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1994 has been a year littered with various ups and downs ui social, political and economic spheres all over the world It has seen the economically advanced coun tries of the West practically falling over one another In currying favour with the so-called Third World countries Considerations on market economy are in the forefront of thoughts in government as well as business circles everywhere. Now that there are only a few days left of 1994. it is time look back at the major events of the year in the sphere of business and. economic life. With these two moot questions. What has happened to the world economy in 1994? What have been the highest and lows erf the business year?

Weil, the experts agree that it has been an Interesting year, to say the lest, when some important trends came to the surface. To put it briefly, this has been a year when the global economy took a big step forward into a new era of freer trade, less regulation and greater competition. But as the year draws to an end. a few Influential voices have began to question the path that has been chosen and express con cem about where it will all end up. So we may perhaps rephrase the two moot questions more simply thus: How well or badly did- the world do in 1994? Did the world get richer or poorer?

One point of view is. it has been a marvellous year — one of the greatest years of economic success since the Second World war. What we have seen worldwide is an economic recovery in the In dustrial world, with very low inflation. This trend has taken hold almost everywhere, ex cept perhaps Japan. The bal- ' ance of payments Of most countries are not out of joint. The economies of the Far East have continued to boom. There has been a recovery and a restoration of economic growth In Latin America and in Eastern Europe things are still improving There are. of course, some areas where things are not doing so well. Sub-Saharan Africa remains a very difficult area and In Russia there are troubles. Bui the world has not seen such a level of economic growth combined with low inflation in many a ^^Let us attempt to analyse some of the more salieni aspects of 1994 In the light of the mgjor events in world

economy and business rhe is sue of the year was free trace After seven years of laborious negotiations over one hundred and twenty countries finally signed a new world trade agreement that is expected to open up markets and Increase competition, and hopefully, boost prosperity. The so-called Uruguay Round — because the negotiations started In the Uruguay capital Montevideo in 1987 — of GATT (the General Agreement on Tariffs and Trade) was concluded In the Moroccan city of Marrakesh on 15th April. All those who had participated in the negotiations were enthusiastic about the prospects that the agree ment seemed to open up. And their euphoric mood was re fleeted in the comments niadt by Peter Sutherland, the Director General of GATT, in a BBC interview. When asked how he felt about the new

GATT agreement, he said: Tm tempted to answer that by doing an Irish jig (folk dance) on the table and that would probably be indicative of the way I fell about the conclusion of the (Uruguay) Round. That Is not to say there are not enormous challenges ahead. But I think that a very positive step for ward has been taken here In Marrakesh.'

How far has this euphoria been justified in the events that have taken place in the months that followed? It has got to be admitted that the negotiations were among the most arduous and complicated ever conducted for an international agreement. In spite of the thousands of hours put In by GATT directors and national representatives over seven years of meetings and discussions. the deal looked balanced on a knife edge tfk the very end. The final cliff-hanger was over disagreements between the United States and the European Union — and in par ticuiar. fhe French — over farm subsidy levels. The crossing of that hurdle actually paved the way for the signing ceremony in Marrakesh In April And the addition in the deal of the ef fects of economies of scale and Improved conditions of com petition suggested that global Income In the year 2005 might be more than 500 billion dollars higher than It would have been without the market open Ing agreed to In the Uruguay Round Yet the changes that will ultimately result front I he GATT agreement are likely to

be painful for some. Farmers in the rich countries will receive lower subsidies. There may be downward pressure on wages in some developing countries as a result tof increased exposure to competition Some of those who saw their own standard of living threatened by GATT took to the streets. Angry fanners staged public demonstrations In France, and In India just a week before the signing ceremony there were huge protest rallies in New Delhi? Police had to use tear gas to disperse the demonstrators assembling outside the Indian Parliament.

Even as the GATT agreement looked signed and sealed, another last-minute threat emerged in the shape of a new Republican-dominated Congress in the Untied States with strongly Protectionist interests. The GATT deal has to be ratified in each country, and

in the US that means It has to be passed by Congress. The debate and crucial vote was scheduled for 1st December.

