America, Germany, and Hungary: A New Relationship

With the US Presidential Election coming up, along with so many other uncertainties, it is important now more than ever to look to what the future may hold. Those with insight towards a future that is still internationally connected increasingly important.

Interesting times bring continuous changes which in turn affect national linkages and alliances. A pre-eminent example is the relationship between the U.S., Germany, and Hungary.

Take the German domestic diversity. By comparison with the United States, Germans have had very limited exposure to Africans. Only after major migration waves does diversity permeate society more – yet there is very little official activity providing support to People of Color.

Take the use of words: the term ‘race’ in the German Constitution is seen, after more than 70 years, as troublesome, since it tends to imply discrimination. A substitution of the term is part of a major national debate instead of an ongoing threat from the Coronavirus. 

Of concern to the reader is the lack of public German encouragement for the “pursuit of happiness.” This admonition which is so aptly reflected in the American Declaration of Independence is of major significance. Citizens of Germany should acknowledge and accept   that directions for a citizen’s life path should not only consist of admonitions to work, but also include the opportunity for enjoyment, which the U.S. has in its “pursuit of happiness,” encoded in its Declaration of Independence. 

The U.S. has problems, some of them major ones. In consequence, Europeans, particularly Germans, hasten to draw conclusions about European superiority. The jocular aspects are so profound that, as one can discover, there is not even room for debate. The U.S. (and its President, government, policies, and ambassador) are said to be just plain wrong, that’s all there is to it – from a European, and particularly German perspective.

Statements about U.S. policy makes life disconcerted. For example,  President Trump announced the withdrawal of U.S. troops from Germany. Why exuberantly protect Germany with U.S. forces when a long promised 2 percent German contribution to its military budgets had not been delivered? There was an uproar in Germany designating Americans as derogatory merchants only preoccupied with money. No comparison was made to much earlier visits by  Ronald Reagan’s Secretary of the Treasury Jim Baker who, tin cup in hand traversed Europe with the slogan “feed, fund or fight,” thus stressing participation while giving every ally viable options. Even less was mentioned about commitments made and or kept. Nothing was heard about the fact that military payment of 2 percent of GDP represents an investment, not some wild and senseless expenditure.    

Fascinating are the intra-European comparisons of nations, many of which have found their orbit around Germany. Concessions in one field then trigger sacrifices in another. For example, in many German rankings, Poland is relatively low. However, their help in bringing in the German asparagus harvest works as an important redeeming factor. For many Germans the import of agricultural products has tended to be unimportant. However, after the renewed Covid-19 outburst in their key domestic butchering plant, procurement from abroad suddenly gained important priority. 

How do  these changes refurbish internal alliances? My bets are on Hungary. That country has, more often than not, hit rock bottom due to invasions but has always recouped, even though it sometimes did take much time. Some controversies surrounding Hungary exist.  Just the other day I overheard a German parliamentarian comment,  warning that some legislation would lead to Hungarian conditions in Germany. That did not appear in the friendly way of consuming kolbasz, Tokaji wine, or palinka, but rather a derogatory statement. Amazing it is, in light of many Hungarian Nobel prizes, toy, and machinery production. Also, one might not forget the 1989 opening of the Hungarian border to Germans by the Hungarian Foreign Secretary Gyula Horn who effectively set the stage for German unification.       

Hungarians have always in history experienced the friction of being caught  between East and West. Going back to the hordes of Mongols,  Huns, and even Austrians, the country has been decimated. Nonetheless, there was consistency in Hungary’s desire to adhere to the West of Europe. Nowadays, Hungary takes on repeated leadership positions when it comes to policy design and implementation. Itss management of immigration flows has, over time, been adapted by other European nations. Its acceptance of marketing principles for its society leaves much  room for other Europeans to learn. The pricing policies of stores and services continue to be reasonable. But whenever Hungary initiates an innovation, the rest of Europe claims to suffer. Credit for Hungarian progress is only rarely given. Almost similar to the United States now. 

 Over time, relationships change for both internal and external easons. Take the US/UK relations which were always categorized as a special linkage between the two countries. Yet, the relationship is not quite the same anymore, particularly since Britain has left the European Union. Germany has its own set of problems. Many of its policies no longer reflect a firm economic and policy friendship with the U.S. If Trump wins the upcoming election, and it results in a restructuring of U.S. alliances, my conclusion for Europe is a special relationship between the U.S. and Hungary. When relationships between nations have more to offer each other, they will result in actions that strengthen each nation’s competitiveness. 

This article was featured in the Sri Lanka Guardian and the Voice of Vienna.

Professor Michael Czinkota teaches International Business and Trade at Georgetown University. He has served as the U.S. Deputy Assistant Secretary of Commerce. His most recent textbook is International Business 9th edition. Professor Czinkota can be reached at czinkotm@georgetown.edu

“For Latin America and the Caribbean, an Age of Anxiety” by Jerry Haar

Published in the Miami Herald (January 18th, 2019), “For Latin America and the Carribean, an Age of Anxiety” discusses the economic outlook for the Americas.

