Examining how the markets of the previously Communist countries are now open for trade and investment.
This paper examines American investment in most of the Soviet Union and the People’s Republic of China. The business climate in these regions is analyzed. Special focus is placed on potential investment in the pharmaceutical industry in Russia. It looks at how these markets are slowly emerging and developing from communist to capitalistic economies and the challenges facing investors.
The Russian economy has been in a transition to a Western-style capitalist country since the time of the failed coup attempt in 1991. There are actually several different types of Western capitalist country, but each of the Western models is sufficiently similar that the path taken by the Russian socialist system will clearly be in a new direction (Leitzel 1). Russia had developed a market economy which included capitalist-style behavior for as much as 25 percent of all economic activity in the pre-reform USSR, and some of this capitalist-style behavior was even legal. The legal portion was dominated by collective farm markets, and prices at these markets were more or less unregulated. Additionally, some 100,000 Soviet citizens engaged legally in small-scale crafts and trades. The remainder of the Soviet market economy was technically illegal, so it was hidden and described as the underground economy (Leitzel 27). The transition has built on both the legal and the illegal market economy.