(by Stefano Giantin) (ANSA) - BELGRADE, 22 NOV - Countries in Central- and Eastern Europe and in the Balkans are generally "significantly wealthier and healthier" than in 1989, in particular those that became EU members. However, "the independence and quality of institutions" in larger parts of the region "declined in the last decade" and "if this continues, it will present a problem for longer-term growth prospects," said the Vienna Institute for International Economic Studies (WIIW) in a special report recently released, produced to mark the 30th anniversary of the fall of the Berlin Wall. "Thirty years after the end of Communism, the region has much to be proud of," the institute noted. "Democracy, representative institutions, a free media, market capitalism and civil society have put down roots," the report reads. Moreover, according to WIIW, "the region's top performers, such as the Czech Republic and Slovenia, are now richer than parts of Southern Europe. If nothing dramatic happens, in a few years the Czech Republic will be wealthier than Italy, a founding member of what became the EU." According to data quoted by WIIW, as of 2018 Slovakia, Lithuania, Estonia, Slovenia and the Czech Republic have for instance already reached a per capita GDP in PPP terms at 60% of the German level or above, while "Ukraine, Moldova and Kosovo have not yet reached one quarter of the German level." Also life expectancy has gone up everywhere, with a record of 8.5 years in Slovenia between 1989 and 2017, Czechia (+7.8 years) and Estonia (+7.6 years). However, WIIW stressed, the "challenges" for the region are also huge. Among them, a "rolling back of globalization", particularly negative for open economies, and an unprecedented "demographic decline" in peacetime. Between 1989 and 2019, the population of Latvia fell by 28%, the one in Bosnia and Herzegovina by 27%, Lithuania (-25%), Bulgaria (-21%), Romania (-17%), Estonia (-16%), Ukraine (-14%) and Croatia (-14%), according to UN data. The demographic decline has significant negative consequences: in particular, it will hamper productivity and growth prospects, welfare and pension systems.

WIIW also pointed out "increased authoritarianism" and the decline in the quality, independence and/or capacity of institutions." "Although when it comes to threats to democracy, Hungary, Poland, Turkey and Russia tend to get the most attention, in reality these countries are not exceptional," WIIW wrote, underlining that a "clear deterioration" of the standards of the electoral democracy were recorded in particular in Hungary, Turkey, Ukraine, Serbia, Hungary, Poland and Croatia between 2007 and 2017. "Negative political trends in many parts of CESEE are already having important implications for institutional quality, capacity and independence, and this in turn could be a problem for economic growth in the future as it affects the climate for investment," the Vienna-based institute stressed. According to the research, the rise in authoritarianism and the decline of democratic institutions have different causes.

Among them, the fact that "political liberalism in general never put down very deep roots" in much of the region. Moreover, countries have less incentive to stick to reforms once they join the European Union and "disappointment with post-1989 economic developments, including rising inequality, give populists a valuable tool to use." In the last 30 years, inequality has risen in particular in Russia, Macedonia, Latvia, Lithuania, Bulgaria, Estonia, Romania, the Czech Republic and Slovakia.

However, "there are several reasons for optimism about the future," WIIW concluded. Among them, "there is a reasonable chance that labour shortages in the region will drive productivity- enhancing improvements, leading to per capita GDP increases, further wage convergence with Western Europe, and better living standards." Moreover, "large-scale protest movements against the authoritarian turn and state capture are visible in parts of the region and, finally, "the new digital economy represents a decent opportunity" for the region. (ANSA).