For Latin American and the Caribbean, an Age of Anxiety
by Jerry Haar
January 18th, 2019

In 1947, the famous British poet W.H. Auden penned “The Age of Anxiety”. This moniker is an apt description of the economic (not to mention psychosocial) environment in which we find ourselves today. The stock market tanks 600 points in one day then recovers by the same amount the next. Populist politicians make bizarre and absurd pronouncements that freak out the investment community, and consumers try to grapple with a merry go round of mixed signals and conflicting economic statistics.

The global economic outlook, in general, is not rosy, to say the least. Anemic growth in the U.S., Europe and Japan will be exacerbated by worsening trade terms, declining capital flows, illiberal protectionist policies and an appreciating dollar. The economic environment for Latin America and the Caribbean region in 2019 will be characterized by increasing uncertainty, medium-term risks, and a recovery characterized by ebbs and flows. Excluding Venezuela, GDP is projected at 2.3% vs. 3.7% for the world.

Four trends or factors will impact both the local and multinational business communities in the region in the new year:

  1. Interest rates and economic performance in industrialized nations. Taking a queue from the U.S. Federal Reserve, the European Central Bank, and other central banks, are expected to raise rates, although the percentage hikes and timing are uncertain. Such moves will increase business and consumer borrowing rates in an environment where trade and investment flows to the region from the U.S., Canada and Europe, in particular, have been slowing for the last few years.
  2. Falling demand from Asia for the region’s commodities. Despite healthy projected growth rates of China (6.2%) and India (7.3%), there will be declines in commodity purchases such as soybeans, corn, sugar, iron ore, and mineral fuels, as a result in slowing growth in the Asian region. Brazil, Argentina, Chile, Peru, Ecuador and Colombia will be impacted by this contraction.
  3. Domestic demand from lower/middle classes. The proliferation of credit, relatively low inflation rates, and major gains in poverty reduction in the region have catalyzed consumer purchasing at all income levels, especially the lower and lower-middle classes. Credit cards, e-commerce, and online lending by non-bank institutions have significantly fueled domestic demand for goods and services.
  4. Technology proliferation. Businesses of all sizes, national and multinational, will continue to harness technology—by necessity as much as choice—to improve efficiency and productivity, gather market information, enhance customer service, and expand their business. Artificial intelligence, blockchain, and a myriad of customized software are key features of this continuing technology wave where not only large providers such as Microsoft, Hewlett-Packard, and SAP service a wide range of industries, but small and medium-size firms and start-ups proliferate, as well.

Given this environment, the challenges that businesses will face in 2019 are numerous. These include greater competition from China, possible recessions in Europe and the U.S., and issues of intellectual property protection and data privacy, witness the recent Facebook debacle. For smaller firms and consumers, wider access to financing (especially for suppliers) is still daunting despite market improvements in financial access in recent years. Firms that are commodity producers will find the global business environment especially challenging. Finally, for firms of all sizes workforce availability and readiness are significant daunting hindrances. Latin America underperforms vis-à-vis nations with similar levels of GDP and education spending. The region spends more per capita than Asia but with poor results. Talent attraction and retention are no easy feats to say the least.

Despite the challenges elucidates above, microeconomics will trump macroeconomics in the new year. As previously mentioned, the growing demand in internal markets by both business and consumers, across a range of socioeconomic classes, means that a slow-down is not anywhere near a shutdown. Goods and services with that are heavily technology-based have a bright future, as technology is harnessed to boost productivity and accountability to both shareholders and customers. And with few exceptions (Venezuela, in particular) pro-market environments characterized by neoliberal economic policies will ensure a favorable playing field.

The current global environment may be described as one of volatile stability or stable volatility (witness the roller coaster performance of equity markets in recent weeks). This new age of anxiety we have entered will be with us through 2019. Astute investors, well-managed and agile firms, and savvy consumers should be able to successfully negotiate through the challenging times before us.

Jerry Haar is a professor in the College of Business at Florida International University as well as a Global Fellow of the Woodrow Wilson Center in Washington, D.C.

Great Things Can Happen and Not Just for America

When President Trump attended the G20 meeting in Hamburg, Germany, the aspects publicly reported were mainly uncontrolled demonstrators, burning Porsche cars and police at the end of their rope. Few benefits were attributed to the meeting. That is incorrect.

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Episode 22: Getting and Keeping the International Job

In this segment of “Thoughts on International Business, Marketing, and Strategy,” Professor Michael Czinkota of Georgetown University’s McDonough School of Business is joined by Paul Kollmer-Dorsey, international attorney. They discuss the new, changing globalized job market and converging international attitudes.