*{Globalization and Nationalism [http://www.weforum.org/site/knowledgenavigator.nsf/Content/Globalization%20and%20Nationalism?open&topic_id=300250000&theme_id=300]

            28.06.2000

            Central and Eastern European Economic Summit 2000}

            The most successful transition economies are those with a holistic approach to reform, where market liberalization goes hand in hand with social and political change. Legal and regulatory frameworks are not the only prerequisites for attracting foreign investment, managing privatization and promoting economic growth; robust and effective safeguards of human rights are equally as critical. "A repressive police state is no alternative to a semi-criminal oligarchy," said Grigory A. Yavlinsky, Member of the State Duma and Leader of the Yabloko Movement in Russia, warning that "Pinochet is not an alternative to Yeltsin." Yavlinsky ranked human rights and freedom of information as two of the most critical challenges now facing Russia and other former Soviet countries. Thus, the prescription for a successful transition needs to focus as much on institutions as it does on people. 

            This was the opening message to the fifth annual Central and Eastern European Economic Summit of the World Economic Forum in Salzburg. "We have more business participants than ever," said Macha Levinson, Director, World Economic Forum, adding that Salzburg, a place "imbued with a sprit of universal culture," remains a most appropriate venue.

            Moderator E. Neville Isdell, Chief Executive Officer Designate, Coca-Cola HBC, Greece, and Co-Chairman of the Summit, said protests at the WTO ministerial in Seattle last year demonstrated that public discussions of globalization and economic liberalization remain very much an open debate. Globalization has meant the entry of two and a half billion people into a global system of economic competition, noted Kurt Biedenkopf, Minister President of the Free State of Saxony, Germany. "There are winners and losers when you open markets," he said.

            "Hungary's approach is simple and practical," explained Zsigmond Jarai, Minister of Finance of Hungary. The role of government, he said, is to maximize the public benefits of globalization and market economics, and minimize its ill effects. According to Jarai, Hungary has relied on a three-tiered approach that includes developing stable political institutions, maximizing educational capacity and setting up proper legal and regulatory measures. This strategy has helped Hungary attain the region's highest per capita level of foreign direct investment. 

            It has long been recognized that foreign investment is critical for transition economies. After a decade of experience, some lessons can be drawn to help build a road map for the future. Multinational corporations (MNCs) must maintain a local perspective when they decide to invest in the region, argued Biedenkopf, who emphasized that MNCs need to understand a country and know how the local community thinks before they enter a market. "Don't come in as conquerors," he warned, adding that national identity can actually be strengthened, not challenged, when foreign investors understand local needs and maintain a people-oriented approach.

            The role of foreign direct investment should be seen in the context of preparing transition countries for integration, argued Danuta Hübner, Executive Secretary, United Nations Economic Commission for Europe, Geneva. While some economies have succeeded in attracting FDI, others need to continue to first focus on developing the proper legal and institutional capacity to absorb investment.

            The discussion repeatedly returned to the theme of human rights and the non-economic foundations for stable and successful transitions. Panellists agreed with Yavlinsky that the protection of basic human rights, including the right to private ownership and the promotion of democratic norms are essential to transition economies. "The obvious lesson is that everything matters," said Hübner. 

            When asked about the role of outsiders in contributing to successful reform in Russia, Yavlinsky said Western leaders need to be more consistent when they promote human rights and need to pursue a policy of "civil" engagement with all segments of Russian society, rather than focus exclusively on the Kremlin leadership. He also reflected on the importance of people-to-people contacts and said Western countries need to do a better job streamlining and simplifying visa procedures for Russians who wish to travel abroad. "Please open your doors," Yavlinsky implored, "open them wider."                    

                  *{Contributors:       Biedenkopf Kurt
                  Hübner Danuta
                  Isdell E. Neville
                  Jarai Zsigmond
                  Levinson Macha
                  Yavlinsky Grigory A.}