Final Word from Friday, January 10, 2003

It's a paradox: Despite the mounting public-finance problems in the CR, foreign investors keep piling in. Things may be bad here, but the grass is still greener than on the other side. Germans, for example, are attracted because of the growing difficulties of doing business at home. The Financial Times found that German businesspeople think their country is in its biggest post-war crisis. Yet the same things that German companies complain about at home - high non-wage labor costs, tax hikes, chaos about long-term economic strategy - are present in the CR too. Without significant reform, these problems could eventually outweigh the advantages of low wages and skilled labor. To imagine what the CR will look like in a few years without reform, it might be enough to look at the labor unrest, investor flight, recession and general malaise in Germany today.


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