Lessons from the Economic Transition

An attentive reader embarking on this book might wonder what "the" economic transition to which the title refers might be. In this century almost all countries have gone through periods of economic transition; but which period of economic history can claim to embody the notion or to represent the era of "the" transition? Definitely, no country or group of countries has experienced anything comparable to the economic upheavals that the fall of communism has brought about in a large portion of the world in just three years (1989 to 1991). No other "transition" to date has prompted more interest and more studies among economists, academics and policy-makers than has the transformation of centrally planned economies into market-based systems. It is this transformation that has come to define "the" transition. Early in the transformation process (in November 1990), with the support of the Centre for Co-operation with the Economies in Transition (CCET), I launched a conference to examine the challenges faced by these countries. About six years have gone by and a new economic landscape has emerged in that part of the world. The difficulties in transforming these economies have exceeded all expectations, and economic performances have varied considerably across countries. The time has come, therefore, to make a first evaluation of progress and problems, with a view to extracting useful policy lessons to guide policy-makers in successfully completing the transition in the near future.

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I - Main successes and failures in the transition strategy.- 1. Transition approaches in retrospect.- 2. The transition in Eastern Europe and the former Soviet Union: some strategic lessons from the experience of 25 countries over six years.- 3. Transition to date: a comparative overview.- 4. From transition to market: evidence and growth prospects.- 5. Lessons to be drawn from main mistakes in the transition strategy.- 6. Adjustment without recession: a case study of Hungarian stabilization.- 7. The interplay between economic and political transition.- 8. Political constraints and the transition experience.- 9. Comments.- 10. General discussion.- 11. Policy conclusions.- II - Enterprise restructuring and private sector development.- 1. Comparing two Great Depressions: 1929-33 to 1989-93.- 2. Restructuring outcomes and the evolution of ownership patterns in Central and Eastern Europe.- 3. Corporate governance and the political effects of privatisation.- 4. Large privatisation, restructuring and foreign direct investment.- 5. The evolution of bank credit quality in Romania since 1991.- 6. Comments.- 7. General discussion.- 8. Policy conclusions.- III - Unemployment and the reform of social policies.- 1. Unemployment, restructuring and the pace of transition.- 2. Transformation as a demographic crisis.- 3. Labour market policy and the reallocation of labour across sectors.- 4. Central and Eastern European labour markets in transition.- 5. Reforming tax and benefit systems in Central Europe: lessons from Hungary.- 6. Comments.- 7. General discussion.- 8. Policy conclusions.- IV - External policies.- 1. Currency convertibility in transforming economies: was it a mistake?.- 2. Exchange rate policies in post-communist economies.- 3. Access to Western markets, andEastern effort levels.- 4. Interrelations between subregional co-operation and EU enlargement.- 5. Foreign direct investment in Eastern Europe and the former Soviet Union: results from a survey of investors.- 6. Comments.- 7. General discussion.- 8. Policy conclusions.