Eastern Europe and Eurasian Countries Collaborate to Recover from Recession
FrontLines - August 2009
By Yang Yang Zhou
Kyiv, Ukraine—The 2008 global recession hit Eastern Europe and Eurasian countries particularly hard, but more than 200 representatives from private industry, government, non-profits, international donor groups, and USAID offices in 17 countries met here recently to find ways to recover.
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A vegetable market in Kyiv, Ukraine, is
just one of the types of small businesses in
Eastern Europe feeling the impact of the
global recession.
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The 4th annual Europe and Eurasian Regional Competitiveness Conference was held June 16–18 by USAID.
First the bad news: The countries
in Europe and Eurasia are all experiencing severe gross domestic product declines, with some losses in the double digits. One recent analysis forecasts that the region’s recovery will take the longest.
But the countries hope to shorten that time period by working
together and strategizing at the Kyiv conference about best practices and lessons learned.
Participants listened to first-hand testimonies on the consequences
of the economic downturn,
ranging from the sharp decline of remittances in some countries to the collapse of financial
markets in others.
Experts also offered their views on development
trends in light of globalization and the financial crisis.
Paul Marer, professor
of international business at Central European University in Budapest and former chairman of the Blue Ribbon Commission on Economic Transition in Hungary, said that Eastern Europe’s growth model was largely externally generated
from Western Europe through credit access, capital inflows, and trade—all of which dried up during the crisis.
“In the future,” Marer said, “Eastern Europe must rely more on internally generated sources of productivity and competitiveness.”
Natalie Jaresko of the Western New Independent States Enterprise Fund, a USAID-funded investment company operating in Ukraine, Moldova, and Belarus, described how investment motivations
will need to change in the future. She said that future investment
decisions will return to the basics and be driven principally by profitability, unlike the recent past when speculation was often the basis for investment decisions.
Conference participants agreed that although Eastern Europe and Eurasia have made significant strides towards developing market economies, the transformation is not complete. Integration into the world economy in the past was built on unstable foundations. The crisis revealed that those underlying
weaknesses—which had been masked by temporary, unsustainable
growth—remain unsolved.
The event was organized by the Office of Economic Growth in USAID’s Europe and Eurasia Bureau.
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