Geographical Imaginaries of the 'New Europe' and the 'East' in a Business Context: The Case of Italian Investors in Slovakia, Romania, and Ukraine

Sellar, Christian, Journal of Cultural Geography

A large literature in cultural geography, history, and sociology has discussed the different, constantly shifting, and mutually defining constructions of 'Europe,' 'Eastern Europe,' and more recently the 'New Europe,' focusing mostly on examples from the media, politics, and sometimes the arts. However, the literature has done little to analyze the construction of notions of Europe, and the role they play, in the realm of business. This paper begins to explore the connection between cultural understandings of Europe and investment decisions. Specifically, it follows a group of investors from Italy, showing the 'cultural clashes' they encountered in setting up business operations in Slovakia, Romania, and Ukraine. The paper is developed in three steps. First, the relevant cultural and economic geographical literatures are reviewed. Second, the historical progression of Italian investment since the 1990s is discussed in relation to broader economic changes in Italy and the New Europe. Third, investors' changing perceptions of the 'New Europe' are discussed in the framework of the consolidation of Italian investments in the region.

Keywords: cultural geography; economic geography; New Europe; foreign direct investment; cultural economy

Introduction

'Europe' is variously imagined and contested. In the literature, constructions of Europe as Western, efficient, and advanced are often found in opposition to the 'East' or 'Eastern Europe'--less advanced, violent, but also in the process of becoming like the West (Wolff 1994; Todorova 1997; Neumann 1999). However, the literature has done little to consider the construction of such notions of Europe in the minds of key economic actors.

Business decision making, especially in the realms of foreign direct investment and the internationalization of production, is an important--but unexplored--arena in which the notion of Europe is currently being re-imagined. In the 20 years following the fall of the Berlin Wall some have renamed 'Eastern Europe' as 'New Europe.' The new term is often used to identify the willingness of former Eastern European governments and the public to embrace a new, 'European' and capitalist identity. Economic actors are central in the reconfiguration of Europe: the Copenhagen Criteria establish the "existence of a functioning market economy and the capacity to cope with competitive pressure" as a precondition for European Union (EU) membership (EU no date a). In practice, EU-led market reforms consisted of the adoption of a neoliberal model across the region: low corporate taxes, low state spending and improved law enforcement. As a consequence of those reforms, all countries in the New Europe adopted development models based upon the attraction of foreign direct investment (FDI) (Bandelj 2008).

If neoliberal reforms targeted foreign investors as key agents of change in the New Europe, and 'Eastern Europe' itself is currently being dynamically re-imagined, how do investors' changing perceptions of the 'East' affect business decisions? How is the cumulative activity of investors shaping the various imaginations of Europe? This paper explores how various imaginings of 'Europe' contributed to the 'cultural clashes' encountered in setting up and managing business operations by 'Westerners' in the 'East.' To do so, it follows one specific group of foreign investors--Italian textile and clothing manufacturers, plus some of the Italian banks and business services that support them--in their historical and geographical process of expansion into Slovakia, Romania, and Ukraine.

The paper develops a three-step argument. First, the relevant cultural and economic geographical literatures are reviewed. Second, the historical progression of Italian investment since the 1990s is outlined relative to broader economic changes in Italy and the New Europe. Third, investors' perception of the 'New Europe' is analyzed in the context of a) the consolidation of Italian investments in the region and b) the relation between cultural and institutional change.

The paper builds upon the concept of 'nesting Orientalisms' to explain the initial cultural clashes encountered in setting up and managing investments into the region, the progressive assimilation of parts of the region as 'Europe,' and the reproduction of similar clashes in the more recent round of investment into the Ukraine. 'Nesting Orientalisms' means the practice, common in the identity discourses of most formerly socialist European countries, of defining their own Eastern borders as "the Eastern border of Europe" (Kuus 2004, p. 479). In its original formulation, nesting Orientalism identified the practice of each Central Eastern European group of orientalizing its Eastern others. Later, Merje Kuus used it in a more dynamic way, to argue that the 'East' shifts according to point of view and time (Kuus 2004). This paper uses the latter conceptualization of nesting Orientalism to show that Italian investors' stereotypes of the 'East' have shifted over time and space.

