I’m not an economist, so I solemnly declare that some of the economic and/or financial indicators, currently debated in the media, totally escape me. But I wonder… What’s the meaning of this incredible evolution, over the past 8 months, from an economic growth of +8 to -8% year-on-year, coupled with an economic deficit of, once again, 8%? To my mind, several explanations may be in order, but I haven’t heard any of our analysts, commentators, even politicians, talking about these things–at all! Does corruption play any role in this severe crisis?!?
- Can it be the case that our system of macro-economic indicators is terribly screwed up? If that were true, I’d be ready to admit that last year’s economic growth of 8% (as well as previous growth rates varying from 4-5% during 2001-04, to 6-7% after 2005) were false, while the new indicators being used in 2009 picture a more accurate reflection of economic realities. Hence, we should use this opportunity to recalibrate our indicators, and possibly revisit the entire statistical package that’s currently in use. Consequently, we should be able to further improve our capacity of monitoring, evaluating and planning reforms–measures, results and impacts of government decisions.
- What if the indicators are just fine, but we’re incapable of making proper interpretations? [Or, just as it used to happen before 1989, reports are being fudged to please the ultimate decision-makers, whose egos “must” be propped by meager subordinates that create a personality cult whereof they draw individual benefits?] If that were true, past analyses regarding Romania’s economic development may have been, once again, false. But in this case, we should recalibrate/replace the people that proved either incompetent or malevolent. From this perspective, we should design an improved system for the cross-verification of statistical data, with harsh and immediate sanctions for false reporting–regardless of whether “mistakes” are honest or not.
- Finally, I must also consider the possibility that both indicators are properly designed, and reports or analyses are utterly true. In this case, I assume the only explanation for the discrepancy from +8 to -8% resides in the Romanian economy being completely non-competitive? Thus, the cause of the economic contraction might not be so much related to the global crisis, but rather to the impact of Romania’s entering the European Union–and I can easily understand that growth in 2007-08 was the inertial effect of the accession process, whereas contraction in 2009 is the inertial effect of lacking a competitive advantage within the EU. As a result, then, we should take the opportunity and finally enact the sound, structural, economic reforms that are so long overdue.
3′. Of course, not being an specialist, I can only speculate–and here’s an alternative scenario for #3, based on the effects of systemic corruption: Say I had 100 monetary units stashed from bribes and other undue benefits, and I negotiate with you a laundering scheme, as we are both businessmen: We “discover” that you owe me 100, but you can’t pay, “because of the crisis.” Then, I “take over” your business, and you get 50 in cash, from my black stash, while I just laundered the entire 100. A few months later, we open a new business together (most probably based on the one I just “took over”), and you repay some 20-30 of the original 50–ultimately, you make some money, totally “legit,” and really out of nothing, while I launder at least 70% of my illegal stash, taking advantage of the global crisis.
With so many businesses flipping over, of course the general stats would reflect a severe contraction of the Romanian economy in 2009. Moreover, since these people want to keep a low profile for their “investments,” they’d only operate with small enterprises, so these transactions wouldn’t be reflected on the stock exchange, but rather in the trade registry. I wonder if one could check on the total volume of investments this year, as well as the total changes of ownership for small businesses–if I’m right in my “corrupt scenario,” I guess we should see a sizable injection of funds into a feeble economy. Would that make sense to you?!? I mean, would it be logical to see small and inconspicuous investors flocking around a collapsing economy with the strong conviction it’ll turn profitable in less than a year?!?
This is the way I can make sense of these macro-economic indicators that otherwise escape me. I really have no preference for any of the scenarios above–either one of them is equally insulting, from a governance perspective 🙁 But if I’m right in my alternative speculation, I can only trust that early warning mechanisms are in place, and money laundering may be exposed. Otherwise, given the old saying that corruption may be good at a certain stage of economic development (“greasing the wheels”), I’m only left with the hope that past decades of systemic corruption would finally have a positive result, in a strong and competitive economy, consolidated after 2010 with large sums of money amassed illegally until 2008… Hopefully, it’ll stay clean!
Later edit: Another explanation appeared, and I think it makes sense; just as this latest alternative. The question, then, remains: Which one of these alternative explanations is true?
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