with proper consciousness, and even more, it must be the practice vis-à-vis such proxy for transition economies. It must raise some doubts if the evaluation of GDP per capita (in 1995 PPP dollars) suggests that Estonia is on a par with the Czech Republic, or that Belarus’ income is almost twice as much as Ukraine’s, or that Macedonia has a GDP per head almost 70 percent larger than Moldova. However, these estimations are based on the same method-
Passive Scenarios and Active Policies for the 21st Century 77
ological ground and are done along the lines of similar assumptions. So if there is—since certainly there is—some error included in those estimations, it still allows us to rely on these data in a quest for answers to the questions that have been asked in the context of recession, recovery, growth, and catching-up in transition economies.
Moreover, catching-up is about much more than just the closing of a gap between level of income in the most advanced nations and in the ones lagging behind in this respect. On the one hand, even if, in certain cases, after a certain period of time the income gap is closed, the standard of living will still be lower, owing to the accumulated wealth. Liquidation of the difference vis-à-vis the latter will take another number of years of relatively faster growth. That will be also catching-up, though first things must happen first.
On the other hand, many postsocialist countries are not that far behind the countries with the highest GDP per capita as simply the data on GDP
might suggest. The GDP is just a flow of current production and does not reflect other aspects of development, otherwise important for the standard of living and the quality of life. In several transition economies—and this time it is a positive legacy from the centrally planned episode—there is relatively long life expectancy, on a par with the OECD, the rate of literacy is very high, secondary school enrollment is similar to that in advanced industrial societies, etc. (UNDP 1999).
This does have a significant implication for the future. It shows that the quality of human capital, and hence the growth potential, which is dor-mant for the time being, are relatively higher. If the growth in terms of quantity supplied can be considered as a linear process, it is not so with socioeconomic development. The nature of the latter is going to change considerably during the era of globalization and vast expansion of information technology. Altering values of society are contributing to this evolution, too.