By Manuel Alvarez-Rivera, Puerto Rico
Croatia, the second largest of the former Yugoslav republics, holds a parliamentary election on Sunday, November 25, 2007.
The State Election Commission has live election results in Serbo-Croatian (Croatian). A preliminary distribution of parliamentary seats appears at the bottom of this posting, under Update.
The boomerang-shaped country's unicameral legislature is composed of up to 160 members, of which 140 are chosen in ten multi-member constituencies. Croatian nationals residing abroad are also represented in Parliament, but the number of seats set aside for them is determined according to the proportion of votes cast by expatriates relative to the total number of votes cast in the ten territorial constituencies. Finally, eight seats are reserved for Croatia's national minorities, with the Serbs entitled to three seats and the remaining groups to five.
Multi-member constituency seats are apportioned by the D'Hondt or largest average method of proportional representation, while national minority seats are filled by majority voting. The electoral law establishes a five percent constituency-level threshold for the proportional distribution of seats, but in practice the official barrier is rendered irrelevant by the fact that each territorial constituency has 14 seats, and the application of the D'Hondt rule in these establishes a higher de facto threshold of up to 6.7%.
Like neighboring Slovenia, Croatia held its multi-party elections in 1990 and declared its independence the following year, after the proposal was overwhelmingly endorsed by Croatian voters in a referendum. However, Croatia's large ethnic Serbian minority, which constituted about one-eight of the country's population, was staunchly opposed to independence, and rebel Serb groups, morally and materially supported by the rump Yugoslav state, seized control of about one-third of the country during Croatia's brief war of independence with the Yugoslav People's Army. Although Croatia attained international recognition by 1992, the country had to deal with a large number of refugees from both Croatian areas under Serb control as well as from Bosnia-Hercegovina, where a full-scale civil war was raging. Nonetheless, Croatia recovered most of the Serb-controlled areas in a 1995 military operation, and following the Dayton peace agreement, which brought peace to Bosnia-Hercegovina, the country peacefully regained control of the remaining areas. However, the Serbian minority dwindled to less than five percent of the population.
Save for a brief interval between 2000 and 2003, Croatia has been ruled since 1990 by the right-wing, nationalist Croatian Democratic Union (HDZ), and the party's founding leader, Dr. Franjo Tudjman, became the country's first post-independence president, holding office until his death in 1999. Although Tujdman's rule was somewhat authoritarian, the HDZ government of Prime Minister Ivo Sanader, in power since 2003, has pursued a more moderate course and sought to improve cooperation with the International Criminal Tribunal for the Former Yugoslavia (ICTY), which indicted for war crimes several individuals regarded by many in Croatia as national heroes. Since 2004, Croatia has been officially a candidate for membership in the European Union. However, Croatia's GNP per capita, while much higher than that of any former Yugoslav republic other than Slovenia, remains well below the EU average. More importantly, widespread corruption remains a major obstacle to EU membership.
Recent polls suggest a close race between HDZ and the main opposition party, the left-of-center Social Democratic Party (SDP); neither appears likely to gain an outright parliamentary majority, and several minor parties trailing well behind could hold the balance of power after the election.
Update
Preliminary figures from Croatia's ten territorial constituencies have the Croatian Democratic Union (HDZ) narrowly ahead of the opposition Social Democratic Party (SDP). According to election results published by Croatia's State Election Commission, HDZ would have 61 seats to 56 for the SDP, while a four-party alliance headed by the Croatian Peasants Party (HSS) and the Croatian Social Liberal Party (HSLS) would obtain eight seats, and the Croatian People's Party - Liberal Democrats (HNS) would receive seven; four smaller parties would secure the remaining eight seats. In addition, results for the Croatian diaspora indicate HDZ would capture five additional seats, for a total of 66 seats.
Voter turnout in the territorial constituencies stood at 63.5%.
Voting will be repeated on December 9 in five polling stations that reported more ballots than registered voters, so final results won't be known before that date. Meanwhile, following a first round of consultations over the formation of a new government, Croatian President Stipe Mesic declared that neither Prime Minister Ivo Sanader (HDZ) nor SDP leader Zoran Milanovic have the required parliamentary majority, contradicting assertions by both party leaders.
