How much convergence to expect?

Very well, professor! Let’s begin the bold analysis of the factors that may hinder economic convergence right now and not postpone that to the coming years.
First we may agree that growth actually is about getting physical capital, labour, human capital (health and skills) and productivity (technology times efficiency) mainly, though not exclusively, into the manufacturing industries, focusing on high value-added production. It is rather simple to understand, but much more difficult to accomplish.
Let’s discuss why? Lack of money (locally)? Poor business environment? Policy that promotes spending, reduces saving and discourage investment? Lack of interest for ‘elite’? What about FDI and where are ‘spillovers’? Latvian speakers may read my blog at http://www.makroekonomika.org.
We my observe that there is no hint of such analysis in tonnes of ‘National Development Plans’ so far. Unfortunately, there are very few professional voices that are bold enough to tell that. Latvia has produced about 1500 planning documents. There are five different institutions producing ‘strategic plans’ in Latvia. Common denominator of them is – „the Christmas wish list”. Having red most of them I’d say that they are garbage made by boys having very little idea about how ’milk happens’. Yet Mr. Aslund sings the prizes to wisdom of these folks.
So we would have an ‘implementation deficit’ if we would ever had any real plan. So let’s help to develop the real one!
I here challenge you and all serious economists to start this discussion before we really become ‘the failed state’ as some folks ‘boldly’ suggested.

Mortenam taisnība, bet, jāsaka, jautājums nav tikai par cilvēku dumjumu un zemo produktivitāti šajā zemē. No svara arī ģeopolitiskie apstākļi. Ar skaudību lūkojos Slovākijas virzienā: šajā valstī, kurā dzīvo ne īpaši gudrāki cilvēki kā Latvijā, nudž un mudž no FDI autoindustrijā, pat par spīti samērā nesenajiem Mečiāra autokrātiskajiem izlēcieniem. Latvijai kaimiņos nav tādu valstu kā Vācija vai Austrija. Varam, varbūt, lūkoties Somijas, Dānijas un Zviedrijas virzienā, bet tad, tiešām, jāveic dažas kardinālas pārmaiņas Latvijas politiskajā sistēmā.

Since comparing GDP against the average is a zero-sum game, the only
way for any country to improve its standing is for some other country to do more poorly. (The only exception is Garrison Keillor’s fictional town where all the children are above average.) On the other hand, if the standard of living of the EU increases and pulls Portugal and Latvia along with it then languishing perpetually below average might not be so bad. So I am wondering if there might not be some absolute statistics on GDP that shed light on the question of whether standards of living have actually improved over the last twenty years?

Labpāt redzētu vispusīgu Morten Hansen analīzi par Zviedru un citu Ziemļeiropas banku darbību Latvijā “treknajos gados” un “vecākā demokrātijas brāļa” lomu Latvijas ekonomikā….. Bet tā rodas priekštats, ka atkal kāda- хата с краю

Interesanti tas, ka salīdzinot Baltijas valstu IK uz cilvēku pret ES vidējo laika posmā 2003. – 2010. (tik, cik Eurostat pieejami dati), Latvijai un Lietuvai pieaugums ir 9%, Igaunijai 10%. Apjūsmotā igauņu valdības budžeta balancēšanas prasme un “oligarhu” neesamība tik vien devusi, kā vienu knapu procentu, komiski nudien.

Way of thinking is the key. We have inherited soviet way of thinking – state as an enemy and evil. From other side – state employee must control everything. And with only visible evidence of control – all kind of filled forms.

>>> Very few countries have seen dramatic changes in their GDP rankings even over very long periods, suggesting that there are other forces – ‘culture’ – at play.
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It may be difficult to judge about old statistics on GDP per capita, but Latvia between the two world wars seemed somewhere near the European average. Nordic countries and Germany were certainly ahead of it, on the other hand – Portugal and Greece were most probably behind.

Can we identify those cultural forces which have changed since then? Is it the departure of German minority in late 1939? The killings of civilians during the WW2? Some adverse impact of Soviet culture in business and governance? Mistakes during the last two decades of nation building?