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Central/Eastern Europe: Investment Could Top $200 Billion

Washington, 31 October 1996 (RFE/RL) -- A recent paper by a senior World Bank economist says that as the nations of Central and Eastern Europe and the former Soviet Union stabilize and transform their economies to market-based systems, they can expect to see investment increase by five percent or more per year over the next decade.

Economist Zia Qureshi says that total investment in these countries "could average a little over $200 billion a year over the next 10 years (in 1997 dollars.)"

Qureshi was writing about the adequacy of the global supply of capital and asked: Is there enough to go around?

The paper concludes that there is indeed, but says the savings necessary to make enough available is not automatic.

"The greatest influence on world capital markets will be the savings in industrial countries, which account for about three-quarters of the world's total annual savings," the paper says.

"Unfortunately, the average gross savings rate in OECD (Organization for Economic Cooperation and Development) countries has fallen by about 5 percentage points of GDP (gross domestic product) since the early 1970s."

Saving in developing countries won't automatically rise to meet the need either, the paper argues, noting that institutions conducive to higher savings will be needed, underpinned by stable economies with fiscal discipline.

The paper concludes that in the end, most countries must look to domestic resources and savings to finance their increased investment. And the bank projects that real gross domestic investment in developing countries is expected to rise by about 7 percent per year from now to the year 2005.

U.S. Plans Crackdown On Thefts Of Trade Secrets

The end of the cold war led to the drastic reduction of most export controls, but economic espionage is still very much the order of the day for nations everywhere, especially in the vastly expanding global economy.

That has prompted the United States to plan a crackdown on the theft of trade secrets as well as the piracy of intellectual properties such as CDs and computer software.

A bill signed by President Bill Clinton three weeks ago received almost no notice, but institutes a major change in the American legal arsenal by making the theft or misappropriation of trade secrets or intellectual property rights a violation of federal law.

The law includes not only fines of up to $5 million on individuals and $10 million for organizations, and prison sentences of up to 15 years, but also provides for, according Clinton, "criminal forfeiture of property used in or derived from economic espionage or trade secret thefts, and preserves the confidentiality of trade secrets in court proceedings."

The ability to confiscate property from those convicted of these crimes has been a major element of the U.S. war on illegal drugs, putting millions of dollars into government coffers in recent years.

Clinton said trade secrets are "an integral part of virtually every sector of our economy and are essential to maintaining the health and competitiveness of critical industries operating in the United States." He said companies foreign and domestic have been losing "billions of dollars in lost revenues" because U.S. laws were antiquated and could not deal with modern computer theft and piracy.

The U.S. Chamber of Commerce welcomes the legislation, but says it needs to be even tougher. An executive of the chamber says it is a "good but incomplete first step" and that next year the chamber will push for a new law allowing victimized companies to recover damages in civil suits.

American Hopes To Expand ATM Network Across Region

Michael Brown, the American entrepreneur behind the Euronet BV independent network of automatic bank teller machines (ATMs) based in Warsaw, says his firm hopes to install 2,000 of the machines in Hungary, Poland and other Central European countries before the end of the century.

Brown told the "Wall Street Journal" recently that Eastern and Central Europeans still tend to buy almost everything with cash. But he said use of the ATM system -- making cash available at convenient locations around the clock, as well as allowing the direct purchase of goods at cooperating merchants -- will rise dramatically as more machines become available.

The general manager of Citibank's Hungarian retail bank, Atul Vorha, says there is already "an almighty rush into bank cards."

Euronet will have a busy four years if it hopes to achieve the goal of 2,000 machines. According to the journal, Euronet currently has only 81 ATM machines in Hungary and 19 in Poland.