Vol. 3 (2) 2006 Vol. 3 (2) 2006 • UDK 33 • ISSN 1820-4570 Content Economic policy and development 5-58 Economy of regions 59-138 Global economy 139-180 Business operations, analysis and planning 181-250 Management and marketing 251-264 Book reviews 265-287 The international review review megatrend of applied economics megatrend review Megatrend University, Belgrade Megatrend Review The international review of applied economics Vol. 3 (2) 2006 Megatrend University, Belgrade Megatrend Review The international review of applied economics Vol. 3 (2) 2006 For publisher: Published by: Nevenka Trifunović Megatrend University Publishing director: Dragan Karanović Editorial board: Editorial staff Professor Mića Jovanović, PhD, President Professor Jean Jacques Chanaron, PhD Editor-in-chief and revisor: Professor Wolfgang Jahnke, PhD Professor Dragana Gnjatović, PhD Professor Momčilo Milisavljević, PhD Visiting editor: Professor Momčilo Živković, PhD Professor Mirko Kulić, PhD Professor Vladimir Prvulović, PhD Professor Oskar Kovač, PhD Members: Professor Veljko Spasić, PhD Professor Galen Amstutz, PhD Professor Aleksandar Ivanc, PhD Professor Jean Jacques Chanaron, PhD Professor Zoran Bingulac, PhD Professor András Hernádi, PhD Professor Slavoljub Vukićević, PhD Professor Maria de Monserat Llairó, PhD Professor Mirko Kulić, PhD Professor Laura Ruis Jimenez, PhD Professor Milivoje Pavlović, PhD Professor Darko Marinković, PhD Professor Srbobran Branković, PhD Professor Vladimir Grbić, PhD Professor Slobodan Kotlica, PhD Professor Beba Rakić, PhD Professor Slobodan Pajović, PhD Professor Dušan Joksimović, PhD Professor Dragan Kostić, PhD Professor Gordana Komazec, PhD Professor Ðorđe Kadijević, PhD Assistant Professor Biljana Stojanović, PhD Professor Jelena Bošković, PhD Assistant Professor Vesna Aleksić, PhD Assistant Professor Vesna Milanović-Golubović, PhD Assistant Professor Tomislav Obradović, PhD Assistant Professor Dobrinka Veljković, PhD Assistant Professor Ana Langović, PhD ISSN 1820-4570 Ksenija Maltez, M. A. UDK 33 Secretary & Serbian language editor: Irina Milutinović The review is published twice a year in Serbian and twice a year in English language. English translation: Boška Agbaba All papers have been reviewed. Technical editor: Adress: Tatjana Stojković Megatrend Review Obilićev venac 12, 11000 Belgrade, Cover design: Serbia & Montenegro Milenko Kusurović Tel: +381 11 32 86 730, ext. 931; Fax: +381 11 32 86 747 e-mail: [email protected] [email protected] 3 CONTENTS ECONOMIC POLICY AND D E V E LOPM E NT Professor Roumen Avramov, PhD THE BULGARIAN NATIONAL BANK IN A HISTORICAL PERSPECTIVE: SHAPING AN INSTITUTION, SEARCHING FOR A MONETARY STANDARD 5 Professor Milan R. Milanović, PhD THE RESEARCH OF THE SERBIAN AGRARIAN-DEVELOPMENT POSITION IN EUROPE 23 Assistant Doctor Jure Gašparič, PhD INTEGRATION OF THE TERRITORIES OF SLOVENIA AND SLOVAKIA INTO THE ECONOMY OF NEWLY FORMED STATES AFTER THE BREAK UP OF AUSTRIA-HUNGARY 41 ECONOMY OF R E GIONS Professor Blagoje Babić, PhD DOUBTS OVER JAPANESE “ECONOMIC MIRACLE” 59 Assistant Professor Biljana Prlja, PhD ECONOMIC GROWTH AND “TWIN DEFICITS” IN THE UNITED STATES OF AMERICA: COULD THE SAD ENDING BE ESCAPED? 95 Professor Jana Lenghardtová, PhD INTERCULTURAL COMMUNICATION IN INTERNATIONAL ECONOMIC RELATIONS – THE EXPERIENCE OF SLOVAKIA WITH LATIN AMERICA 111 GLOBAL E CONOMY Assistant Professor Ivica Đorđević, PhD GLOBALISATION AND ECONOMIC UNDERDEVELOPMENT 139 Predrag Gavrilović, PhD ECONOMIC DIPLOMACY IN THE CONDITIONS OF GLOBALISATION: COMPARATIVE ANALYSIS 161 Megatrend Review, vol. 3 (2) 2006 4 Content BUSIN E SS OP E RATIONS , ANALYSIS AND PLANNING Professor Nataša Cvetković, PhD RESTRUCTURING – KEY TO A COMPANY’S RECOVERY IN IMPERFECT MARKET ECONOMY CONDITIONS 181 Professor Slavoljub Vukićević, PhD BUSINESS MORALS AND CONSCIENCE IN COMMERCIAL CONTRACTS 197 Assistant Professor Biljana Petrović, PhD LIABILITY FOR DAMAGES INCURRED BY DEFECTIVE MERCHANDISE IN THE EUROPEAN UNION LEGISLATION 211 Dragan Č. Kostić, M.A. FREE ZONES – TOOLS FOR THE EMPLOYMENT GROWTH OF THE ECONOMY OF SERBIA – 225 MANAG E M E NT AND MARK E TING Assistant Professor Vesna Milanović-Golubović, PhD MARKETING APPROACH IN HEALTH CARE 251 BOOK R E VI E WS Professor Oskar Kovač, PhD Professor Momčilo Živković, PhD ONE HUNDRED YEARS OF COPPER PRODUCTION IN BOR 265 Katarina Zakić THE IMPORTANCE OF BUSINESS CULTURE 269 Professor Vesna Đukić-Dojčinović, PhD MARKETING IN ARTS – WE CREATE KNOWLEDGE AND (OR) KNOWLEDGE CREATES US 277 Dragana Novaković, M.A. DEMYSTIFICATION OF GLOBAL ECONOMY TERMS 283 Megatrend Review, vol. 3 (2) 2006 Professor Roumen Avramov, PhD 5 Original scientific paper UDK 336.711(497.2)(091) Received: August 22nd, 2006 Professor Roumen Avramov, PhD Centre for Liberal