Why Is the Progress of Marketisation Slow in Russia?

Summary

The paper highlights economic and socio-cultural conditions representing constraints for marketisation of Russia and explains why marketisation has been out of step with other highly significant macro- and microeconomic developments. Marketisation is unlikely to make headway unless economic conditions and market requirements will make its importance unequivocal to all market agents. Standard marketing techniques and activities require appropriate adaptations in an ideologically neutral manner. Consequently, the transfer of know-how may play only a very limited role following the discrepancy in business conditions in developed market economies and transition economies.     

Human capital and exports: A micro-level analysis of transition countries

ABSTRACT

This paper investigates the impact of human capital endowments on export intensity employing firm-level data for 29 transition economies. A particular focus is placed on comparing and contrasting Central and Eastern Europe countries (CEECs) with those from the former Soviet Union, the Commonwealth of Independent States (CIS). The impact of the share of employees with higher education, provision of on-the-job training, years of experience of the top manager and labour cost on export intensity is assessed. To test these relationships, Tobit and Fractional Logit approaches are adopted. The estimation results suggest that, overall, having a more educated workforce exerts a positive impact on the export intensity of firms in transition economies, the magnitude being larger for CEECs. Average labour cost, as an alternative measure, also turns out to exert a positive but stronger impact. Insufficient evidence is found of a role for training programmes and years of experience of the top manager.     

Energy and oil in Eastern Europe— Status and prospects

The energy economies of the states in Eastern Europe—East Germany, Poland, Hungary, Czechoslovakia, Bulgaria and Romania—are in a state of transition.¹ This is just one aspect of their overall transition from communism to more liberal political and economic systems. Future developments of the energy sectors in Eastern Europe and the Soviet Union will have important implications for world oil and energy market developments, since these countries comprise, as a group, the world's largest oil and gas producers, and they are the second largest energy consumers in the world.     

The Needed Globalization for African Countries

ABSTRACT

Whether or not local economies can benefit from investments that seek to take advantage of a local comparative advantage (e.g., cheap labor) is the question that is addressed in this article. Through multiple case studies of Moroccan companies operating in the textile sector, the paper shows that the link between low labor cost exploitation and economic development is an eclectic phenomenon. The best variable to explain whether or not this link exists is the development of human capital in local factories. The case studies show that suppliers' development initiatives in supply chain management and the vision of local managers/entrepreneurs are more effective mechanisms for growth and development than a “traditional” program of Foreign Direct Investment where knowledge is withheld by the investor. The implications are that management capabilities in emerging economies, such as those of Africa, can be developed even through investments that do not appear, at first sight, to be so appealing for host countries.     

Small Business Retailing in Privatizing Economies

Summary

The paper advances a framework and a set of propositions regarding the relative influence of collectivist and individualistic values of small retail business managers on the management of the retail-mix and business performance, in the context of the privatizing economies of Central and Eastern Europe. The conceptual discussion, supported with two case illustrations from Romania, suggests that managers embracing the two value systems develop complementary retail strategies. Managers with more individualistic values tend to be more competitor-oriented and emphasize business growth and innovation, while managers with more collectivist values tend to be more customer-oriented and emphasize business relationships, stability and predictability.     

Assessing institutional efficiency,growth and integration

This paper presents an alternative empirical approach for evaluation of the institutional system's development in transition economies and the impact it has on economic performance. We suggested an operational indicator of institutional system dynamics to observe the “institutional reforms-economic growth” interdependence in transition economies. The empirical work reveals a certain dependence between institutional development and economic recovery. An application of the approach to the problems of international economic integration of transition economies in the context of EU accession allows us to assess the role of democratization and the rule of law in particular.     

The Endogenous African Business: Why and How It Is Different,Why It Is Emerging Now and Why It Matters

ABSTRACT

Africa is currently undergoing a transition that is unprecedented in its history. For the first time, the demand of urban populations pulls business development, thus creating economies with higher levels of specialization than before. This essay highlights the phenomenon of the endogenous African businesses that are arising in this process. These businesses tap into the natural resources and the social, economic, and cultural systems that build upon them. These resources and systems make the African business environment different from business environments in other parts of the world. Furthermore, the endogenous businesses have access to knowledge on how to manage modern businesses in the formal sector of the economy. In combination with African resources and systems, such knowledge enables them to create and sustain and competitive advantage in modern dynamic marketplaces. Endogenous African businesses are important because they have the potential to fuel economic growth, to revitalize rural areas, to contribute to food security and healthy diets, and to provide role models of which Africans can be proud. Hence, these businesses deserve our attention in the next two decades of scholarly research and education on African business.     

