2 - Globalization and Postsocialist Transformation

Summary

The last decade of the twentieth century has been marked by immense changes in the world economy. The new phase of technological revolution occurring within the countries and continents’ borders, on the one hand, and far-reaching internationalization of capital flow, on the other, have changed the patterns of economic performance. Broad trade liberalization, accompanied by growing liberalization of the financial and capital markets, has brought new prospects and new challenges. These challenges must be tackled not only by governments and various international organizations, but to an even greater extent by the private sector and non-governmental organizations (NGOs). Hence, on the eve of the new century, there are not only old structural problems that are increasing, but also several new issues that must be addressed properly by theoretical considerations as well as by sound policy response.

First, the private sector ought to be not only the main beneficiary of the fruits of globalization and transition, but it must be engaged more than up to now in crisis management. The role of private business is growing worldwide, both in advanced market economies and in developing and formerly centrally planned economies—in the latter mainly owing to vast privatization taking place there. The private sector, hence, must bear larger responsibility for the outcomes of the crises when they occur. To be sure, from time to time they will do so, regardless the efforts taken to avoid them. The private sectors in advanced industrial countries—including various financial intermediaries, investment banks and funds, the hedge funds, and still further merging multinational corporations—while getting involved more and more in business on the global scale, must also be more concerned about sharing the responsibility and the costs, when the international flow of capital fails to deliver positive results.

Second, the international organizations—including regional development banks and institutions dealing with particular aspect of international and global economic activities (i.e. IMF, WB, WTO, UNCTAD, ILO, etc.)— must coordinate their actions in a well-orchestrated way. Despite advancing liberalization, or in some sense because of it, there are certain intertwined processes being monitored by different organizations that are not capable of coordinating their policies sufficiently. Many problems on the global economic scene, including its postsocialist theatre, have evolved because of a lack of such coordination.