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The Day after Tomorrow
the fiscal retrenchment, some 40 million people now find themselves among the ranks of the poor, and many more are vulnerable. As the economic performance of the region begins to turn around, these newly manifested weaknesses cast a shadow on the prospects of future growth and social development and point to the need for governments to demonstrate determined leadership and strategic vision. The trajectory over the next decade crucially will depend on how well significant long-term challenges will be tackled. These challenges include the following:
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The aging of the population and the related stress on labor markets, social protection systems, health, and the sustainability of the fiscal accounts The challenge of raising productivity in an increasingly interconnected world The effects of global warming on the environment and the economic structure of the region.
The Crisis of 2008–10: A Wake-up Call A Large and Differentiated Region. Spanning from within the European
Union to the borders with China, the ECA region is a large (30 countries, 480 million people), economically important (US$3.7 trillion gross domestic product [GDP]), and politically sensitive region that is most noteworthy for its extreme diversity. Hence, it provides both substantial opportunities for and challenges to integration. It includes the world’s largest country, the Russian Federation, and some of its smallest, such as Montenegro. Three countries—Russia, Turkey, and Ukraine—account for more than half the region’s population, while the smallest 15 account for less than 10 percent. The region ranges from institutionally weak, low-income countries, such as Tajikistan (US$600 per capita), to postconflict countries, such as Bosnia and Herzegovina (US$4,500 per capita) and Kosovo, to high-income European Union (EU) member states, like Slovenia (US$24,000 per capita). While some ECA countries, particularly Kazakhstan, Russia, and Turkmenistan, hold almost one-third of the world’s gas reserves and are key suppliers to Western Europe, energy security is a major concern for others. Reorientation of trade was a key