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Central Europe

Central Europe. Emma Jane Riddle, 2011. Overview. Statistics: population and GDP The Communist period After Communism, What? Business culture in Poland and the Czech Republic. Population (Millions) – 2011 Estimates. U. S. Population = 313.2 Million. Gross Domestic Product 2010 Estimates.

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Central Europe

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  1. Central Europe Emma Jane Riddle, 2011

  2. Overview • Statistics: population and GDP • The Communist period • After Communism, What? • Business culture in Poland and the Czech Republic

  3. Population (Millions) – 2011 Estimates U. S. Population = 313.2 Million

  4. Gross Domestic Product2010 Estimates U. S. GDP = $14.7 Trillion = $14,700 Billion

  5. GDP Per Capita2010 Estimates U. S. GDP Per Capita = $47,200

  6. Eastern Europe The Soviet Union (now 15 countries) Bulgaria Romania Central Europe Czechoslovakia (now Slovakia and the Czech Republic) Hungary Poland East Germany The Soviet Bloc: 1945-1989

  7. Other Communist Countries in Europe • Albania – allied with China • Yugoslavia, including present-day: • Bosnia • Croatia • Kosovo • Macedonia • Montenegro • Serbia • Slovenia

  8. Communism in a Nutshell • Command economy: the government owns and manages the means of production and distribution • The Soviet Union planned production and allocated resources for the entire Soviet bloc, except Romania. • Basic goods, including food, were scarce. • Black market and barter economy • People were taught that capitalists exploited workers and private business was evil.

  9. Communism in a Nutshell (2) • Totalitarian governments • The government controlled every aspect of life. • Almost every organization was dominated by the Communist party. • Police state • Writers, artists, filmmakers, musicians, and media were supposed to promote "socialist realism" – Communist interpretation of events. • Religious groups were limited or prohibited.

  10. Cultural Impact of Communism • Work ethic • More employees than needed. • No reward for good work. • Those who protested against Communism lost their jobs or had to do menial jobs. • Culture of dependency • Rent and food were subsidized. • Workplaces arranged vacations, camps for kids, and access to scarce goods.

  11. Central European Culture • Culture is a mixture of local and western European influences • Architecture, art, music, literature • Understanding of democracy • History of political dissent and resistance to foreign occupation • There was serious resistance to Communism in Poland, Hungary, and Czechoslovakia • Hungary and Poland left the Soviet bloc first.

  12. After Communism, What? • Democracy • Prosperity • Market economy • EU membership • WTO membership • Euro currency (still in the future for some) • Security: NATO membership • These goals promoted political, economic, and cultural change.

  13. The Challenge of Free Markets • Foreign investment was often needed to replace obsolete equipment and facilities. • Privatized firms employed fewer people. • Enterprises devoted to military production often could not be made profitable and had to close. • The distribution network in the Soviet bloc collapsed. • The education system had to be overhauled.

  14. Economic Growth in Central Europe Biotechnology Tourism Transportation, distribution • Automobiles and parts • Financial services • Information technology • Internet services

  15. Higher Education • Mixture of public and private universities • Higher education in the European Union • Five-year Master’s degree program • Three-year Bachelor’s degree program • Two-year Master’s degree program • After completion of a Master’s degree, a doctorate can be completed in three years. • European Credit Transfer System (ECTS)

  16. Requirements to Join the EU • Be a stable democracy, respecting human rights, the rule of law, and the rightsof minorities. • Have a functioning market economy that can compete in the EU. • Most state enterprises were privatized. • Adopt EU laws, product standards, and regulations. • The five central European countries joined the EU on January 1, 2004.

  17. European Union (EU) Before 2004 Enlargement

  18. European Union Today • 27 member countries • Croatia is scheduled to join in 2013 • Candidate countries • Turkey • Macedonia • Montenegro • Iceland

  19. Benefits of EU Membership • Ability to export to markets in western Europe • Citizens of an EU country can live and work in any EU country. • Economic development aid from the EU

  20. Requirements to Use the Euro Currency • Stable consumer prices – low inflation • Government budget deficit <= 3% of GDP • National debt <= 60% of GDP • Stable long-term interest rate • Value of the national currency must be stable relative to the euro • Slovenia and Slovakia use the euro

  21. Recent Economic News • In 2009, Poland was the only country in the EU to have growth in real GDP. • Hungary had a financial crisis. • Real estate bubble, financed by loans that had to be paid back in euros • The Hungarian forint lost value, relative to the euro • Many people could not pay off their loans.

  22. Requirements to Join NATO • A democratic political system, based on a market economy • Fair treatment of minority populations • Commitment to resolving conflicts peacefully • Ability and willingness to contribute to NATO military operations • Commitment to democratic civil-military relations • The five central European countries are NATO members.

  23. Business Culture in Poland • Design products for Poland. • Do your homework. Poles are often shrewd negotiators. • Be prepared to provide data. People are not impressed by "sales talk". • Be prepared to make a long-term commitment. • Take time to build relationships and gain trust. • Be willing to "give something back" to the community.

  24. Business Culture in Poland (2) • Don't be afraid to ask questions about things that you don't understand. • It's okay to ask sensitive questions, but be polite. • If a question is important, keep asking until you get an answer. • Local governments have a large role in business regulation. Some areas are more conducive to business than others.

  25. Business Culture in Poland (3) • Professional titles are used in Poland. Example: engineer • Do not call older people by their first names until you are invited to do so. • Business entertainment should be reciprocated. • People may be less willing to share personal information than Americans are.

  26. Managing Czech Employees • Establish a good rapport with employees. • Managers must be trustworthy and credible • Younger Czech employees • Are eager to learn and often creative • Want work that is meaningful and appreciated • Want opportunities for professional development • Some older Czechs lack motivation and are not accustomed to taking initiative

  27. Managing Czech Employees (2) • Czechs may be reluctant to tackle new responsibilities because • They tend to be perfectionists. • They don’t want to lose the respect of colleagues by making a mistake. • Many Czechs do not like to take risks. • Responsibilities and work procedures should be clear. Source: Karin Genton-L’Epee, Prague Post, Jan. 6, 2005

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