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Starting a business in Eastern Europe

Jul 14 2006

Eastern Europe has undergone, and is still undergoing, many substantial changes, which are altering the economic landscape. Would-be entrepreneurs should investigate the area to see if any lucrative business opportunities are arising.

According to the European Bank for Reconstruction and Development (EBRD), there are currently fewer business constraints on companies across the region and in the former soviet bloc than at any time since the start of the ‘transition’ process 15 years ago.

The EBRD, the largest single investor there, owned by 60 countries and two intergovernmental institutions, is currently planning to narrow its investment focus in the eight countries that joined the European Union in 2004. Dubbed the EU-8, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovenia and Slovakia are expected to be stable enough by 2010 for the EBRD to shift its focus towards less balanced economies to the south and east, such as Moldova, the poorest county in Europe.

Foreign investment in the EU-8 has gone from zero to nearly €200 billion over the past 15 years and in the current climate, economic growth across the transition countries remains strong at 5.6 per cent in 2005, outperforming many world regions.

However, despite booming economies high unemployment remains in transition countries. According to the EBRDs Transition Report Update published in May, ‘as the region integrates into the world economy, it becomes more vulnerable to global economic trends’. The report warns that a further cooling of investor interest in emerging markets may put pressure on countries with ‘wide macroeconomic imbalances and high debt levels’. It also identifies political risks in parts of southeastern Europe and the Commonwealth of Independent States (CIS).

For further information and analysis of the regions economic condition, visit the EBRD website at www.edrb.com. Fact sheets on eastern European countries can also be found at the UK Trade & Invest website giving information about trading and investing in the region and with non-EU countries

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