Special Feature, The German Economy At A Glance
Welcome to the Global Economy Matters Blog. Below you will find the normal chronological blog posts. But first here is our Monthly Special Feature which in January 2008 focuses on Germany. Here you will find charts which provide background data on the German economy. We hope these will be of some help to the first time reader here, making it easier to contextualise, assess and get to grips with the general argument being presented on the blog. The big question which arose concerning the Germany economy in 2007 was whether or not the new found dynamism in German economic activity constituted some form of remaissance, and formed part of a global decoupling process whereby a sustainable recovery in domestic demand was taking place. Analysts on this blog never really accepted this view. The key question and central enigma associated with the German economy is really why domestic demand should have remained so congenitally weak over such a considerable period of time.
Since this phenomenon is also to be observed in the the two other societes with very high (circa 43) population median ages - Italy and Japan - we postulate that demographics and population ageing processes offer some part of the explanation here.
Basically what we can observe as societies move above the 40 median age mark are a number of stylised facts. Weakness in domestic private consumption would be one of these, absence of consumer credit driven property booms would be another, growing pressure on the national debt as the elderly dependence ratio steadily rises would be another, and growing dependence on export growth for sustaining GDP growth would be the central feature of the whole edifice.
We hope you will find the background data presented here useful in assessing the argument which we are presenting on this blog, which is basically that a key component in the longer term growth stagnation from which Germany is suffering has its roots in the underlying demographics. Basically and in the long run (possibly with a 30 year lag) fertility does matter. Please click on thumbnails for better viewing.
What follows is a very rough and ready attempt to describe in broad brush strokes how the contemporary German economy actually works. First off, and as is well known, German society is ageing, and at the same time the German population has started declining. Not only is Germany's median age rising, the proportion of the population in the key 25-49 age group is now falling.
As can be seen from the chart this crucial age group touched its highpoint in 1997/98. This could be thought of as the moment of maximum capacity for the German economy since it includes the crucial 25 to 40 household-former, first-time-homebuyer group. In terms of credit expansion, it is this group which drives a significant part of internal demand.
The age group also includes another important group, the 35 to 50 years one. This group drives an economy in productive terms, since these are the prime age workers. If you think of a society as a 100 metres sprint athlete, then there is an age when this athlete is at the maximum of his or her running potential, an age after which each time they can only run the 100 metres more slowly.
Well a society is the same in terms of its collective economic potential, without addressing underlying issues either through fertility or immigration, it can only move forward more and more slowly. Consumption becomes flat, and GDP growth - gioven the external dependence - fragile.
Private consumption has hovered pretty close to the 60% mark for many years now, while government consumption - after moving sharply upwards as a total share in the first half of the 1970s has subsequently remained pretty constant, moving around the 19% of GDP mark. The big difference has been in the importance of fixed capital formation (GFCF) which reached from 1975 to 2000hovered around the 22 - 24% of GDP mark.
Prior to 1975 GFCF was at a much higher level, while post 2000 it has dropped substantially And So what we can see is that the year between, say, 1975 and 2000, when GFCF remaind a more or less constant share of GDP, constituted - to use the language of neo-classical economics - the constant growth period of the German domestic economy.The years prior to 1975 were the convergence, or "catch-up" years
And especially the 1960s, after Germany finally broke out of the destruction and devastation of WWII - while the years after 2000 constitute what the neo-classicists would call the "balanced growth period", although as we can see, it isn't very balanced, and there certainly isn't a steady state.
