The main purposes of setting up EU (European Union) was to establish a region of peace between neighbors. This effort was initiated in 1950 when European Coal and Steel community decided to unite various European countries through politics and economic matters so as to avoid any bloody wars between or amongst European countries. The first members of the union were Belgium, Netherlands, Italy and Germany. In the 1960s, the EU stopped charging custom duties and also decided to combine their effort in food production thus everyone had enough to eat and even surplus of the agricultural produce was achieved. As years went by, EU began to enlarge and many other countries began to join. During 1974, the two major dictators in Europe were overthrown; Salazar of Portugal and General Frace of Spain. During this time, EU supplied large sums of money for the development of infrastructure and other facilities in poorer regions which made EU to be known by all citizens. In 1979, EU helped in allowing citizens to role for their own leaders. It also introduced laws to guard the environment. In 1998, other countries like Austria, Luxembourg and Sweden joined EU. Further expansion occurred and in 2007 Bulgaria and Romania joined EU. The latest members formed the Central and East European. The included; Czech Republic, Romania, Slovenia, Bulgaria, Hungary, Latvia, Poland and Lithuania. This dissertation is based on analysis of various elements of the economic status of some of the countries that make up the Central and East European. The paper also focuses on how the enlargement of EU has affected the growth of economic status of some of the CEE members. The paper will start by giving some insight about the field in question.
HISTORICAL BACKGROUND
Literature review.
After the collapse of socialism in CEE, EU initiated its enlargement in order to give assist to the countries that were going through difficulties in establishing themselves. EU also desired to maintain part of Europe. Currently the outcomes of the various activities that took place in the Eastern Europe are not that consistent with the original intention of the project. The project has not been able to achieve major breakthroughs or assist in explaining the main reason behind the Eastern enlargement. Few authors that have written about the Eastern enlargement have enumerated well known facts regarding the procedural aspect of the relationship between EU and Eastern EU and have included tedious citations of some of the official documents. After the economic evolution took place in Europe during the 90s some of the conditions and restrictions with regards to the business environment were laid off making Eastern Europe function as an open market. This made other regions of Europe want to invest on Eastern Europe. There were a number of factors that were considered before investing in Eastern Europe. An analysis was done to determine the main point of focus with regards to foreign investment. The political, economic or social component and the natural frame work guided the analysis. Among these, a conclusion was made on the various aspects that were considered while investing in Eastern Europe. The aspects included starting a business contract enforcements and property rights and protection of investment (Alexandra Loan Caza, 2012 pp 389).
Factors to Consider When Venturing into a Business
Most investors focus on the attitude of the country with regards to business sector. The policies and process of starting and establishing a business. If the policies go against their favor and starting the business becomes as uphill task compared to the return, most investors shy off such ventures. In this dissertation three aspects are considered with regards to investing in a particular place or country.
Starting a Business
Before investing in a country, a lot of factors are considered. Some of these factors include; laws that are put in place in order for a business to start up, issues to do with taxation, the market that is in the country, understanding the market in terms of culture, the political climate of a country and the availability of both legal and local guidance. Of course understanding the market is the main thing that leads to the success of a business venture. In understanding the market, the first thing investors do is to know who they will be dealing with. This comes in the entry point to the market. This is where investors analyze all policies including the barriers set while entering a particular market. The investors must way understand the policies and barriers so as to put the resources that they have in very efficient use. This also includes having an account of the cost that they will undergo while establishing the business. If the cost are too much than the expected profit then the business venture is not viable. The aspect of competition is another matter that investors consider. Most investors prefer to have no competition at all. Although this might look as an advantage to some extent, makes them feel comfortable. Some therefore prefer competition as it pushes them to strive higher.
With regards to global markets, investors consider the factors mentioned above but in a broader perspective. To understand the economic status of a country before investing is key. This helps in being ready for any season or a season that may not be so promising and thus helping prepare adequately on what to expect. Laws and regulations and also the culture of the country is another aspect understanding competition in the global market is also very important as well as considering and exit strategy in case a business does not go as well as expected. This helps in minimizing losses that can be incurred and still end up with the collapse of a business. All these factors are very vital before investing in a particular business venture or a particular country (Caitlin Stewart, 2016 no pp)
Contract Enforcement
Contract enforcement is another vital issue with regards to investment. Although contractual laws have been put in place to settle any indifferences in order to strengthen economic and commercial relationships. Some countries have weak contract enforcement. Counts are flooded with corruption and other forms of malice the corrupt the set laws of managing indifferences. This can be a very huge issue to a business investor therefore considering contact enforcement before investing in a country to see whether they can fit into their system.
Property Rights and Protecting System.
This is another vital aspects that most investors consider before starting a business in a certain country. Depending on the set policies for property rights and protection of investor’s investment. Investors consider such aspects and compare them their individual likings. If they fit and agree with such policies they invest into the countries.
METHODOLOGY
The methodology used in the paper is analytical research. The main aim of this paper is to establish a correlation between EU and the business environment of CEE. In order for this to be achieved, various findings and data that were already written will be used to come up with the contents of the paper. Analytical methodology will be the most efficient research methodology in this case. It will help in the gathering of data and analyzing various results in order to come up with conclusions that are in this paper. The information gathered through this method will help in understanding the topic in a deeper extent. It will also help in the gathering of information in a larger scope and time frame. The main reason for choosing the specific countries is because some pioneered the enlargement of EU thus they will be the most efficient for the research. In analyzing the connection between EU and their business environments. Most of them suffered because of communism thus making them suitable for analyzing their business environment after joining EU. Various secondary sources will be used in supporting the topic. It will provide a brief summary of the business environment and an analysis of the correlation between the business environment in CEE and EU.
ANALYSIS
As stated earlier, the main essence of the paper is to understand the correlation between business environment in CEE and EU. The business environment in CEE has been very weak due to the political state of the country. Despite this, there has been a slight improvement of these business environment that correlates with them joining EU. The three specific areas of the business are;
Starting a Business
As we have earlier seen one of the main things that investors focus on before venturing into a country is analyzing the various policies and procedures put in place so as to start a business. The time required to start a business has reduced drastically in Bulgaria which takes 23 days in the last year as compared to the 39 days in 2003. The trend is the same for Romania, Czech Republic, Hungary and Poland. This is since they joined EU. The number of documents needed to start the business have also decreased. The issuing of permit constructions is also a vital matter in setting up businesses. In Romania, the number of documents in setting up businesses has decreased while in Bulgaria and Czech Republic, construction permits are being issued rapidly. This helps in setting up new businesses.
Protecting Investors
This involves protecting the rights of the minority investors against the managers. This is a very vital issues especially with regards to International operations. The level of protecting investors in most CEE countries is usually medium or low level. In countries such as Romania Bulgaria and Poland, investors are protected with the highest level
Contract Enforcement
Various issues to do with conflicts and solving them are dependent on the legislation of a particular country. Investors therefore use this to determine whether they will venture into a particular country.
These three main aspects have been monitored after the countries joined EU. These aspects are very vital to foreign investment and have helped in the improvement of the business environment of those countries.
CONCLUSION
The three main aspects improves in the CEE after the countries joined EU. The analysis about their business environment with regards after them joining EU has shown the improvement of their business environment especially with regards to foreign investment. This has also helped the CEE countries to develop relations with other countries. It has also helped in maintain the peace amongst European countries.
