Free LOSING CONTROL by Stephen D. King Page A

Wall, a world where many would-be workers and consumers simply did not have access to Western markets and capital.
    Had you been living in affluent West Germany in the early 1980s you might have treated yourself to an Audi Quattro, one of the most desirable automobiles ever made. It certainly wasn’t the most expensive car available at the time, but it was the first to feature both four-wheel drive and a turbo-charged engine. Its huge success in rallying provided an extra mystique. For its day, the Quattro offered an exhilarating performance, with a 0–60mph time of only around seven seconds. Over 10,000 of these cars were sold in Western Europe in the early 1980s, with a few hundred more sold in North America. 1
    If you had been living in East Germany in the early 1980s, you might have known about the Audi, but you wouldn’t have been able to get your hands on one unless a kindly West German had given you a very generous gift. 2 East Germany’s economy was under the shackles of Soviet-style communism. The regime survived only by protecting itself from the competitive pressures coming from theWest. The dreams of central planners had turned into nightmares of bureaucracy and corruption, leaving East German consumers with products that wouldn’t survive in a world dominated by free market choice. While the West Germans could whiz around in their Audis, the East Germans had to make do with Trabants. Although the cars are treated with nostalgic affection today, Trabant production lasted only a couple of years after the fall of the Berlin Wall in 1989. Given the choice, East Germans preferred to scrap their heavily polluting and remarkably slow Trabants (0–60mph in 21 seconds) and replace them with second-hand cars from Western Europe. The Trabant was dumped onto the scrapheap of Soviet communism. Those employed making Trabants and other relics of the Soviet era ended up without jobs, and were supported instead by handouts from the wealthy citizens of former West Germany. 3
    Not all Soviet-era car companies went the same way. Škoda was a Czech car company originally founded in 1895 as a manufacturer of bicycles. After the Second World War, the company was nationalized. It went on to produce a number of innovative designs in the 1960s and 1970s but could make only limited headway in Western markets, where advances in motor technology and marketing were far greater. Indeed, by the 1980s, the Škoda brand had become something of a joke. In the UK, Škoda gags became very popular. 4 (Q: ‘How do you double the value of a Škoda?’ A: ‘Fill its tank with gas’.)
    With the fall of the Berlin Wall it became clear that Škoda, like the manufacturers of the Trabant, would not be able to survive as an independent company. In 1991, it became part of the Volkswagen Group, alongside Audi and Seat. Since then, its fortunes have been transformed and the jokes have been long forgotten. In 2008, Škoda managed 674,530 sales, the largest number in its long and sometimes turbulent history. Its biggest markets, interestingly, are other emerging economies. Sales to Russia, China and India have proved to be particularly important. Škoda still benefits from low Eastern Europeanwages, which allow cars to be produced relatively cheaply, but it now also benefits from the technologies, management know-how and cheap international finance available to the Volkswagen Group.
    Škoda’s experience neatly encapsulates the difficulties in making sense of international trade and investment since the fall of the Berlin Wall. Škoda exports from its Mladá Boleslav assembly plant in the Czech Republic to customers all over the world. It offers competition to other car manufacturers which, in earlier decades, did not have to cope with the cheaper labour available on the eastern side of the Berlin Wall. It provides employment for Czech workers and tax revenues for the Czech government. It also provides employment in its dealerships across the