Vast swaths of RussiaÕs assets were effectively stolen by what are now known as oligarchs in the 1990s, creating an economic power structure that will persist for decades to come.

Central and Eastern Europe (CEE) has changed beyond recognition in the past 20 years. Few would have dared hope in 1987 that the region would, in just a couple of years, begin its rapid reintegration into the global economy and democratic community.
Countries that had spent the best part of half a century unofficially at war with the West quickly became key members of NATO and, eventually, the European Union (EU), reported Gfmag.com.
There have undoubtedly been some upsets along the way: The horrific conflict in the Balkans in the 1990s has left a painful and shameful legacy for the region. Meanwhile, recent unrest in Ukraine has reminded observers that democratic reforms are far from entrenched in some parts of the region. However, what is most remarkable about the transformation of Central and Eastern Europe has been the overriding peacefulness with which it has occurred.
The key event in the development of modern Central and Eastern Europe is undoubtedly the entry of many states from the region into the EU. A total of 10 countries joined the EU in May 2004: the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia plus Cyprus and Malta from outside the region.
All accession countries benefited from generous funding from the EU in advance of entry and--most importantly--from the expectation of convergence with the developed economies of Western Europe.
Bulgaria and Romania joined on January 1 of this year. Most EU accession states have enjoyed rapid growth in recent yearsÑalbeit often after years of stagnation following the end of the Soviet era.
Many countries from Central and Eastern Europe have managed to leapfrog some Western European countries in economic and financial policies such as low and flat tax.
The Czech Republic, the Balkans, Hungary, Poland, Slovakia and Slovenia are demonstrating the benefits of free markets and radical taxation policies to a slow-growing Western Europe. They are also providing the model for the next wave of EU hopefuls, including Croatia, Turkey and Ukraine.
The new and prospective members of the EU are just one part of the Central and Eastern European story. Russia has endured a political and economic rollercoaster that has taken the country from glasnost and perestroika to the disintegration of the Soviet Union to a coup and then to a form of democracy, although not a form many in the West believe is credible.
Russia’s economic performance has been similarly erratic. Vast swaths of Russia’s assets were effectively stolen by what are now known as oligarchs in the 1990s, creating an economic power structure that will persist for decades to come.
Despite all these tests, the country has reemerged in recent years as a global superpower of oil and natural resources. Russia has quickly capitalized on the political power that this economic strength has given it, with a series of multi-billion dollar listings of oil, banking and other companies in London.
The development of financial markets across CEE has also inevitably experienced problems. Many countries suffered from endemic corruption during the privatizations of the 1990sÑalthough none so much as RussiaÑwhich turned both domestic and international investors off buying shares.
But most countries have now settled into a pattern familiar across Europe, with medium-size and large companies seeking local listings and raising money in the international debt markets--increasingly at prices close to their Western European rivals.
The reintegration of Europe after more than half a century of separation is almost complete.

The past two decades in Africa have been marked by the twin themes of dramatic progress, such as the demise of apartheid in South Africa, and heartbreaking inertia, characterized by much of the continent’s seemingly endless struggle with war, disease and famine.
African leaders--as well as multinational lenders and international peacekeepers--have grappled with the arduous task of nation building and emerging ethnic and religious conflicts over the past 20 years as the individual countries recovered from the impact of centuries of colonial rule, AP reported.
Many countries saw the benefits of using regional economic or intergovernmental pacts to foster economic growth and political stability. The Eastern African Community, created in 1999 by the governments of Kenya, Uganda and Tanzania, for example, now encompasses the neighboring countries of Burundi and Rwanda. It finally has a customs union in place to reduce tariffs and boost trade and ambitious plans for a common currency and even a federal president by 2012.
Meanwhile, the Chinese have been tapping into Africa’s economic potential and have become major investors in the continent, including the oil-rich countries of Angola, Nigeria and the Sudan.
Regime changes abounded throughout the continent over the past two decades. Nigeria, Africa’s most populous nation, ended a cycle of military rule in 1999, and the Democratic Republic of the Congo, the site of decades of civil strife that left millions of people dead, saw its first multi-party elections in nearly 50 years in July 2006.
Liberia, after 14 years of civil war that devastated the country’s infrastructure, elected Africa’s first female president, US-educated banker Ellen Johnson-Sirleaf, in 2005. Analysts agree that this shift toward democracy, along with economic liberalization, has helped spawn a wave of opportunity for the sprawling continent.
“Africa has done in 10 years on electoral changes what it took Latin America 40 years to do,“ says Calestous Juma, a professor at Harvard University. “Africans are embracing change as the new order.“
Rather than point to specific regime changes, Richard Mshomba, a professor of economics at La Salle University in Philadelphia, prefers to see the overall shift from single-party to multi-party states as more significant. In the early 1990s many African countries, for example, began to make the necessary changes to their constitutions.
“Before, opposition parties were not allowed. There were no term limits for leaders,“ says Mshomba, who left his native Tanzania in 1982. “And one important thing that a multi-party system brings along is private newspapers and freedom of the press. Before, there would be only government or ruling-party newspapers,“ he adds.
Mshomba also sees the continent’s more liberal economic policies as significant. Though frequently criticized as a failure, the structural adjustment programs foisted on African nations by multilateral financial institutions were successful on some levels because they forced African nations to make needed changes, he says. He points to more stable exchange rate policies that corrected dysfunctional exchange rate systems, the emergence of private banking systems and more liberal agricultural policies.
All of these trends have helped contribute to an expected economic growth rate of nearly 6 percent in the coming year. In its latest report, issued last month, the United Nations Economic Commission for Africa says the expected jump of 5.8 percent for 2007 is the fourth straight year of 5 percent-plus growth.