Nesting Orientalisms, Balkanism, and the East as 'internal Other'

Milica Bakic-Hayden (1995, p. 917) developed the concept of 'nesting orientalisms' as part of a broader theoretical analysis of the ways in which 'Europe' and 'Eastern Europe' have been imagined and constructed in opposition to each other. Such literature (Wolff 1994; Todorova 1997; Neumann 1999) sheds light on some of the contradictions inherent in the practice of EU enlargement vs. its rhetoric of democracy and equality. EU 'deepening' has been an attempt to create an 'even space' of institutional, legislative and infrastructural common ground among the member states, aimed at promoting a better functioning market economy while preserving cultural diversity. EU 'widening' has extended such an 'even space' to the new members (EU no date b).

The EU has exerted a fundamental influence on the New Europe through its enlargement. The two latest phases of enlargement in 2004 and 2007 included ten former socialist countries of Central and Eastern Europe. As a part of this process, the candidate countries received significant resources from the EU to help them meet the accession criteria (EU no date c). To qualify for these resources, the EU created a new conditionality process, which was particularly effective in "tipping the political scale in favor of reforms" (Vachudova 2005, p. 7).

The new criteria and process of EU enlargement built upon old assumptions and cultural understandings. Cultural geographers have pointed out that "The notion that Eastern Europe needs advice from Europe predates the current round of EU enlargement" (Kuus 2004, p. 474). Since the eighteenth century, Western European travelers and intellectuals portrayed Eastern Europe as geographically belonging to Europe, but still in the process of becoming European (Wolff 1994). General processes of identity formation explain how the perception of Eastern Europe as 'the Other within' Europe has been reproduced over time. Western European cultural and political elites defined 'Europe' against lesser 'Others,' thus constructing the 'mystic' India, the 'savage' Africa, and the backward--but still redeemable--Eastern Europe. (2) In order to define itself as 'civilized,' Western Europe needed the 'barbarian' Eastern Europe (Bakic-Hayden 1995, p. 918).

This process of essentializing Eastern Europe has had several negative consequences. Maria Todorova analyzed how a geographical area--the Balkans--has become "one of the most pejorative designations in history, political science, international relations" (1997, p. 7). Building upon--and differentiating from--Said's Orientalism, Todorova argued that Western Europe constructed the Balkans as "the dark side within," a "repository of negative characteristics against which a positive and self congratulatory image of Europe and the West has been constructed" (p. 188). Similarly, Iver Neumann (1999, p. 207) concluded that the 'East' has become a "generalized social marker of European identity formation". However, 'East' is also a highly flexible marker, "cut loose from its geographical point of reference" (p. 207). As such, it became a rather generic term, without precise boundaries.

Thus, over time 'Eastern Europe' has become the repository of connotations and characteristics not necessarily linked with specific geographical areas. Nesting Orientalisms is a consequence of this flexibility of the 'dark side of Europe.' Bakic-Hayden used this construct to analyze national stereotypes in the former Yugoslavia, where "the designation of other has been appropriated and manipulated by those who have themselves been designated as such in orientalist discourse" (1995, p. 922). She described a system of stereotypes, where Western Europeans saw Yugoslavia as part of the Balkans (and thus 'Other') and …

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Publication information: Article title: Geographical Imaginaries of the 'New Europe' and the 'East' in a Business Context: The Case of Italian Investors in Slovakia, Romania, and Ukraine. Contributors: Sellar, Christian - Author. Journal title: Journal of Cultural Geography. Volume: 26. Issue: 3 Publication date: October 2009. Page number: 327+. © 2008 JCG Press. COPYRIGHT 2009 Gale Group.

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