Strategies, Sofia, Bulgaria THE BULGARIAN NATIONAL BANK IN A HISTORICAL PERSPECTIVE: SHAPING AN INSTITUTION, SEARCHING FOR A MONETARY STANDARD∗ Abstract: The Bulgarian National Bank (BNB) was established in January 1879. It was among the first institutions of the freshly created Principality of Bul- garia – a virtually independent tributary of the Ottoman Empire that emerged from the 1877-1878 Russo-Turkish war. Initially, the BNB was deprived from the privilege of issuing banknotes. This right was granted to it in 1885, transforming the institution into one of the first ten proto-Central banks worldwide. The BNB has played a pivotal role throughout modern Bulgarian history. It is a key for understanding the philosophy of national economic development. The bank has mastered the capitalization of important segments of the economy and it shaped the fundamental relationship between the economy and the State. Moreover, the BNB has set important behavioral standards, thus molding the financial cul- ture of the nation. It has also established patterns in the accountability and the transparency of the financial system. The National bank has been a first-order producer of economic data and (incidentally) of economic knowledge. The aim of this article is to outline a brief sketch of BNB historical development. The focal perspective is on its role in the choice and implementation of the monetary regime. BNB institutional arrangement is discussed, as well. Key words: Bulgarian National Bank, monetary regime, institutional arran- gement * Paper presented at the First General Meeting of the South East Europe Monetary History Network, organized by Bulgarian National Bank, Sofia, April, 13-14, 2006. R. Avramov, S. Pamuk, Eds.: Monetary and Fiscal Policies in South-East Europe. A historical and Comparative Perspective, Conference Proceedings, Bulgarian National Bank, Sofia, 2006 Megatrend Review, vol. 3 (2) 2006 6 The Bulgarian National Bank in a Historical Perspective 1. The Bulgarian National Bank: Shaping an Institution 1.1. The “impossible institution” By definition, a Bank of Issue tries to manage an unmanageable “original sin”: it receives a monopolistic privilege in exchange of services provided to the Government. Thus, having access to the credit of the bank and to its seignorage, the Government is provided with immediate solution to short-term emergency problems. The Bank, in turn, develops a specific dependence and a “financial Oedipus complex” vis-à-vis the State. The conflict of interest is inherent, its tackling being a matter of economic culture. Two key questions are addressed: How to deal with conventions? How to avoid violation of the frail balance? The two sides are not symmetrical. Crucial to monetary stability and the ulti- mate force behind money supply is a decent fiscal stance. No issuing policy going straight against the fundamentals of State financial targets is feasible. The Bank of Issue lacks the instruments to enforce such a fully autonomous line. Monetary policy can be constrained only when fiscal policy is credibly constrained. Transgression of specific breaking points puts at risk the stability of the established monetary standard. History of the BNB (as of many Central banks) boils down to the account of this conflict. 1.2. Private versus public / Dependent versus Autonomous Bank Checks and balances have been put in place in order to safeguard against the abuses of the State. They included self-constraints accepted by the Government; spontaneous devices implemented by the Bank; a more sophisticated set of con- ventions. The prevailing view at the end of the 19th century was, however, that a private Bank of Issue whose credit is separated from the credit of the State is the best warranty. At the time the BNB was established, several heavily regulated private issuing institutions were operating across Europe. Only in a few coun- tries “free money” was the rule. State-owned Banks of Issue were the exception, with the Bank of Russia being a well-known example. In other instances – such as Greece – the issuing authority was de facto dependent from the Government. The 1879 design provided by the occupation forces followed the Russian pattern of a state-owned deposit/merchant bank for commercial credit. Later on, a series of reform projects (1879-1885) were inspired by the Belgian, the Romanian and the Greek models. Bulgarian politicians resorted to institutio- nal plagiarism, and to a “copy/paste” approach, introducing into the blueprints eclecticism and baroque promiscuity of different banking cultures. Taking into account that the Romanian and the Greek banks were themselves inspi- red by Western models, the reforms of BNB followed a Byzantine institutional path that incorporated direct