Qin, manager of the HuaXia baseball cap factory, is a proud man. His factory, located in the booming Yangtze River delta region of China, has expanded dramatically in the last few years.
It is now producing 30 million baseball caps each year, supplying retailers across the US and Europe at an average price of $1 per cap.
Every day the factory fills a standard 20-foot container with 5,000 caps, which is sent down the motorway to the port of Shanghai. A sister factory, Hua Yuan, has an exclusive contract with Nike to manufacture their branded caps, the BBC wrote.
Qin is particularly proud of the embroidery department, where dozens of new Swiss-made machines automatically reproduce the complicated logos on the front of the caps, with only a few workers in sight.
But textile and clothing manufacturing is nevertheless a labor-intensive business. The factory employs more than 1,000 workers--mainly young women--in the large sewing rooms where the caps are put together.

Workers’ Lives
They work a six-day week, 7:30am to 7pm, and many live in dormitories adjoining the factory. But with average factory wages of around 1,000 RMB per month ($130, £65), most want the extra work.
A worker told the BBC she had worked for the company for four-and-a-half years, while her husband worked at another factory and his parents looked after their child.
The booming export trade has made the factory owner, Bao, a rich man. Having started from humble beginnings, he now has two homes and two cars--including an Audi A6, and can afford to educate his children privately, according to the factory manager.

Export Boom
Bao’s success story is not unique. The private sector has led China’s huge export boom, which continues to accelerate.
In the first three months of 2007, China exported $252 billion worth of goods, an increase of 27.8 percent on 2006, and had a trade surplus with the rest of the world of $46 billion--nearly double the amount in the same period last year.
Textiles and clothing exports are expected to reach $161 billion this year, and in 2006, textiles and clothing accounted for 72 percent of China’s trade surplus in manufacturing.
Textile and clothing exports from China have surged since the ending of restrictions on exports to Western countries in 2005, when the Multi-Fiber Agreement was finally abolished as part of a world trade deal.
The rise in Chinese exports sparked protectionist pressures in both the US and the EU, and China negotiated export restraint agreements that expire in 2008. The US government has also been urging China to revalue its currency, the yuan, at a faster rate in order to reduce its trade surplus.

Pricing Pressures
But seen from the ground, Chinese firms feel under increasing competitive pressures, with profit margins continually squeezed by the appreciation of the yuan and government increases in interest rates.
Conditions have improved in many clothing factories. Qin says that his firm has borrowed heavily to invest in the new equipment to lower their costs and improve quality and productivity.
According to government figures, the overall profit margins in the textile industry are only 3.9 percent--the lowest of any major industry. The shift of textile factories away from Shanghai to cheaper cities in the interior is one way that owners can control costs.
Vivian Zhu, operations manager for ET2C International, is a close observer of those pressures. Her firm helps oversee outsourcing contracts between Western and Chinese companies, often supplying bespoke services to major retailers.
She explains that rival firms often cluster in the same towns--so several baseball cap manufacturers, or several handkerchief makers, are found together. Designers work closely with pattern cutters to produce designs.
She says that there is continuous pressure for high quality and low cost from Western purchasers. Price pressures have increased since the spread of internet sites such as Alibaba.com, which seeks to match buyers and suppliers in China. Zhu says that many of her clients also want to ensure the factories they use meet social standards and are free of child labor.
She regularly sends inspectors to the factories she uses to check quality and carry out social audits--although she admits that, faced with the issue of free trade unions, the best she can do is ask the workers whether they are happy. But the combination of labor shortages, pressure from abroad and rapid expansion have been raising standards nevertheless.

