Conference Title: International Conference in Business,Technology and Innovation 2013
Conference Title: UBT Publications
Contributing Editos: Prof. Albert Qarri, Prof. Ibrahim Krasniqi, Krenare Pireva, Evelina Bazini, Nita Abrashi
Co-Organizers: Ardian Emini, Vlora Aliu, Betim Gashi, Xhemajl Mehmeti, Kushtrim Dragusha, Murat Retkoceri, Kaltrina Bunjaku, Leonita Braha
Start Date: 2013-11-01
End Date: 2013-11-02
Venue, City, Country: : Hotel Bleart , Durres , Albania

Paper Title

Economic and financial crisis in Europe

Authors

Schari Zafarpour

Content

The financial and economic crises have a different impact on countries inside of EU and potential members in South East Europe, but it depends even on their foreign trade policy, management and real activities. The analysis of the sources of the crisis in these countries is a multiple level complex issue. This paper discuses the problem from the foreign trade point of view, which includes politics, capacities and management. Looking at the crisis situation in the different countries in Europe, those countries which have a problem with negative trade balance or weakness in export sector are the most affected. The export goods are mostly agriculture products, labour intensive products or maximum capital intensive products, which are not enough competitive on the world market. We can recognise the export problems through the low expenses for R&D, infrastructure, high education and FDI according to GDP. Cheap loans from the financial markets or financial institutions (banks, insurance companies and privates in central and northern Europe) were granted without security backup because all this countries had an economic growth. The economic growth was the one and only guarantee for these institutions. At the beginning it was a win - win business for both sides. Life standards were increased in the southern countries, people were happy to spend more money for imported products from Central and North Europe without thinking about paying back the loans. The institutions were happy to get the interest of there loan and start to speculation of an optimistic cash flow in the future. The problems started for both sides with: - Trust in the financial markets - Indebtedness according to the GDP - Competitiveness of these countries on the European market - Simple bill of the house hold - more expenses (loans) than incomes. The crisis is not homogeny; there are different roots and reasons in different countries. 1. Construction of the Euro - Integration of different kind of currencies with different economic growth and future development perspectives. - They have constructed a car, but without planning a repair shop and the necessary tools 2. Panic attack in the financial markets (Italy….) 3. No control of the bank activities (especial lending) caused bank crisis (Spain, Ireland,…) 4. Poor European corporate governance in day to day decision making processes and implementations of agreed procedures (Greece) Summarising: A one-dimensional strategy for all these countries cannot solve there different problems. They have different needs; one strategy is not suitable for all financial problems in Europe. We have to think and act in a multiple dimensional European structure. One fact is evidence for all of those countries in trouble. They have not invested the loans in the important future oriented sectors (above mentioned areas), which are the basic for export activities. The cheap loans have been invested much more in higher life standards, higher salaries in general and especially for some authorities groups (corruption tendency), and military expanses year by year. Therefore it was and is still very difficult, to pay back to loans with higher interests. The theory to save the expenses of the states and to bring the state house hold in order will not solve the financial problem in Europe. It will lead to the final crash with heavy impact on labour market and consumes (Greece, Portugal, Ireland, Spain, Slovenia, Italy….) From other hand, if we look at the countries, which came better through the crisis, they have a strong export sector with much more expenses in R&D, infrastructure, high education, labour market strategy. They have kept the salaries stable in the last 10 years, particularly in the production sectors to remain competitive on the world market (Germany, Austria, Netherlands, Sweden….). The problems in East and South East Europe in this crisis are more or less in the same framework and not a different case. Because of 1. Very fast economic growth 2. Not spreading of the relevant economic information equally in the markets. 3. No competitive productions compared with the market 4. Leak of the access to the cheap loans 5. No efficient capital market, because of the: - Selling the financial sectors (banks and insures companies) to abroad. - No efficient capital market, because of centrifugal policy - Difficult access for small and middle size companies to cheap capital for investments - Low investment in R&D, infrastructure, high educations, labour market - Leak of export/trade supporting programs by the governments. The economic growth in Europe depends basically on competitive trade activities and especially on competitive export sectors (agriculture and labour intensive, capital intensive, raw materials, services and know-how intensive sectors what ever sectors). At the same time we know, how complicate is the coordination of international business management with different levels and different tasks, which includes - International Framework - National efforts - Company condition - World market situation In spite of the diversity in Europe I wish we would be able to challenge these financial and economic crises together.


Keywords