Privatization and Company Restructuring in Eastern Europe

Summary

The successful transition of Eastern European economies from central planning to market orientation has to include significant company restructuring in addition to privatization. At the micro level it can bring enhanced productive efficiency through changes in organizational structure, operations and financial control and the introduction of marketing as a crucial element and function of the restructured companies. At the macro level, company restructuring creates the necessary conditions for improved allocative efficiency, achieved through the transition from the monopolistic market structure of chronic deficit to a mostly competitive one able, in the longer run, to meet market demand. Restructuring is used here in the broader sense of changes in the organization's management orientation, operational processes and systems as well as in its formal structure. Restructuring is held to be both extremely complex and critical to the realization of the benefits of privatization at both macro and micro levels. Some broad hypotheses relating to common elements of the restructuring process arc introduced: a shift to a flatter, less hierarchical organization structure; the adoption of ‘western’ financial management and accounting practices and the introduction of budgetary accountability; the evolution of the marketing function and the rationalization of product ranges in the light of market needs.     

Eastern and Central Europe

ABSTRACT

The aim of this research is to help explain the impact of cultural variables on privatization and market entry strategies in several of the transition economies of Central Europe. The geographic area focus is on the former East Germany, Hungary, Poland, and the Czech Republic. The cultural legacy of communism involves the need to fundamentally change core values. Democratic capitalism requires a cultural re-orientation. The authors seek to examine the implications of cultural impediments and opportunities and to show how successful strategic management seeks to function in a dramatic value transition. Finally, the analysis underlines how each country as well as individual management teams have made progress under the new circumstances.     

Trade and Exchange Rate Policies in Formerly Centrally Planned Economies

This paper examines the international economic policies of the eastern European and Soviet Successes States in the early 1990s which provide one of those wide‐open windows of opportunity when powerful vested interests are not lobbying for retention of an existing tariff structure. Moreover, the simultaneous abandonment of central planning by over two dozen countries provided a natural experiment in which a range of differing policies might have been pursued. Policymakers in transition economies have generally ended up pursuing liberal non‐discriminatory trade and foreign exchange policies. There are exceptions and the majority may be wrong, but the presumption is that, perhaps after a learning or trial‐and‐error process, decision makers have found the rules of thumb suggested by economists to be their best guide to international economic policy. This paper notes that integration of transition economies into the global trading system has been surprisingly successful. Almost all the countries in transition from central planning have accepted the WTO rule‐based system in principle, even if there are variations in trade policies and performance, and have generally pursued multilateral non‐discriminatory trade policies. In particular, the potential danger of regionalism proving more attractive than multilateralism has not eventuated. The revealed behaviour of policymakers suggests that trade liberalisation is a good rule of thumb and regional groupings among transition economies have been insignificant. Despite a proliferation of new currencies, varying exchange rate regimes, and differing degrees of currency convertibility, the general pattern has been to accept convertibility for current account transdactions, and in many cases to extend this to a de jure commitment and to allow substantial capital account convertibility. A general policy conclusion in favour of more open and non‐discriminatory trade and exchange policies have passed the test of acceptability by policymakers in over two‐dozen countries in this category.     

Distance Education

ABSTRACT

This article examines management of accountancy education in Zambia and Zimbabwe, two countries in Sub-Saharan Africa. Both programs are collaborative efforts to manage the link between the accounting profession, governments of emerging economies and in-country postgraduate training facilities. Both programs are designed to promote the study of accounting at a level recognized by the international accountancy profession.

The programs are being developed in the context of World Bank research, which confirms linkage between economic growth and an appropriately trained accounting profession, and recognizes the need for economic growth in Sub-Saharan Africa.

Six principal program characteristics are examined: the challenge facing the accountancy profession in Sub-Saharan Africa; funding sources; details of the programs; delivery of the programs; program costs, and graduation outcomes. This article reports on the struggle faced by the accounting profession in emerging economies to make the managers of the global accountancy profession, donor agencies, and multinational commercial enterprises aware of this aspect of the developing SSA market.     

Organization and Management Research in Transition Economies

Abstract

This article ascertains some problematic issues that may arise when conducting organization and management research in the former socialist countries. It reflects on methodological difficulties the two authors have encountered themselves in doing empirical research in a number of East European transition economies (the Baltic States, Bulgaria, and the CIS-especially in Belarus, Russia, and the Ukraine) since the beginning of the transformation in the late 1980s. By providing examples from their own experience, the authors suggest some solutions for solving methodological problems, which other researchers might face while accomplishing empirical studies in a peculiar but also a very attractive research context.     