Going Upmarket
China’s export advantage no longer lies mainly in its low cost of labor and firms are recognizing this by moving up-market or by specializing in a single product.
ET2C International itself decided to move up the value chain by launching a fashion brand, Urban Shock, for young women. It has now launched a series of shops in Shanghai marketing the brand, and has recently opened its own factory to produce its clothes.
The firm’s factory has to pay higher wages to attract workers, but its location means that the designers can work closely with it to ensure the dresses are made to their specifications. But ET2C is not alone.
It is the domestic market, rather than cheap exports, that is now attracting a huge wave of foreign investment into China by Western multinationals.

Japan and the Association of Southeast Asian Nations have reached an agreement in principle on the modalities of free-trade negotiations that they hope to wrap up by the end of August. According to Japan Times, if the Comprehensive Economic Partnership Agreement is signed in November as hoped, it will be Japan’s first free-trade agreement with a regional bloc.
Japan’s progress has been slow compared with that of China and South Korea in their FTAs with ASEAN. Japan must carefully watch other economic powers’ approach to ASEAN. On the day that Japan and ASEAN reached agreement, the European Union and ASEAN agreed to launch free-trade negotiations.
Under the agreement, which came on the sidelines of the ASEAN economic ministers’ meeting, Japan would abolish tariffs on 92 percent, and ASEAN on 90 percent, of some 5,200 items of goods within 10 years.
Vietnam will abolish the tariffs within 10 to 15 years, and Cambodia, Laos and Myanmar within 15 years. The remaining items would receive exceptional treatment. Japan would have 7 percent of goods categorized as sensitive or highly sensitive to give them some degree of protection. It would have 1 percent of goods completely excluded from liberalization. The negotiations may become difficult because Japan and ASEAN member-countries must agree on the kind of treatment that items receive.
The agreement would give a boost to Japanese firms that are operating factories in ASEAN countries. Abolition of tariffs on their products exported to other ASEAN countries would make them competitive with Chinese and South Korean products. But Japan’s expected move to give exceptional treatment to agricultural products such as rice, sugar and dairy products will likely disappoint ASEAN.
If Japan wishes to keep the momentum going for trade liberalization with ASEAN, its government must carefully consider its policy on agricultural imports.

Currency Stabilization
Finance ministers of the 10-member Association of Southeast Asian Nations plus Japan, China and South Korea have also agreed to working out a scheme to pool part of their foreign reserves for multilateral currency swaps as a means of preventing a currency crisis like the one that struck Asia in 1997.
Although it is expected to take two to three years to draw up the scheme, the agreement, which could serve as a bulwark against speculative funds, is a meaningful step forward toward stabilizing the currency situation in the region.
The agreement stems from the bitter experience of the Asian financial crisis, which started when hedge funds withdrew their short-term funds from Thailand, causing the baht to crash. The crisis also shook other countries, including South Korea, Indonesia and Malaysia.
The affected countries sought a bailout from the International Monetary Fund. But without taking into account the specific situations in those countries, the IMF linked financial assistance to stringent conditions aimed at quickly achieving structural reforms. This gave rise to regional anger toward the IMF. In an attempt to lessen reliance on the organization, an idea of creating an Asian Monetary Fund was floated. But the United States, opposed to the idea, quashed the attempt.
To improve their currency-related resilience, ASEAN plus Three agreed in 2000 to establish a network of bilateral currency swaps called the Chiang Mai Initiative, which now consists of 16 bilateral swap agreements among eight countries worth $ 80 billion.
During the 40th anniversary meeting of the Asian Development Bank, the finance ministers agreed that the 10 ASEAN countries and the three Northeast Asian countries will contribute part of their foreign reserves to create a self-managed reserve-pooling arrangement.