The crest of the wave or down the plug-hole?

Forget the looming Russian menace, treasonous tycoons, dismal domestic politics and corruption. The big story in the ex-communist world is people: too few being born; too many dying ­- and most of all, so many moving around.

A recent World Bank report on the tens of millions of citizens of the former communist countries now living elsewhere in the region makes broadly comforting reading. For poor countries, the benefits of remittances slightly outweigh the cost of losing their most dynamic people, it argues.

As labour markets tighten, fewer people will leave. The report’s main recommendation is more liberal regulation, to encourage "circular" migration. People who can come and go freely are more likely to take a risk on returning home.

That may well be true. Indeed, the bank probably understates the huge other benefits of migration to individuals, such as dispelling neuroses and learning new skills and languages. But the report - and much of the discussion around the issue - fails to deal adequately with the darker possibilities: chiefly, what happens if the exodus continues.

As the World Bank rightly argues, it is not the prospect of higher wages alone that makes people move abroad. Good public services play a big role. Most ex-communist states neglect their duties: providing dependable health-care, good education, legality and order (ie, honest bureaucrats, friendly policemen, speedy justice). So do employers: even if the pay is good, jobs in ex-communist countries can still be pretty miserable when it comes to relations with bosses and colleagues. Cronyism, trickery and bullying are rampant. In all these respects, ‘old’ Europe is far from perfect. But it is a lot better, especially for the young and ambitious.

The big danger is a toxic circle in which migration and bad demographics combine with slow reform and bad government. The labour market will signal this, creating ‘shortages’, but it may not clear at a rate that keeps post-communist countries competitive. In other words, the level of wages that would be enough to persuade a Moldovan, say, to return to Moldova from Italy, or a Pole from Britain, may be so high that the kind of business there that might employ him cannot pay it.

Bad public policy brings slow growth, less foreign investment and worse public services. These conditions encourage more people to leave, worsening life even more. A steadily declining quality of teachers, doctors, officials and managers makes countries yet more unattractive to live in.

Eventually, of course, the migration will stop, when the pickings for those that remain become sufficiently lucrative for them to stay. (It is not the last person to leave who turns off the lights, but those that remain, melting down the cables for their copper). As talent drains away, brutality and cunning are what really counts: whether democracy, a pro-Western orientation and a functioning market economy still survive by then is another question.

Labour market protectionism in the West will not avert this gloomy outcome. Migrants will still leave, but will work illegally, or travel to other countries that offer a better deal. So good government is crucial. That means rethinking what is meant by competitiveness. In the early post-communist years, this chiefly involved making things nice for employers, through flexible labour markets and business-friendly taxes. All that is still necessary. But in future, it must be matched by a new dimension to competitiveness: making things so nice for workers that emigrés return, and foreigners come. That means not just good public services but also a political elite that inspires trust and optimism. People will put up with a lot if they think the future looks bright.

• The author is central and eastern Europe correspondent of The Economist.

Forget the looming Russian menace, treasonous tycoons, dismal domestic politics and corruption. The big story in the ex-communist world is people: too few being born; too many dying ­- and most of all, so many moving around.