Background and Overview
In a world of new and growing challenges for economic and
democratic development, Central and Eastern Europe represents
a region in which positive trends towards the consolidation
of democracy and economic reform outweigh the negative.
However, as European Union integration becomes a reality
for some in the region, we are witnessing the emergence
of two tiers of countries: those that have achieved
or are moving toward EU accession, and those that may
be left behind indefinitely.
The issues facing pro-reform business forces differ in each
tier, but the root cause of the challenges is the same:
the business community remains ill-prepared to engage
in policy discussions that shape its future, and the
governance environment that influences business activities
remains poor. This problem is especially compounded
for business groups that represent economic forces traditionally
on the margins of society - women and ethnic minority
populations.
The issues facing the business community in EU candidate
countries are directly related to shortcomings in democratic
dialogue and failures of governance. In a reform process
that is driven by EU benchmarks and external political
and diplomatic pressure, the small business community
is often refused a seat at the EU bargaining table,
while bearing many of the costs of acquis-related reform.
To gain entry to these bargaining rooms, business must
learn to overcome its greatest obstacle: building common
policy positions and creating effective association-driven
advocacy programs.
In the lower tier countries, democratic and economic
reforms remain closely intertwined and reflect the scale
of the challenges that remain. Where governance institutions
and democratic trends remain weak, so does the ability
to operate a business in a legal and ethical environment.
Macedonia and Serbia and Montenegro face inconsistent
or backsliding reform processes, but at least do so
in a setting where reform is possible should the political
will exist. It is states such as Bosnia and Herzegovina,
Albania, and Moldova, which fail to provide both a policy
and governance environment in which business can grow,
that face the greatest challenge. Sustained levels of
corruption and the lack of a transparent political process
continue to challenge the business community in terms
of both democratic participation and the ability to
function within the formal economy. For business, a
vicious cycle exists where participation in the informal
sector leads to exclusion from the policy process, which
in turn continues to create a poor business environment.
To break the cycle, associations and other businesses
with an interest in reform must learn to coordinate
a common approach that will challenge policy makers
and drive more effective reform.
Within the Balkans, regional stability is a key factor
for both economic and democratic development, and business
remains the most effective engine to drive regional
social and economic integration. Creating networks of
like-minded business groups that can reach across borders
and work in tandem to resolve the policy barriers that
reinforce fragmentation remains an achievable goal.
CIPE’s strategy in Central and Eastern Europe
seeks to address these challenges by providing support
to business groups and coalitions within countries that
seek to articulate alternative visions for reform and
growth based on transparency, public-private cooperation,
and regional action.
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