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Maintaining an International Economy
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18424 |
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CURRENT ISSUES
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9 / 1990 |
3,135 Words |
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Raymond Vernon
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For international businessmen with a nose to the wind, the summer of 1990 was a time for exploring markets. With the close of the cold war, the world returned to Europe.
Forty years of closed regions and economic blocs divided between socialist and free world came tumbling down with the Berlin Wall in November 1989. Along with backpacking college students, rubbernecking tourists, and academics between semesters, businessmen of every nationality, distinguished by sober dress and dispatch case, could easily be identified on Budapest's Corso, in Prague's St. Wenceslaus Square, and outside the Kremlin walls.
It appeared the end of at least a part of history had indeed come. Judged by the brouhaha in the Western press, the signs seemed auspicious for enterprises from the West. New economics initiatives were being considered throughout the world. Most of the countries of Eastern Europe were in earnest about the need to enlarge the role of the private sector, attract foreign capital, and open up the economy to international trade. Some 24 rich countries were in the midst of putting together a program to provide billions of dollars in long-term aid. Those East European countries that were not already members of the World Bank, the IMF, and the General Agreement of Tariffs and Trade (GATT) were laying plans to join.
Will the euphoria over the end of Cold War economics continue indefinitely? Probably not. Fall and winter follow summer. And those seasons are likely to see the crowds thinned out, with the business delegations from the West fewer in number. Some West Germans will remain, eager to build on the advantages they have acquired though their East German business contacts. A few Japanese firms will settle in, determined to explore whether Eastern Europe can provide a platform to penetrate the much more interesting markets of Western Europe. But most of the Americans, British, and French businessmen will have drifted back to their home bases.
For most businessmen, the realities of doing business in Eastern Europe will seem far removed from the euphoria that political developments have produced, such as the final bulldozing of the Berlin Wall and the ultimate dismantling of the Warsaw Pact. In some Eastern European countries, they will have encountered bitter complaints over back-room deals already consummated between managers of state-owned enterprises and foreign businessmen. In other such countries, they will have had a glimpse of the passionate struggles to create the legislation and the institutions required for a transition to capitalism. Only those businessmen with a stomach for the long pull will be prepared to sit through the long winter months to come.
Although the political consequences of the opening of Eastern Europe have been overwhelming, the economic consequences will take a long time in working themselves out. It will be many years before that opening can have much effect upon the international economic relations of the West. On the other hand, how Western countries manage relations among themselves can profoundly affect the recovery of Eastern Europe. Instead of looking to Eastern Europe for the sources of change, therefore, we need to understand what is happening to economic relations among the countries of the West, especially between the United States, the European Community, and Japan.
Evaluating the old
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