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Let’s start economic growth

30/04/2012

Finally the leaders of Europe started to understand, that economic growth needs additional demand. Since the growth in demand from the rest of the world is rather sluggish, or at least not strong enough to compensate for the reduction in the demand of the G.I.P.S.I. countries, this additional demand has to be created within the European Union. It can’t come from the countries suffering high debts, as some tend to hinte, but from the countries with relatively low debt and potentially high perspective of economic growth. Clearly the best candidates are the Eastern European countries, with about same size of population as the G.I.P.S.I. countries. These countries have relatively low public dept, mostly bellow 50%, (except of Hungary), on the other hand in spite of being part of the European Union, have relatively low standard of living and big deficit in infrastructure. If to start to create demand it should be in these countries, namely Poland, Romania, Czech Republic, Slovakia and Bulgaria. It is time to allocate financial resources, to where they are mostly needed and where they will create the highest yields and effect. A very good example for infrastructure project is the railways in these countries. While in France and Germany the trains are running at speed of 300 Km/hour and more, in Czech Republic at average it is 80 km/hour, (This is if they keep the schedule, what to my personal experience they don’t). This is why there is no reasonable train connection between Berlin to Wien, distanced about 700 km, that takes today 10 hours with train, or Berlin to Budapest, distanced about 900, that takes 12 hours. Even Berlin to Prague that is about 400 kilometer takes 5 hours. Just try to calculate the economic contribution of a train with double or triple speed could have. Berlin – Wien for 3 hours and Berlin – Budapest 4 hours, what a relive and increased efficiency it would be to the traffic between these cities. And the same can be said about Berlin – Warsaw, Warsaw Prague, etc. I know in all this post communistic countries the railways remained in the state of art and management systems of the previous regime. Here is a challenge, that Brussels could cope with, financing the project and encouraging structural changes in the railway companies. It could be a big project with whole European importance, and with much higher direct and indirect return rate, than for example investing in Solar or Wind Energy with the existing technology, that is still not economically feasible, even if located in Greece.

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