Top Economic Trends of the 1990s

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Top Economic Trends Of the 1990s

For years, management decisions have been based on such tried-and-true factors as demand, inflation, and interest and exchange rates. These economic influences are familiar - American managers understand them. But in the '90s, management decisions will also be affected by a number of new factors: European union, new markets in Eastern Europe, erosion of U.S. technological predominance, new financial instruments, potential trade wars, radical changes in the Soviet Union and the speed of scientific innovation. These are only the most obvious new factors; there are many more.

Because of these influences, an economic forecast for 1990 needs to weigh the mix of economic, political and technological change. 1990 is a pivotal year. Many exciting changes are already occurring that will forever affect how business is conducted all over the world. In fact, the year 1990 begins the transition to a new millennium, as the international marketplace eliminates trading barriers and forges new global bonds.

To understand these changes, Management Review asked four leading business strategists to discuss the range of politico-economic influences that will shape the business climate of the early 1990s. This special section has been organized by Derek Leebaert, a managing director of Future Technology Inc., a Washington, D.C.-based business and defense systems integration company.

Our contributors' insights result from diverse experiences in business, academia and government. Before joining Future Tech, Dr. Leebaert was chief economist of CBEMA, the Computer and Business Equipment Manufacturers Association. He also teaches international business at American University's Graduate School of Business Administration. Dr. Everett Ehrlich is vice president, economic analysis of Unisys Corp., the third largest U.S. computer manufacturer. He was previously assistant director of the Congressional Budget Office. Jeffrey Bellin is the president of Meridian Investments, a private Washington D.C. and Boston firm engaged in venture capital, acquisitions and leveraged buyout transactions. He has also been a director of finance and administration, as well as a regional controller, for Northern Telecom. Dr. Gregory Treverton is senior fellow and director, Europe/ America Project, of the New York-based Council on Foreign Relations. For six years, he was on the faculty of Harvard University's Kennedy School of Government, and he has been a staff member specializing in Western Europe at the National Security Council.

The results, we believe, provide a comprehensive outlook on the emerging business environment - an outlook that can no longer be the province of economists alone. Instead, it must be enhanced by views from manufacturing, finance, international policy planners and the battlefield of technological competition.

Derek Leebaert

Future Technology Inc.

First, the internationalization of the large corporation will be a pivotal development of the early 1990s. Internationalization will expand beyond the service industries. National airlines as well as chemical and steel companies are irrational in societies that aren't directed by a model of reoccurring future wars.

Second, the interconnectedness of global finance was underlined dramatically by the October 1989 stock wobble. Stock markets dropped four to 10 percent and started recovering at the same rate as a ripple effect went around the world. Such connectedness may be even more evident in the growing number of cross-border mergers.

Third, the most competitive nations in the 1990s will be those that can best mobilize talent. Technological rivalry becomes rivalry for talent. And the advantage may ultimately lie with China (where the effect of even an inefficient mobilization would be staggering) as well as with the Subcontinent rather than with the United States of Japan. Readiness by the banks to write off foreign debts reflects despair over Third World societies; yet individual Third World talent, whether mobilized in place or overseas, holds vast potential - especially in the information era. …