Trends in East-West Industrial Cooperation
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Carleton University, Ottawa
of East-WestindustrialcooperaAbstract. Thisessay reviewsbrieflythe nature and forms tion, its evolutionduringthe 1970s,and then assessesthe outlookforthe 1980s.Inparticular, the analysis seeks to determinewhat effects the worseningeconomic and political climate forcooperationmayhave hadon its developmentin thelatter halfof the 1970s. The analysis drawson the author'sown research as well as on theworkof others inAmerica and Europe. * One of the most innovative features of the expansion of relations between the INTRODUCTION developed market economies of Western Europe, North America, and Japan, and the planned economies of Eastern Europe and the Soviet Union has been the emergence of new microeconomic relationships. These have linked Eastern state agencies and Western firms (public and private) in a variety of forms of cooperation in the spheres of industrial development, production, marketing, and research. Under the rubric of "East-West industrial cooperation" (hereafter EWIC),these linkages have attracted widespread attention.1 The evolution at the enterprise level of these novel relationships has paralleled roughly the recent course of East-West trade. Both began to take off in the second half of the 1960s, expanded rapidly in the early 1970s, and encountered adverse economic and political conditions after 1975. The purpose of this paper is to survey the state of EWIC on the threshold of the 1980s. After analyzing past trends in EWIC,some conclusions may be inferred about the prospects for its further development. The emphasis will be on EWICas an institutional innovation in East-West relations. A full-scale assessment of the economic effects of so broad a set of relationships is well beyond the scope of this essay. Before examining what trends may be established on the basis of the available empirical evidence, some fundamental questions must be asked regarding the nature of industrial cooperation in the East-West context. This short introductory review draws on the small body of theoretical literature, which has emerged on the subject, to convey the present state of conceptual understanding of the phenomenon. Whereas governments have concluded EWICagreements, they have intended to establish the macroeconomic conditions for cooperation. The essence of EWIC is to be found at the level of the enterprise, where designated operations are coordinated internationally under the aegis of inter-firm contracts.These establish relationships whereby individual producers, based in East and West, commit resources and coordinate their use in the pursuit of complementary objectives. By
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*Professor McMillanspecializes in the foreign economic relations of the planned economies. He is the coauthor of Joint Ventures in Eastern Europe:A Three CountryComparison [1974] and has edited two volumes on East-West business, Changing Perspectives in EastWest Commerce [1974] and Partners in East-West Economic Relations: The Determinants of Choice [1980, coeditor]. Prof
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