Year 2004 is historical for Europe and especially for those 10 European countries which have become true members of European Union. This event will start important processes for these countries. At the same time the newcomers are not equal. Each of them has his own history, experience, strong and weak sides. Even in the Baltic countries which are all too often assumed to be similar, the differences are essential. Under the new conditions all countries have to make decisions despite a lack of experience. Which are the right decisions on the macro scale for each individual country? This question is hard to answer without models. Similarly as in the case of modelling of technological processes, in fact it is very important to understand the models on some defined scale. For example, there exist interesting models which allow one to study macroeconomic benefits and international spillovers of an increase in competition in Euro area in comparison to USA (T. Bayoumi, D. Laxton and P. Pesenti, Federal Reserve Bank of New York Staff Reports, no. 182, 2004). Globalization defines new roles not only for large players (Europe, USA) but also for each small country. Can a reasonable global model be constructed which allows one to model interactions of a country with the rest of world? For new countries this question is of special importance.

September 11, 2001 caused huge losses for the insurance industry. Global warming created unusual windstorms in Western Europe and floods in Central Europe. Such events force the insurance industry to raise rates dramatically. As a result some industrial clients have opted to stay self-insured. At the moment the insurance industry is profitable because most of their clients pay higher premiums and the premium increase has compensated both the previous losses and the loss of some clients. However in the future it is possible that catastrophic losses and the ensuing heavy rate increases will leave too many clients without insurance and the insurance industry will not be able to cover previous losses by a simple increase in rates. The business problem is how to make the decision: “to continue your insurance policy or not”. If the insurance premium exceeds a certain level there is no sense to buy insurance coverage. How can one measure this critical level when a client could interrupt his insurance policy? It is also very important for insurers to know when they may lose their clients. How to compare the insurance premium amount with the company’s assets, profit, return on equity, etc. Should the insured always believe that his insurer would calculate the rate based on statistics or, in case of catastrophic events like September 11, could there be a solution which differs from the standard “supply and demand” law? Is the solution: “to stay without insurance for one or two years until the rates go back down” smart or stupid?

Each business requires resources. Some of the new European countries especially during the first years of independence did not use their resources (forest, water, ground,…) reasonably with a view to the future. Ecological aspects of business activities were not always taken into account. In the future the intensity of business activities will increase. Monitoring of resources will become more and more important but these activities by using old methods are time consuming and expensive.