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Central Europe
Emma Jane Riddle, 2010
Population – 2009 Estimates
Slovenia
2.0
Slovakia
5.5
Poland
38.5
Hungary
9.9
Czech Republic
10.2
0
10
20
30
Population (millions)
U. S. Population = 307.2 Million
40
Gross Domestic Product
2009 Estimates
U. S. GDP = $14.26 Trillion = $14,260 Billion
GDP Per Capita
2009 Estimates
U. S. GDP Per Capita = $46,000
The Soviet Bloc: 1945-1989
Eastern Europe
• The Soviet Union
• Bulgaria
• Romania
Central Europe
• Czechoslovakia
• Hungary
• Poland
• East Germany
Other Communist Countries in Europe
• Albania – allied with China
• Yugoslavia, including present-day:
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Bosnia
Croatia
Kosovo
Macedonia
Montenegro
Serbia
Slovenia
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.
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.
Percentage of Self-Identified Christians - 2008
Roman Catholic
61%
Slovenia
Protestant
84%
Slovakia
92%
Poland
75%
Hungary
29%
Czech
0%
20%
40%
60%
80%
100%
Other Christians
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.
Central European Culture
• Culture is a mixture of local and western European
ideas
– 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
• The end of Communism began in those countries.
After Communism, What?
• Democracy
• Prosperity
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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.
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.
Economic Growth in Central Europe
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Automobiles and parts
Financial services
Information technology – hardware and software
Biotechnology
Tourism
Transportation and distribution
Requirements to Join the EU
• Be a stable democracy, respecting human rights,
the rule of law, and the protection of 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.
Benefits of EU Membership
• Ability to export to markets in western
Europe
• In 2011, citizens of these countries will be
able to live and work in any EU country.
• Economic development aid from the EU
Requirements to Use the Euro Currency
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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
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.
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.
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.
– You may have to ask the question differently.
• Local governments have a large role in business
regulation. Some areas are more conducive to
business than others.
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.