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Interesting BusinessWeek international cover story. While mature Western European states continue to bicker over trivial matters among themselves, instead of addressing the real underlying isues of their competitiveness (or rather lack thereof), emerging Central European states are embracing 21st century opportunities with gusto.

It has been more than 15 years since the collapse of the Iron Curtain opened up Central Europe to the world. In that time the region’s 10 countries have survived bouts of gangster capitalism, waves of painful reforms, and dramatic changes in government. Yet the region’s economies have somehow managed to thrive, easing entry (for most) into the European Union. In the process, Central Europe has made a wholesale transformation into the low-cost manufacturing zone of the continent.

Today the region is sucking in foreign investment at a rate of $37 billion annually, which places it second to China in the international competition for capital and light years ahead of India. Central European stock markets are taking off, too. Growth ranges from 3.5% in Poland to 6.8% in Estonia. Poverty rates are declining, and the area’s 100 million citizens are turning into a potent consumer market. Most of the region’s countries have flat taxes, with rates as low as 15% for corporations — a big investment draw.

UPDATE : NYT on Estonia’s technology industry

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