Types of Products and Services
Types of Products and Services
Because so many products and services are in short supply within the HPEs, it is difficult to speculate where more advantages lie for Western firms. As long as all resources enter from abroad and as long as transferees are willing to wait long-term to repatriate their capital and earnings, almost any type of product and service will be welcome. However, when locally scarce resources have to be added to those brought in from abroad, HPEs will likely try to promote those projects that offer hope of economic growth, while allowing just enough expenditure on consumer goods and services to placate their consumer-products-hungry populations.
The composition of imports by HPEs from the West is an indication of their industrial emphasis. Nearly one third of imports are classified as engineering products, and the HPEs have been particularly eager to expend their resources on importing advanced machinery and equipment. From numerous examples it is obvious that HPE negotiators want to get the most advanced technology, yet they also want proven technologies. It is difficult to get both at the same time, except in mature industries where most technology transfers will probably take place. A number of Western automobile manufacturers, who see mature markets in the United States, Western Europe, and Japan, have already committed to projects in the Eastern European HPEs and in China.61
Of particular importance is the need for replacement machinery over the next several years. The HPEs have generally expanded the stock of equipment and machinery in order to bring additional workers into the labor force rather than increased the output of existing workers through the introduction of more labor-efficient machinery. There is a near consensus that HPEs have practically reached their limits of increasing output by simply adding to the work force. Because the participation rate in the work force is so high, housework activity is a real burden that falls, for cultural dictates, almost entirely on women, who are also working outside their homes. There would seem to be a market for any household appliances that would help alleviate this problem.
Aside from machinery for industrial and home use, it is anticipated that HPEs will have a greater need for agricultural machinery, especially machinery suitable for small- and medium-sized farms, and food-processing and distribution equipment. About one third of the CIS labor force is in agriculture, compared to only about 5 percent in the United States, yet the CIS farmer can feed many fewer people than the U.S. counterpart. The difference in productivity is due partly to natural geographic conditions, but the major culprit appears to be the lack of modern machinery. The HPEs also lag behind in the ability to preserve foods once they are produced. The lack of agricultural productivity also points to a continued need for Western agricultural products, particularly grains.
Traditionally, service firms such as banks and advertising agencies have followed their production clients abroad in order to provide them with the same types of services as at home and to help them in coordinating worldwide strategies. Service activities, including wholesaling and retailing, are poorly developed in HPEs. There is evidence that Western service firms are already entering HPEs to serve their Western clients' present and anticipated future needs.
Because so many products and services are in short supply within the HPEs, it is difficult to speculate where more advantages lie for Western firms. As long as all resources enter from abroad and as long as transferees are willing to wait long-term to repatriate their capital and earnings, almost any type of product and service will be welcome. However, when locally scarce resources have to be added to those brought in from abroad, HPEs will likely try to promote those projects that offer hope of economic growth, while allowing just enough expenditure on consumer goods and services to placate their consumer-products-hungry populations.
The composition of imports by HPEs from the West is an indication of their industrial emphasis. Nearly one third of imports are classified as engineering products, and the HPEs have been particularly eager to expend their resources on importing advanced machinery and equipment. From numerous examples it is obvious that HPE negotiators want to get the most advanced technology, yet they also want proven technologies. It is difficult to get both at the same time, except in mature industries where most technology transfers will probably take place. A number of Western automobile manufacturers, who see mature markets in the United States, Western Europe, and Japan, have already committed to projects in the Eastern European HPEs and in China.61
Of particular importance is the need for replacement machinery over the next several years. The HPEs have generally expanded the stock of equipment and machinery in order to bring additional workers into the labor force rather than increased the output of existing workers through the introduction of more labor-efficient machinery. There is a near consensus that HPEs have practically reached their limits of increasing output by simply adding to the work force. Because the participation rate in the work force is so high, housework activity is a real burden that falls, for cultural dictates, almost entirely on women, who are also working outside their homes. There would seem to be a market for any household appliances that would help alleviate this problem.
Aside from machinery for industrial and home use, it is anticipated that HPEs will have a greater need for agricultural machinery, especially machinery suitable for small- and medium-sized farms, and food-processing and distribution equipment. About one third of the CIS labor force is in agriculture, compared to only about 5 percent in the United States, yet the CIS farmer can feed many fewer people than the U.S. counterpart. The difference in productivity is due partly to natural geographic conditions, but the major culprit appears to be the lack of modern machinery. The HPEs also lag behind in the ability to preserve foods once they are produced. The lack of agricultural productivity also points to a continued need for Western agricultural products, particularly grains.
Traditionally, service firms such as banks and advertising agencies have followed their production clients abroad in order to provide them with the same types of services as at home and to help them in coordinating worldwide strategies. Service activities, including wholesaling and retailing, are poorly developed in HPEs. There is evidence that Western service firms are already entering HPEs to serve their Western clients' present and anticipated future needs.
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