Huge hat-tip to Paul Kedrosky for this – an eye-catching chart from JPMorgan’s Michael Cembalest’s ‘Eye on the markets’ note (click to enlarge):
All the chart does is track how ‘different’ countries are from each other in a range of monetary unions which never existed, or are long dead, compared to the eurozone. ‘Different’ means scores on a hundred or so factors taken from the World Economic Forum’s Global Competitiveness Index, from GDP per capita to judicial independence to available airline seat kilometres.
The result speaks for itself.
Some of Cembalest’s annotations…
“Major countries of the EMU” include Germany, France, Italy, Spain, Netherlands, Greece, Belgium, Portugal, Austria, Slovakia, Finland and Ireland. This group accounts for 98.5% of Eurozone population and GDP. Excluded to avoid small-country distortions: Slovenia, Estonia, Cyprus, Luxembourg and Malta. When they’re included, the results are similar.
Results are also similar when Greece is excluded; the dispersion in Europe is not just about Greece.
- Some of Europe’s higher dispersion scores relate to the link between pay and productivity (#7.06); the efficiency of the legal system in settling disputes (#1.10); anti-monopoly policy (#6.03); wastefulness of government spending (#1.08); judicial independence (#1.06) and quality of scientific research (#12.02).
- “Market Economy of Latin America” is a category that excludes Venezuela and Argentina for reasons we can discuss some other time. If you owned shares in companies that were nationalized in either country, you know what I am talking about.
And if you’re looking an explanation of the headline — it comes from Massimo d’Azeglio.
Related link:
What price Europe? – FT Alphaville
