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Citizens of EBRD region show resilience in face of crisis

The remarkable resilience of people in the EBRD region in the face of the global economic crisis stands out among the many valuable findings of the new Life in Transition Survey that is later described and introduced in essays

The study, conducted jointly by the EBRD and the World Bank, provides unparalleled insight into the attitudes and values of nearly 39,000 households in the countries where the EBRD operates and five western European nations. It also sheds precious light on how the transition to an open market-oriented economy and the economic downturn have affected the citizens of eastern and central Europe and central Asia.

Unique perspective

“The Life in Transition Survey provides a unique perspective on the impact of transition and of the crisis,” EBRD Chief Economist Erik Berglof said at the launch event. “It shows that, despite their dissatisfactions, people in transition countries have largely embraced the market economy and democracy and are optimistic about the future.”

The survey, conducted in late 2010, covered 29 countries in the region where the EBRD operates – so-called transition countries – plus five western European comparator states: France, Germany, Italy, Sweden and the UK. It asked respondents how much they had been affected by the economic downturn and how satisfied they were with their lives.

“The crisis hit the EBRD region harder than any other part of the world,” Mr Berglof said. “It’s humbling to discover how deeply it cut into people’s lives and livelihoods but it’s impressive to see the resilience of life satisfaction and of the belief in democracy and the market economy.”

Regional differences

Nevertheless, a discussion of the report’s findings featuring experts from the EBRD’s area of operations focused on the sometimes sharp regional differences in the data.

The Baltic states – among the worst-hit by the crisis – showed very low levels of support for democracy and the market economy. “Transition hasn’t got as far as we would have liked,” said Alf Vanags from the Baltic International Centre for Economic Policy Studies. “Twenty years ago we wouldn’t have thought that we would still be this far behind.”

In Serbia, meanwhile, support for democracy was lower than in any other country covered by the survey. Srdjan Bogosavljevic from Ipsos Mori Market Research in Serbia attributed this to discontent with the drawn-out EU membership process: “People have lost trust in democracy because they have lost trust in the EU.”

Crisis impact

The Life in Transition Survey found that 42 per cent of households in the 29 transition countries had been affected “a great deal” or “a fair amount” by the global economic crisis, whereas in Germany this was true of only 15 per cent of respondents and in the UK the figure was just over 30 per cent.

Furthermore, 70 per cent of households in the transition countries who reported being affected by the crisis had to cut back on staple food purchases and health-care spending – twice the proportion of crisis-affected households in the western European countries.

Despite this economic hardship, levels of life satisfaction remained almost unchanged compared with the previous Life in Transition Survey, which took place in 2006 following a decade of GDP growth. When asked about the statement “All things considered, I am satisfied with my life now”, 42.7 per cent of respondents in the transition region said they agreed or strongly agreed in 2010, compared with 44.2 per cent four years earlier.

In addition, nearly half of transition households – 49 per cent – remained optimistic about the future in 2010, down from 55 per cent in 2006. In western Europe, meanwhile, the proportion of people who agreed that “children who are born now will have a better life than my generation” was much lower – ranging from around 30 per cent in the UK to just under 10 per cent in France.

Stable commitment

Support for democracy and the market economy declined but did not collapse in the transition countries, while appetite for a return to authoritarianism and a planned economy remained very weak. Almost 45 per cent of respondents said they would choose democracy over any other political system, whereas fewer than 40 per cent said they would opt for a market economy under any circumstances. It is notable, however, that fewer than 30 per cent of UK respondents and less than a quarter of French households expressed unequivocal support for the markets.

The new Life in Transition Survey found that levels of trust in banks, financial institutions and foreign investors had fallen in transition countries, although trust in financial institutions was much higher than in western Europe.

The survey also examined attitudes towards corruption, public services, climate change, immigration and minority groups, as well as assessing how women have been affected by the transition process.

Read more on Life in Transition: After the Crisis

The 29 transition countries covered by the survey are: Albania, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, the Czech Republic, Estonia, FYR Macedonia, Georgia, Hungary, Kazakhstan, the Kyrgyz Republic, Latvia, Lithuania, Moldova, Mongolia, Montenegro, Poland, Romania, Russia, Serbia, the Slovak Republic, Slovenia, Tajikistan, Turkey, Ukraine and Uzbekistan. The survey also covered France, Germany, Italy, Sweden and the UK.

Since 2008 the EBRD has not made any new investments in the Czech Republic.