Explaining economic performance during transition: What do we know? (original) (raw)

Starting Positions, Reform Speed, and Economic Outcomes in Transitioning Economies

2000

At the end of the 1980s and beginning of the 1990s 26 countries in Eastern Europe, the former Soviet Union and Mongolia initiated market reform policies. During the 1980's the average annual growth in real GDP for these countries was about 2.9%, while for the period 1990-1997, the average growth rate was -5.7%. During the same period China was implementing a relatively slow and gradual policy of economic reform and their economy responded with very high real GDP growth. From these experiences it was commonly concluded that rapid economic reform led to (at least) a short-term economic decline and that the more gradual implementation of reforms is more appropriate for countries starting with a long legacy of central planning. However, the above statistics and analysis ignore some interesting variations among the 26 CEE/FSU/Mongolian economies. The reform experience within this sample varies considerably from the rapid implementation observed in Slovenia and Poland to the very slow...

The Transition Economies After Ten Years

SSRN Electronic Journal, 2000

While output declined in virtually all transition economies in the initial years, the speed and extent of the recovery that followed has varied widely across these countries. The contrast between the more and less successful transitions, the latter largely in the former Soviet Union, raises many questions about the relative roles played by adverse initial conditions, external factors, and reform strategies. This paper summarizes the macroeconomic performance of the transition economies. We first review the initial conditions confronting these economies, the reform strategy that was proposed, and the associated controversies that arose a decade ago. We then account for the widely different outcomes, highlighting the role of exogenous factors and the macroeconomic and structural policies adopted by the countries. We find that both stabilization policies and structural reforms, particularly privatization, contributed to the growth recovery. We also conclude that the faster is the speed of reforms, the quicker is the recovery and the higher is growth.

The Missed Puzzle Piece for Economic Transition Success

Comparative Political Economy: Comparative Capitalism eJournal, 2015

Economic Transition has been an agenda since decades, Eastern Europe countries began their process of transition after the fall of Soviet Union. Economic transition refers to the process that shift from centrally planned economy to market economy aiming at improving the economic performance of the country. Moreover, political economics argument explains that the suitable political strategy to improve economic performance, should not be based on a central authority government, claiming that decentralization supports democracy because it reduces the vested interests power and allows for competition, transparency and innovation of subnational governments, additionally it would empower and engage minorities in the political power and hence reduces tensions and improves economic performance. Liberalization is considered as a corner stone in transition economies; where liberalizing the economy aims at achieving efficiency by all means. Results shows that, decentralisation has various bene...

Structural Change and Transformation within the Transition Economies

2018

While previous chapters have concentrated on trade-related issues (including foreign direct investment and institutions with global values), we now consider the inter-dependencies that exist between foreign trade, European integration, economic development and structural change within the common framework of transition. The performance of Central and Eastern European Countries (CEECs) is a classic example of ‘diversity in unity’ where countries have faced differing economic environments and pursued different tactical and strategic policies while maintaining a common vision within the framework of market reforms. The dynamics of economic change, starting from early transition with high sunk costs, to the ‘big push’ forward given by membership of the European Union to the adverse impact of the Great Recession (the ‘big pull’ backward) is explained within a formal framework.

Slow and steady wins the race? An appraisal of ten years of economic transition

Economia politica, 2004

Slow and Steady Wins the Race? An Appraisal of Ten Years of Economic Transition Historically unprecedented transition from a central planned to a market economy during the last decade took different forms and produced different outcomes across former socialist countries of Central and Eastern Europe and of the Commonwealth of Independent States. The Optimal Speed of Transition (OST) models elaborated over the 1990s to explain the process of transition provide a fruitful frame of mind. However, they leave unanswered important features of the reform process, such as the persistent output fall of some former Soviet Union countries. In fact, the OST literature adheres to the emphasis of the Washington Consensus on neglecting initial conditions across countries and the role of institutions in the well functioning of market economies.

Transformation Strategy and Economic Performance

2004

We use monthly time series data for Poland and Hungary to assess the impact of differences in the pace of implementation of economic reforms. The selected policy variables are a measure of reforms in both the domestic and external sectors of the economy, and they also indicate the initial level of distortions. We use impulse response analysis to measure the effect of changes in the interest rate, the exchange rate, and the share of exports to the European Union on each other and on industrial production. Our results indicate that a faster rate of implementation results in a system that quickly adjusts to a new equilibrium. The exception for Poland is the impact of the interest rate on production, indicating that domestic reforms may not yet be complete. Our results show that, when compared with Hungary, faster reform implementation gives Poland more policy options in one sector with less destabilization in another.

The Success and Failure of Reforms in Transition Economies

2001

This paper argues that an important reason why Russia's performance and China's performance under capitalism have differed dramatically is that different arrangements governing the determination of prices and work practices evolved during the transition process. In Russia, the arrangement, which conferred monopoly rights to industry groups left over from socialism, prevented the adoption of better technology. In China, the arrangement that evolved contained no such monopoly elements. The key factor in determining which arrangement evolved was the strength of the central government at the start of the transition. We put forth a model that implements these ideas and provide evidence in support of this theory.