The year began with the North American Free Trade Area coming into being. This creates a huge open market In North America involving the US. Canada and Mexico. And in November a meeting of eighteen Asta/Pacific countries in Indonesia agreed to work towards a free trade zone — the world's largest — by the second decade of the next century. The signing of the APEC (Asia Pacific Economic Co-operation Group) agreement on 15th November in Jakarta was heralded by President Clinton as a historic watershed. When the APEC leaders were brought together tn Seattle for the first time last year, they and the US agreed on a common vision of a united and open trading system. At the November meting they, claimed Mr Clinton, committed themselves to making that vision real through free and fair trade, and to do it by a certain date. But not all the signatories to the APEC agreement were as emphatic about it as the American President. The Malaysian prime minister Mahathir Mahammed said that he had concerns about creating what could become an Inward looking trading group He stressed that Malaysia did not want to see APEC ever become a strut-- -t tired organisation or a trade block like I he European Community or like NAFTA. APEC. In his opinion, should

be a loose form to enable members to discuss common problems and Issues and seek a solution to them. In fact..the Malaysian Prime Minister's views reflect a growing Concern about the emergence of what is sometimes called a tripolar world of three powerful trading blocs, based on Western Europe. North. America and the Asla/Pacific region clearly there is a major impetus under way at the moment towards regional trade blocs. 1994 has seen the North American Free Trade Agreement coming into force between the US. Canada and Mexico.

But 1994 has also seen the emergence of more direct threats to the cause of a global free trade than regional trading blocs. The American people elected a new Republican-dominated Congress with strongly Protectionist in-

stlncts. Part of the Impetus for the new Protectionist agenda in the US comes from contlnu Ing frustration with Japan's failure to fully open up its markets to American products. Tn February this year. President Clinton met Japanese leaders to try to hammer out a new bilateral trade deal.

Grewing insecurity in the developed Western economies, however, is far outstripped by the kind of insecurity people are living through in the former Communist/socialist countries. The transition from monolithic command economies to market economies is proving every bit as painful as predicted. This Is especially true in the former Soviet Union. 1994 was punctuated in Russia by symptoms of economic malaise. Jn July there were scenes of panic in Moscow as MMM. Russia s largest Investment company with as many as 10 million shareholders, suddenly closed all but one of Its offices Shares in MMM plummeted to drastic depths, but the managing director of the company blamed the government for the collapse. He warned that hud deeds of thousands of people had sold their personal possessions like cars, country homes and so on and If the government tried to bring In new laws against MM.V people would tear the Kremlin down But although the government did not tall and the company-staggered on. In October the rouble went on a caper that

rocked the government. On 1 I ih October Russia's currency lost 20 per cent of Its value in a few hours of trading. It did recover some of Its fosses In the days that followed, but the crisis showed up the fragility of International confidence In Russian economic management. Summing up the economic year In a speech in November. President Borts Yeltsin tried to sound a confident that the economy was turning round, but he could not hide the utter discomfiture he — and his government — felt at the rouble crisis. And the process of Integrating the former command economies into the global trading system did not move forward In 1994.

The other Asian giant of the third World. India, has had a difficult year. India has been pursuing a programme of economic' liberalisation. But in September, its Image as an emerging modern economy suffered a serious blow. An outbreak of plague — the disease known in 14th century Europe as Black Death and associated with rat-infested slums — in parts of the states of Gujarat and Maharashtra, showed that India still has far to go to end the squalor of absolute poverty. Apart from this slur on India’s image, there were fears that the outbreak of i he disease — Ironically. In one ol the country's boom cities — would discourage foreign in vestment and seriously damage the tourist industry. But the plague has-been quickly and effectively controlled and the Indian finance minister. Manmohan Singh, who is the architect of India s economic modernisation said at the World Bank/IMF annual meet mg in Madrid that the economy as now too powerful to be knocked off course. According Io Mr Singh, India today has foreign exchange reserves of about 19 billion dollars, and possesses he resources and the capacity to withstand the effects of all kinds of exogenous shocks As a matter ol fact. India s economic progress has been quite impressive In 1994 and although in comparison with China the rate of growth of the Indian economy does seem to be somewhat slower, the Indian step-by-step de regulation and economic reforms has been going quite well There have been certain setbacks, put India is clearly on its way to becoming a ven serious economic player and in a few wars time will perhaps have the largest middle class in the world