Czechoslovakia: Past and Present, Research Paper Example

Recent decades have posed many challenges for Czechoslovakia. In less than fifty years the country has gone from a communist nation to a democratic republic. Commonly identified as the Czech Republic, Czechoslovakia has progressively transformed its political and economic spectrums to reflect that of the Western world. Although its economy has drastically changed over the past decades, the Czech Republic continues to grow and adjust to the realm of globalization. While not accustomed to global affairs like the United States, Czechoslovakia is making headway in the arena despite current economic crises.

Globalization can be defined as progressive growth in worldwide interconnections. Whereas in past times nations were not integrated in economic and political sectors, various countries are now interweaved with one another to form one global government. Country X investing in country Y’s automobile industry is one example of globalization, while exchanging goods through worldwide trade is another instance of the phenomenon.

While some trends are not good, globalization is viewed as a positive effect that can lead to growth and development in impoverished nations. Many underdeveloped countries benefit from national trade because it rapidly provides necessities that cannot be acquired in their region. Instead of an entire village spending ten years attempting to build an automobile, the community can bring assets together to purchase a vehicle from an industrialized nation. Globalization essentially broadens the spectrum of worldwide resources to include underdeveloped nations.

How developed is the country in terms of competitiveness, etc?

Although not impoverished like some countries, Czechoslovakia has reaped the benefits of a global economy. While the nation experienced hardship during its currency crisis of 1997, the Czech Republic has managed to restructure its financial sector in a manner that allows investment from various countries. When discussing Japan’s investment in Czechoslovakia, Shuichi Ikemoto speaks on the Republic’s renovation plan after the crisis. Ikemoto comments, “while the government’s main concerns during the initial stages of the economic transformation process were focused on macro-economic policy and reform, from the second half of the 1990s, corporate restructuring and privatization of state enterprises became the main targets of reform” (2). Although the government did not intend to involve itself with micro-economics, private sectors were transformed as a result of macro-level changes in financial operations. Such changes have created a ripple effect that has led to growth. From 1995-2006, the Czech Republic experienced steady increases in Gross Domestic Product (GDP), and the nation ranks 43 in the Global Competitiveness Index of 2011-2012.

How has the country responded to G-world effect and Beijing Consensus? The answer begins here and is further explained in the subsequent paragraphs

Such ranking indicates that Czechoslovakia maintains an innovative drive in the face of the Beijing consensus and G-world effect. While superpowers like the United States have come to a standstill in globalization efforts because of domestic issues, the Czech Republic continues to be a winner in its global ambitions.

Whether the country is a winner or loser based on the NIE, SPG, Outliers, or Feminist perspective?

Karen O’Brien and Robin Leichenko makes distinctions between winners and losers in the current economy in her article, “Winners and Losers in the Context of Global Change.” According to the authors, “a nation-state (individual) may determine for itself (himself/herself) whether it (he/she) has been made better or worse off in both relative and absolute terms as the result of global change” (90). While a nation with more losses than gains is deemed a loser, countries that have more positive outcomes than negative issues are counted as winners. When comparing the Czech Republic with other nations during the 2008 financial crisis, it can be concluded that the country is a winner because it weathered the storm of world market collapse and manages to maintain innovativeness in the current scheme of events.

The New Institutional Economic (NIE) perspective that Czechoslovakia models is rooted in the Republic’s social and economic history. One of the many reasons why the Czech Republic maintains innovativeness in the current economy is because of past experiences. Contrary to some nations that have never experienced financial crises before, the Czech Republic has endured deflation and massive debt defaults. In fact, the currency crisis of May 1997 was partially caused by numerous loan defaults resultant from banks financing unqualified borrowers. So while other nations are forced to reckon with new financial constraints, Czechoslovakia is accustomed to economic changes that lead to restructuring. Although the nation is not necessarily flourishing in times of scarcity, it is able to see snippets of progress because of previous renovations to macro-economics.

Whether globalization reflects skepticism, hyperglobalism, or transformational view? The Czech Republic leans more towards the transformational thesis.

When considering the type of globalization that the Czech Republic is experiencing, the two theories of transformational globalization and hyperglobalism come to mind. Whereas transformational theory asserts that the end point of globalization is undecided, hyperglobalist theory states that the interweaving of nations will result in privatized industries. Transformational theory expects some links to be dissolved by globalization as other relationships are created, but the thesis does not speculate which relationships will come to an end. Hyperglobalism on the other hand, specifically states that “businesses more than nation-states will become the ‘primary economic and political units of world society’” (Parker 17). In essence, businesses will have more power than political spheres as globalization progresses. Whereas in past times governments regulated the private sector, corporations will begin to dictate to state and federal authorities. The world will essentially see an end  to the public nation-state and a beginning of privatization in every area of life. Jan Drahokoupil holds that “the undermining of the nation-state containers of social and economic processes is one of the main factors that caused the crisis of the Fordist social fix” (4), proving that hyperglobalism can be dangerous if stretched to extremities by corporations.

