The Vienna Institute Monthly Report 1998/8-9
SUMMARIES

Death of capital markets in Russia
After almost a year of turmoil in the Russian financial markets, the Russian government and the IMF agreed on a new loan worth USD 22.6 bn to be disbursed during 1998/99. The markets' immediate reaction was positive. The government fell and Russia plunged into what seems like a protracted crisis. Yet with the passage of time it became obvious that the recovery of the Russian financial markets would be a slower process than anticipated, because the capital markets have been, for all intents and purposes, killed in the process. In mid-August the rouble exchange rate band was widened significantly signalling what is in effect a devaluation.
 

Lithuania: Very high current account deficit
Lithuanian economic growth accelerated in 1998 leading to a record high current account deficit of above 13% of GDP in the first quarter and raising concern about its sustainability. A fiscal contraction is being phased in to cool domestic demand. Similarities to Estonia are striking except for inflation, which continued to ease in Lithuania. The country has intensified structural reforms to cause a reversal of the negative avis of the EU Commission about its ability to integrate with the region in the medium  term.
 

Technology and growth in central Europe
Catching up with the EU requires technical change and technological learning. But does central Europe have the capability to absorb new technology from abroad? Successful attempts at catching up in the 20th century combined technology imports together with local capabilities. These technological capabilities include formal education and training and a science and technology system that advances technological learning. Central European countries compare favourably with the four less developed countries of the EU, but this may not be enough if they are to catch up in today‘s knowledge-based economy.
 

Manufacturing in transition countries: A comparison of four sectors
The  varying levels of technology (from low to high) in manufacturing are reflected in differential performance to date. Future trends seem most promising for transport equipment and electrical and optical equipment. Growth in the food sector will depend on liberalization of trade with the EU. Mechanical engineering needs yet some more time for restructuring.
 

 

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