Photo: Chris Hondros for Mercy Corps

Like it or not, Kosovo is independent. Yet its survival depends on whether or not it will be able to build a functioning and sustainable economy, a goal that remains far from certain. Post-independence Kosovo faces daunting economic challenges, including weak infrastructure, unemployment rates of nearly 50 percent, and economic corruption that has been ranked as fourth worst in the world by Transparency International.

Although some in Kosovo are confident about prospects for economic growth and development, many estimate that it will be another ten to fifteen years before Kosovo can support itself economically. Commentary from the World Politics Review argues that independence may actually exacerbate Kosovo's economic problems:

While Kosovo may be able to get loans now from the IMF and World Bank, the last nine years have shown that aid alone is not going to do it. Kosovo has already received 25 times per capita the amount of aid given to Afghanistan, and the economy is still in shambles. Furthermore, it is a safe bet that Serbia will obstruct investment in Kosovo, first by shutting down the commercial border between the countries, and then by challenging privatization plans in the World Court and other international bodies. Late last week, Serbia indicated that it will continue to pay Kosovo's debts to the international community, which will amount to $70 million this March alone. Serbia's only reason for doing this is to preserve its legal claim to the territory and its right to tax any development projects. The legal wrangling likely to result will tie up proposed projects for years, and chase away the few investors Kosovo might be able to attract.

For the first time in more than five years, the average household income is declining in the U.S., reports the Financial Times.

Joseph Stiglitz, John Edwards and anti-war group MoveOn.org all blame the Iraq War for triggering a U.S. recession. While the connection is politically attractive to some, President Bush — and even some of his critics — argue that this simply isn't true.

When President Bush said last week that "spending in the war might help with jobs" and that "this economy is down because we built too many houses and the economy’s adjusting," even well-known Bush-basher Paul Krugman had to concede the point. In a blog post, he wrote, "Hate to say this, but he’s right."

Although Cuba's new leader says he will continue to run the country under a socialist framework, economic changes may soon be underway.

According to The Economist:

In his speech, Raúl also gave broad hints of economic changes. He recalled a commitment by Fidel in 2005 gradually to revalue the peso. Since many prices are set in hard currency, that is essential if wages are to rise above their average of $20 a month. This would take time, he said, but would involve moving away from the state-run rationing system and taking more account of wages and prices. That amounts to a move towards market mechanisms. And he praised decentralisation.

Some predict that Cuba will try to mimic progress made in Vietnam in Cuba by embracing markets while still adhering to the concept of socialism. This would be a substantial change for Cuban economic policy.

Photo:whiffer (flickr)

In the latest issue of Foreign Affairs, the former chief economist of the Venezuelan National Assembly argues that Chavez has failed to live up to his pro-poor rhetoric, and that the policies of his administration have hurt both the national economy and the Venezuelan poor. While many observers outside Venezuela believe that Chavez has made the welfare of the poor his highest priority, the author notes that neither official statistics nor independent assessments show any evidence that Chavez's policies have helped combat poverty in Venezuela.

Fidel has resigned, but a Castro still rules over Cuba. What are the differences between Fidel Castro and his brother Raul, and what will these differences mean for a post-Fidel Cuba? While there is a general consensus that Fidel's official resignation is unlikely to bring substantial political and economic change in Cuba in the near future, there have been indications that Raul may follow the "Chinese model" and gradually open up the Cuban economy while maintaining strict political control.

Many Cubans say Raúl will have no option but to give Cubans more leeway, economically if not politically. “People here say they are fidelistas, but not necessarily socialistas,” said an analyst in Havana, who asked to remain anonymous. Without Fidel, “Raúl will have to renegotiate an agreement with the Cuban people”.

Raúl is hardly likely to jettison half-a-century of socialist reforms and throw the country open to foreign capital, as Russia did in the 1990s. But he has hinted that he wishes to gradually open up the system, acknowledging the “excessive number of prohibitions” in Cuba and starting a national debate about the shortcomings of the regime.