A Discomforting Graph

Thanks to Alexandru Culiuc of culiuc.com for finding my site and leaving a comment. I followed the link to his own blog and it kept me interested for hours. Alexandru is a native Moldovan who has lived in American through the U.S. FLEX program that allows high school students from former soviet republics to attend a year at an American high school. He is now studying economics at Harvard. The site is
entirely in Romanian, so apart from his interesting amateur photography, you non-Romanian speakers are out of luck. However, one entry that I found particularly pertinent to share with you was a bit of economic analysis from Sandu. I have translated it and added it to my blog below. Be sure to check out the rest of his site at culiuc.com.

A Discomforting Graph

Look at any economic report that looks at the Republic of Moldova —
they are all full of graphs, tables and charts. But there is one graph that you will very rarely find and that many would like to ignore.

The graph below shows the real GDPs (adjusted for inflation) of 14
republics in comparison to their level in 1990, which was adjusted to
1. Moldova's performance is shown in blue, and the rest of the
countries are grouped in regions.

From the graph, we see that the size of Moldova's economy represents only 48% of its level in 1990; that is, the cumulative decline of Moldova's GDP over the course of 15 years constituted 52%. We observe that Moldova has registered the most deplorable economic performance out of all the former soviet republics. Latvia recorded the largest cumulative growth — 55% in comparison to its 1990 level. In 2005, nine of 14 republics are, in real terms, more affluent than in 1990.

Evolution of real GDP of former soviet republics. 1990=1

пїј
Source: Economist Inteligence Unit Data Service

I think it's redundant to explain why this graph is so rarely seen in economic reports (and is completely absent from official publications). Many reasons exist as to why Moldova found itself at the bottom of the list — the loss of Transnistria, the population exodus, extremely poor governance in the early transition years, etc.
Explanations exist for the relatively high performance of the Baltic
states — a relatively modern industry, low levels of corruption, etc. Turkmenistan discovered oil, which explains the breathtaking growth beginning in 1997. The Caucases also had inter- and intra- state conflicts in the beginning of the 90s. In other words, all the republics are characterized by certain individual factors which have determined the evolution of their respective economies. However, as far as I know, no one has tried to approach the economic dynamics of the foreign republics as a group.

Are there any systemic factors which explain the differences in performance among the former republics of the USSR?

I plan to soon publish two or three articles in which I will propose and test several hypotheses which try to answer this question. These
hypotheses are united in one common theme: size matters.

[1] Kyrgyzstan is excluded because data is missing for 1990.