I’m living in a small town in Illinois near the Mississippi River these days. I often find myself crossing the river to a larger town in Iowa to get certain things I need. I know a lot of people who work in Iowa and live in Illinois. I know others who’ve moved to the Iowan hinterlands for job and career opportunities.
Sometimes I find myself wondering what things would be like here if this were Europe and not the United States. Bound by a common currency, an open border, but without the virtually friction-free mobility of labor.
This thought comes to mind as I read today that Eurozone leaders remain confident about the future of the currency and the nations it encompasses, even as a report from the London-based Center for Economic Policy Research shows the Eurozone ecnomony contracting for the second consecutive month.
Survey Says…
Research at the Tau Institute, which I’ve co-founded here in Illinois (with an Asian office in Manila) shows that the Eurozone countries significantly lag their Central and Eastern non-zone neighbors. Only the Netherlands continues to perform well.
This research is focused on ICT adaption and how it relates to a nation’s future prospects and attractiveness to investors. It is designed to provide a truly relative, “pound-for-pound” picture of which countries are doing the most with what they have. It therefore tends to favor lower cost developing nations.
South Korea tops the list, which is no surprise. But most of the world’s other clear leaders come from Central and Eastern Europe, which are unbound by currency yokes. In the past, this may have seemed to be a disadvantage, as a single currency can be very volatile.
But today, these nations are able to keep their living costs low and chart their own unostructed economic courses. So, places such as Ukraine, Bulgaria, Lithuania, and many others perform well. Laggards include Greece and Italy.
Trained & Untrained Eyes
Back to Iowa and Illinois, there are some economic differences. Illinois has a much larger economy because Chicago is part of it. Iowa tends to have a healthier economy with a lower unemployment rate. Illinois is corrupt through and through; Iowa is not. Illinois has a few good commercial-free radio stations from various colleges and universities in the area; Iowa has a statewide system.
People here are quite free to make their choice of where they want to work and live. In doing so, what appear as big differences to us natives will be inconsequential to the untrained eye. This is simply not the case across the borders of Europe.
I realize there are certain areas – such as where France, Germany, and Switzerland meet at Basel – in which local opportunity trumps any border problems. But I also know people from my little town in Illinois who’ve moved everywhere from New York to San Francisco to build their dreams, with very little need to adjust and very few problems “fitting in.” This just doesn’t happen in Europe.
Even though the labor-flow problem is endemic to all of Europe, at least the nations unbound by the single currency are able to differentiate themselves, and it appears this is a big advantage to them.
One of our institute’s key Advisory Board members is from France. This is a great country and great location from which to view all of Europe. And France does OK in our research, if not great. That said, when the time comes to locate an office in Europe, we’ll be looking at Kiev, Sofia, and Vilnius first.