This article in Strategy + Business makes the case that the economies which are sufficiently diversified will have a quicker recovery from the economic crisis.
As optimism prevails for a global economic recovery, one would assume that the prospects for increased investment and commerce in Eastern Europe are on the rise. Prospects are likely on the rise but the recent news stories about trafficking, maltreatment of immigrants and organized crime hardly burnish the image of Eastern Europe as a place to do business.
Yesterday, a bomb exploded in a Sofia, Bulgaria building serving as the home of Galeria magazine. Galeria published a series of wiretaps on alleged nepotism and corruption among high-ranking officials, including the country’s prime minister, Boyko Borisov. The explosion, seen as an act of intimidation, detonated a few hours before the arrival of four EU commissioners in Sofia. A less exciting story on the same day was the news that Romania’s customs chief was being sacked because of corruption.
On Wednesday, we learned from The Economist that Afghan and African “asylum-seekers are subject to abuse, exploitation and torture” in Ukraine. Ukraine is a key transit point for illegal immigration to the European Union. CNN.com published a story on Monday calling Romania, the center of human trafficking in Europe.
That was just this week! Three weeks ago, three Albanians were killed in anti-government protests resulting from a corruption scandal.
This lawlessness, or at least perception of lawlessness, does matter. Romania and Bulgaria’s scheduled March 2011 entry into the Schengen zone, allowing free movement among the EU nations without visas or passports, has been blocked by France and Germany. Corruption, poor border control and illegal movement of goods and people were noted as causes for the delay.
As the economy improves and investment funds become available, in order to compete with markets in Asia and Latin America, Eastern Europe must improve governance and civil society in order to be perceived as a competitive destination. Looking at market size and growth rates, the region’s competitiveness compared to the BRIC or larger Asian countries is limited. One of Eastern Europe’s key competitive advantages should be lower country risk – European integration (NATO and EU), democratic governments, support for human rights, etc.
Recent incidents bring credence to the perception of the region as a risky place. In order to improve their global image as a place to do business, the nations of Eastern Europe have a tremendous amount of work to do at home.
The World Economic Forum at Davos has begun. (I guess my invitation was lost in the mail. … Maybe I should check my spam filter.) An interesting article from DealBook discusses how the developed economies especially Europe are saddled with debt and the emerging powers like China and India are not.
To read the article,
1. Please see Black Sea Wines, our blog on the wines of Eastern Europe, Central Asia and the Black Sea region, at: http://blackseawine.kolodkin.com. If you would like to exchange blog or site links, send an email to: blackseawine@kolodkin.com.
2. Send me an a LinkedIn invitation if we are not already connected.
BARRY KOLODKIN - International Business Consulting