2008 Forecasts: There is a consenus at the present time that the German economy is slowing. Where there is no real consensus is over the rate at which it is slowing and where and when it will settle. It is clear that GDP growth in 2007 will be below the heady 3.1% annual rate achieved in 2006. The OECD last December revised their 2007 German forecast down to 2.6%, and their 2008 one down to 1.8%. The IMF in their October World Economic Outlook forecast growth for 2007 at 2.4%, slowing to 2% in 2008. Morgan Stanley's Elga Bartsch, while optimistic that the German economy will whether the credit crunch better than most (and here she may well be right) is somewhat more sanguine, putting 2008 growth at 1.5%. In general though I rather doubt her overview that "Germany could well be on the way to becoming the new growth locomotive in Europe." and especially her suggestion that "the phase of underperformance in terms of GDP growth, which has plagued Europe’s largest economy for years, is clearly over." Unfortunately, what we are arguing on this blog is that Germany's GDP growth rates since the mid 1990s are not some special kind of "underperformance", but what can be expected from a society with a rapidly rising median age which is increasingly dependent on exports rather than domestic consumption for growth.
The EU commission in it's November 2007 forecast was also convinced that the German economy was now on a "solid growth path", forecasting 2.5% growth for 2007 and 2.1% for 2008.
I personally will be very surprised if we see growth in the region of 2% for the German economy in 2008, and I even consider the 1.8% from the OECD and 1.5% from Morgan Stanley still on the high side given the extent of downside risk. Basically the reasonably favourable depreciation rules which currently apply to German investment have been changed as of 1 January 2008, and we might reasonably expect to see some sort of impact on investment comparable with the negative shock which hit private domestic consumption following the VAT rise on 1 Jan 2007. In addition all the indications suggest that German consumption will continue to be weak in 2008. So if consumer consumption is at best flat, governemnt consumption equally so, and investment and construction weakening, we are simply lefy with export growth, and here the outlook is definitely more negative in 2008 than it was in 2007. The Spanish economy (one important German customer) is visibly wilting by the day, as is the UK (another big customer), but it is to Eastern Europe we must look for the biggest impact on German exports of any correction in 2008. Just one data point should suffice, Germany exports roughly the same value of goods to the Czech Republic (and more to Poland) as it does to China. This means that Geramny is proportionately not that exposed to any slowdown in China, but hugely exposed to any sudden shift in growth and demand in the East of Europe.
So I would say, that on current data, 1% growth in Germany in 2008 look a reasonable estimate at this point, but that this needs to be taken to mean with considerable downside risk. Germany is now tremendously dependent on what happens elsewhere, and until what does actually happen elsewhere becomes clearer it is difficult to be more precise on Germany.
The only apparent bright spot on the horizon is employment, but I am dubious that in the context of Germany's ageing workforce this will work through as some are hoping, as I expain at some considerable length in this post here. My opinion is that Germany will enter recession at some point during 2008, and that we may well have 2 consecutive quarters of negative growth. The continuing high euro will maintain pressure on German exports, and high oil and food prices will maintain pressure on the inflation front, at least in the first half of 2008. The ECB will probably switch stance towards rate reductions at some point, but since, as Elga Bartsch among many others so eloquently argues German internal consumption and investment are not especially dependent on credit conditions, easing from the ECB may not have as much impact as one would hope for.
Key Posts For Understanding The Present Path of the German Economy
Is The German Economy Heading For Recession in 2008?
Employment and Unemployment in Germany January 2008
Germany Economy, What Price the VAT Effect Now!
The German Economy, Employment, Export Shares and Age Structure
Structural Aspects of German Export Dependence
Does NeoClassical Steady State Growth Really Exist?
Sunday, November 25, 2007
Croatia's 2007 parliamentary election
2 comments:
Regarding Croatia's recent election I would be grateful to know more about the majority system used for the ethnic minority seats, and would like to know how the voting system works for the overseas voters. With the ethnic seats are they using first past the post or something more complicated?
National minority seats are filled by first-past-the-post, as set forth by Article 43 of the Act on Elections of Representatives to the Croatian Parliament, available in English here; the number of seats assigned to the national minorities is listed in Article 16 of the cited law.
The election of representatives by Croatian voters residing abroad is carried out in the same manner as in the territorial constituencies, other than for the fact that expatriate voters don't have a fixed number of seats (since they have a much lower turnout rate than voters in the territorial constituencies); see Articles 41 and 42 of the aforementioned law for further details.
Incidentally, while some of Croatia's expatriate voters live as far away as New Zealand, seventy percent reside in neighboring Bosnia-Herzegovina.
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