ARE PEOPLE BETTER OFF THAN THEY WERE 10 YEARS AGO?

According to these data, no CIS economy had by 1999 “regained” the output levels achieved in the late 1980s. Total GDP in 1999 had returned to 95 percent of its “pre-transition” level in Uzbekistan, 81 percent in Belarus, 63 percent in Kazakhstan and Kyrgyzstan, 60 percent in Armenia, 58 percent in Russia, 42 percent in Azerbaijan, 41 percent in Ukraine, 34 percent in Tajikistan, and 31 percent in Georgia. GDP per capita in 1999 amounted to 63 percent of the 1991 level for CIS countries on average. Ukraine, Georgia, Azerbaijan and Tajikistan reported per capita GDP of only 47-48 percent of the 1991 level, compared to 56 percent in Moldova, 63 percent in Russia and Kyrgyzstan, 69 percent in Armenia, 77 percent in Kazakhstan, 82 percent in Uzbekistan and 85 percent in Belarus. Labor forces shrank throughout the CIS during the 1990s, while labor productivity declined by one-third on average.

For a number of reasons, GDP statistics remain a relatively poor guide to changes in economic welfare in the CIS countries. For one thing, large amounts of economic activity in the informal sector go unreported. The shadow economy is estimated at one-third of GDP in Armenia and Georgia, one fourth in Russia, Kazakhstan, and Azerbaijan, and one-sixth in Moldova and Kyrgyzstan. Also, while some CIS economies like Georgia, Moldova, and Kyrgyzstan have extensively liberalized prices and commerce, others like Belarus and Uzbekistan maintain many Soviet-era administrative controls over domestic and foreign economic activity. These controls introduce certain biases into the GDP numbers: despite the rapid growth reported in recent years, consumers in Belarus and Uzbekistan are much more likely to face shortages and poor product quality reminiscent of the Soviet period. The retention of these Soviet-era controls suggests that the worst of the economic transition may still await Belarus and Uzbekistan.

The official output numbers also fail to reflect the welfare losses associated with uncertainty about sporadic supplies of heat and electricity, or about the wage and pension arrears that have afflicted most CIS economies. On the other hand, comparisons with Soviet-era GDP are a poor way to measure changes in welfare during the past decade. Since many of the economic activities conducted under Soviet central planning served little useful purpose, their disappearance also meant little in the way of welfare loss. The official data also fail to capture the benefits offered by increased economic opportunity, at least for the better educated and more entrepreneurial citizens in these countries.

LATEST TERRORIST ASSAULT ILLUSTRATES DEEP-SEATED PROBLEMS.