Central European Transition and the Development of Finance

The contemporary global economy appears to be structured around the relationships established between countries with strong foreign exchange balances and low domestic indebtedness, like China, and countries with high foreign exchange deficits and high domestic indebtedness, like the United States. Those countries undergoing a major structural crisis and a « transitional » period which follows, when they once again achieve positive growth generally conserve, at least for a while, a significant foreign deficit, compensated for, it is true, by stimulating domestic demand by grace of foreign loans and direct foreign investment. In a given country, the nature of this FDI, along with development of the financial sector, to a more or less great degree, are going to contribute in large measure to putting the country in a surplus position, or, on the contrary, in a deficit position vis-à-vis its foreign trade.