Post-Communist Countries in Central Europe Emma Jane Riddle, 2012

Overview Statistics: population and GDP After Communism, What? –The European Union and the euro currency Economic growth in this area Economic developments since 2008 Business culture in Poland Managing employees in the Czech Republic

Population (Millions) 2011 Estimates U. S. Population = 314 Million

Gross Domestic Product (Billion $) 2011 Estimates U. S. GDP = $15.09 Trillion = $15,090 Billion

GDP Per Capita (Thousand $) (Purchasing Power Parity) U. S. GDP Per Capita = $49,000

GDP Growth Rate (%) U. S. GDP Growth Rate – 1.7%

Communism in Europe Soviet Union Soviet bloc countries: Czechoslovakia, Hungary, Poland, East Germany, Bulgaria, Romania Yugoslavia, including present-day Slovenia Albania – allied with China

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

Requirements to Join the EU Be a stable democracy, respecting human rights, the rule of law, and the rights of minorities. Have a functioning market economy that can compete in the EU. –Many state enterprises were privatized. –Foreign investment was needed to develop the economies. Adopt EU laws, product standards, and regulations. The five central European countries joined the EU on January 1, 2004.

European Union (EU) Before 2004 Enlargement

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

Benefits of EU Membership Ability to export to other EU countries, with no tariffs charged. Citizens of an EU country can live, work, and study in any EU country. Economic development aid from the EU Easier to attract foreign investment

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 completion program –After completion of a Master’s degree, a doctorate can be completed in three years. European Credit Transfer System (ECTS)

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 rates Value of the national currency must be stable relative to the euro Slovenia and Slovakia use the euro

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

Economic News Since 2008 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.

Threats to Democracy in Hungary The central bank is now under political control. Judges were forced to retire at age 62, instead of 70. The head of the National Judicial Office names all new judges. Public television is being told what stories to cover, whom to interview, and what not to cover. The Media Council recently cancelled the license of an independent television station. The Media Council can fine media outlets with whom it disagrees.

Business Culture in Poland Design products for Poland. Win-win negotiations work well. Be prepared to provide data. People are not impressed by "sales talk". Take time to build relationships and gain trust. Be willing to "give something back" to the community.

Business Culture in Poland (2) Local governments have a large role in business regulation. Some areas are more conducive to business than others. 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 are reluctant to share personal information.

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 may lack motivation and are not accustomed to taking initiative

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. People are reluctant to share personal information. Source: Karin Genton-L’Epee, Prague Post, Jan. 6, 2005