Enterprise Restructuring in Transition

Abstract

Poland in 1989 was faced with massive and unprecedented change. If we consider what communism was-an ideology, an economic system, a political system, a way of life-we can begin to appreciate the nature, scale, challenge and complexity of the change involved.

This paper evaluates how privatised, post-socialist Polish enterprises have responded to market conditions. In particular, it traces the management role in capitalist restructuring and adjustment to the wider aspects of economic transformation in Poland.

A general introduction is followed by case material from three privatised, post-socialist Polish enterprises. Conclusions reached demonstrate both continuity and change in management behaviour and adaptation to capitalism through incremental rather than radical adjustment strategies. Capitalist restructuring is, however, shown to be more radical and extensive with dominant MNC ownership and control.     

Some Transaction Cost Effects of Authoritarian Management

This paper studies the transaction cost economizing effects of authoritarian management in organizations and systems subject to higher transaction costs originating from various sources. We analyze the nature, mechanisms, and transaction cost aspects of the authoritarian management style. We argue that the higher the transaction costs of internal organization, the more autocratic the manager is likely to be. We discuss the features of authoritarian managers, illustrating some of our key hypotheses with the example of Henry Ford and his running of the Ford Motor Company. In the context of non-market economies, we relate authoritarian leadership to economic centralism in high transaction cost systems such as East European societies with significant transactional or organizational opportunism, as well as other sources of market failure.     

Human Transformation in the Transition Economies

Abstract

This paper discusses the human transformation in the transition economies exemplifying the case of Georgia in particular and analyzes the natures of homo Sovieticus, homo transformaticus, and homo economicus. It then argues that since homo economicus has some deficiencies and is thoroughly egoistic in nature, another model of man is to be found to explain his/her behaviours not only in the marketplace but also in the social life, and it introduces the model of man of society. Hypothesizing that individuals are in general men of society, this model is offered not only to make a paradigmatic transition from homo economicus to a real existing man/woman in a nonarbitrary fashion, but also to complement the homo economicus and thus to effectively deal with many problematic issues in the transformation period which is expected to lead to a democratic society with a balanced economy. The paper also includes the results of a survey conducted to find the evidence of man of society in the Georgian society.     

Book review

Abstract

Concerns about relatively high degrees of exchange rate pass-through in a number of emerging economies have contributed to a fear of floating. Despite the obvious policy relevance of this issue there is hardly any existing literature that has examined aggregate CPI pass-through for India, which has been liberalizing its economy since 1991. This paper estimates exchange rate pass-through (ERPT) at the aggregate level into India's CPI for the period 1980Q1 – 2005Q3. We also analyze whether exchange rate pass-through in India has changed over time, particular since 1991, which was the beginning of the country's economic liberalization program.     

Foreign direct investment in Central and Eastern Europe

Foreign direct investment is an important catalyst for the economic changes in transition economies offering host countries external resources, technology, management, and access to foreign markets. It is therefore high on the public policy agenda in the transition economies of Central and Eastern Europe and the newly independent states of the former Soviet Union and figures prominently among assistance activities at the bilateral and multilateral level. This article analyses the legal and institutional framework and the economic performance of foreign direct investment in fourteen European economies in transition at the beginning of 1993.     

Mercosul External Policies in a Multipolar World

ABSTRACT

The creation of Mercosur rested on perceptions of US and European economic and political “hegemony” to which the new regional trade arrangement was viewed as an appropriate response. Since then the world economy has evolved in ways that question these assumptions, driven by the sharp increase in the number of economic activities that are in competition on a world scale. Other major economies, notably China and India, have been more successful than the Southern Cone countries in adapting to this multipolar world economy, challenging Mercosul to find new responses.     

Simulating Economic Development in Transformation Economies

Abstract

The purpose of the game described in this paper is to help students understand the impact of various strategies of government intervention on the dynamic free-market processes stimulating economic development. The game simulates three developing economies. Within the economies, each of the students represents an independent economic entity, able to contribute labor, consume goods, and acquire wealth. The game is played in periods, with each one representing a cycle of production and consumption. In one economy, students are free to act independently, or to collaborate, to invest or save money, to innovate or produce conventional products. In the other two, their activities are constrained by “government” regulations, simulating contrasting strategies of import substitution and export promotion. In the end, students are evaluated according to the wealth they create. The three simulated economies provide experiential evidence as a basis for discussing the relative merits of unfettered free enterprise, import substitution, and export promotion as contrasting strategies of economic development.