While hyperglobalist theory is an interesting concept, the Czech Republic tends to follow the transformational thesis in its globalization efforts. Although private sectors provide 80% of support to the country’s economy, the nation’s government still regulates its society. The nation-state is heavily involved in the social sphere and creates laws that are beneficial to businesses as well as individual citizens. According to the 2011 Index of Economic Freedom, Czechoslovakia ranks higher than the majority of countries in Eastern Europe. The report places the Czech Republic as the twenty-eighth freest country in economics, and gives it an overall score of 0.6. While the numbers may not look significant, Czechoslovakia has shown improvements from last year. According to the report, the progress is centrally reflective of improvements in business and monetary freedom. Although such business freedom may create a hyperglobolist society in coming years, the Czech Republic currently operates from a transformational theory that leaves the future unknown.

How developed is the country in terms of competitiveness, etc?

How do the political standings and diasporas affect the country in terms of globalization?

Whether the economic relations between state and corporations has resulted in growth after the 2008 crisis?

Although not initially viewed as positive attributes to the country, political corruption and recent economic transitions have proved beneficial for the Czech Republic. As a communist nation, Czechoslovakia operated as a planned economy. The nation was not involved in globalization prior to 1994 because communist views would not allow free trade. Whereas the United States and other developed nations were freely exchanging goods and services, Czechoslovakia was forced to keep trading efforts within the country. While it was permissible for Molly to trade sugar with her next door neighbor, she could not go on the Internet and exchange the good with someone from Tokyo, Japan. Although other nations viewed communist restrictions as hindrances to world progress, only after 1994 did the Czech Republic come to the realization that foreign and domestic trade is better than local exchange only. As a result, Czechoslovakia spent the nine years, from 1994 to 2003, restructuring their economy to fit the free market model of the Western world. Although the country faced ongoing deficits and currency devaluing during the time frame, the Czech Republic now stands as a country who has experienced minimum inflation in the current world economic crisis. As the Freedom index states, “inflation has been low, averaging 2.5 percent between 2007 and 2009” (160), and the labor market shows flexibility in severance pay. The transition from planned to free markets have essentially led globalization which has resulted in a more established economy for the Czech Republic Czechoslovakia is now a democracy that has liberality in trade and public office. Such political and economic freedom has fostered cooperation with nations along with citizens who feel more comfortable voicing their opinions about government.

How do the political standings and diasporas affect the country in terms of globalization?

In addition to economic transitions, Czechoslovakia has also experienced political corruption. Prior to and during the economic transformation, the government was criticized for lack of transparency in finances. Many citizens did not believe that politicians were using funds for intended purposes and challenged members of parliament to show proof of social investments. While the political sector is still deemed corrupt by citizens and international reports, Czechoslovakia has made improvements in government that contributed to the globalization process. The country replaced its prime minister during the currency crisis and has signed anti-bribery legislation that prohibits officials and other authority figures from accepting goods in exchange for favoritism. Although previous instances of corruption were directly within the government, present day allegations are typically aimed at the police force and company registration system. Since the court controls the registration system and few individuals see justice when challenging law enforcement actions, many international reports, including the 2011 Economic Index Freedom report, deem the nation as heavily corrupt. The Czech Republic is not however a dictatorship, and such allegations have called for review along with improvements to all policies including those pertaining to globalization.

Whether the country has solved or been impeded by economic development and future power? Solved and progressively moving forward.

Czechoslovakia is a nation with much history. Although initially ostracized for its communist views, the Czech Republic is progressively adjusting to Western ideals. While not a superpower like the United States, the Republic is gaining stability through constant evaluation and reform of policies. Whereas some nations have never experienced economic hardship and political corruption, Czechoslovakia has endured the extensive process of moving from one government and economic sphere to another. In the past two decades, the country has gone from dictatorship to democracy, and from a centralized economy to free markets. Czechoslovakia is viewed as having an innovative economy by international reports, and has used such creative drive to maintain industrialism in the face of world issues pertaining to energy conservation and natural resource scarcity. Although the effects of global affairs are uncertain, the Czech Republic is sure to find success in coming years if it maintains its willingness to restructure as necessary.

Works Cited

2011 Index of Economic Freedom. 2011. <http://web.worldbank.org/Wbsite/External/Countries/0,,pagePK:180619~the     SitePK:136917,00.html>. Web.

Drahokoupil, Jan. “Post-Fordist Capitalism in the Czech Republic: The Investment of Flextronics in Brno.” Prague: Institute of Sociology, Academy of Sciences of the Czech Republic, 2004. Print.

Ikemoto, Shuichi. “Globalization and Japanese Investment in the Czech Republic.” 2007. <http://www.eco.nihon-u.ac.jp/center/economic/publication/journal/pdf/37/37ikemoto.pdf>. Web.

O’Brien, Karen & Leichenko, Robin M. “Winners and Losers in the Context of Global Change.” Massachussets: Blackwell Publishing. 2003. Print.

Parker, Barbara. Introduction to Globalization and Business: Relationships and Responsibilities. California: SAGE Publications, 2005. Print.

Schwab, Klaus (Editor). The Global Competitiveness Report 2011-2012. Geneva: World Economic Forum, 2011. Print.