Transition towards a social market economy? Limits and opportunities

The quest for an appropriate development and transition strategy in less developed countries (LDCs) and post-socialist countries (PSCs) has been studied for a long time, and it has been subject to numerous controversies among academics and development practitioners alike. Disputes have existed with respect to sequencing, timing, and pacing reforms, regarding the components of stabilization-cumadjustment programs, and also relating to the question which actors can become effective drivers of transition and development. Today, a widespread consensus exists that institutions and governance matter for making market-oriented policy reform succeed and that governments, despite the general need for less state interventionism, remain central actors for institution building and rule enforcement. The following considerations focus on the question whether or not the concept of the Social Market Economy, as it was originally developed and designed by German academics and policymakers more than fifty years ago, will be appropriate to guide policy and institutional reform in LDCs and PSCs and to make market-oriented reforms a viable policy choice in such countries regardless of their political regime. --Less developed countries,post-socialist countries,transition,social market economy

The politico-institutional foundation of economic transition in Central Asia: Lessons from China

Central Asia is increasingly the focus of intense international attention because of its geopolitical and economic importance as well as its unsettled transition processes. Central Asian countries, i.e., Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan, faced enormous challenges when the Soviet Union disintegrated. Overall, they have made rudimentary progress in opening up to the international community, creating market institutions, and building more inclusive, democratic political processes. Daunting challenges remain - reflected in the region's relatively low economic and human development indicators. While reforms to stabilize, liberalize and privatize the economy have been conducted in all countries except Turkmenistan, reforms of the institutional environment have been largely neglected. It is evident that the lack of effective institution building as well as rule enforcement in the economic and political realms represents one of the key weaknesses and drawbacks of transition. Hence, crafting adequate market institutions will be of utmost importance in the years ahead. Due to similar political side conditions, high-performing China is taken as a model of orientation for Central Asian countries in this essay; the more so as most governments in the region have recently begun to place a stronger emphasis on improving relations with China. The paper is structured as follows: The next section addresses the need to craft a politico-institutional foundation of economic transition policies from a theoretical perspective. Section 3 elaborates on Chinese economic transition as a reference model for Central Asian countries. Conclusions follow in Section 4. --Transformation,Institutional Building,Central Asia,China

Transition towards a social market economy? Limits and opportunities

The quest for an appropriate development and transition strategy in less developed countries (LDCs) and post-socialist countries (PSCs) has been studied for a long time, and it has been subject to numerous controversies among academics and development practitioners alike. Disputes have existed with respect to sequencing, timing, and pacing reforms, regarding the components of stabilization-cumadjustment programs, and also relating to the question which actors can become effective drivers of transition and development. Today, a widespread consensus exists that institutions and governance matter for making market-oriented policy reform succeed and that governments, despite the general need for less state interventionism, remain central actors for institution building and rule enforcement. The following considerations focus on the question whether or not the concept of the Social Market Economy, as it was originally developed and designed by German academics and policymakers more than fifty years ago, will be appropriate to guide policy and institutional reform in LDCs and PSCs and to make market-oriented reforms a viable policy choice in such countries regardless of their political regime

The politico-institutional foundation of economic transition in Central Asia: Lessons from China

Central Asia is increasingly the focus of intense international attention because of its geopolitical and economic importance as well as its unsettled transition processes. Central Asian countries, i.e., Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan, faced enormous challenges when the Soviet Union disintegrated. Overall, they have made rudimentary progress in opening up to the international community, creating market institutions, and building more inclusive, democratic political processes. Daunting challenges remain - reflected in the region's relatively low economic and human development indicators. While reforms to stabilize, liberalize and privatize the economy have been conducted in all countries except Turkmenistan, reforms of the institutional environment have been largely neglected. It is evident that the lack of effective institution building as well as rule enforcement in the economic and political realms represents one of the key weaknesses and drawbacks of transition. Hence, crafting adequate market institutions will be of utmost importance in the years ahead. Due to similar political side conditions, high-performing China is taken as a model of orientation for Central Asian countries in this essay; the more so as most governments in the region have recently begun to place a stronger emphasis on improving relations with China. The paper is structured as follows: The next section addresses the need to craft a politico-institutional foundation of economic transition policies from a theoretical perspective. Section 3 elaborates on Chinese economic transition as a reference model for Central Asian countries. Conclusions follow in Section 4

Transitional institutions, institutional complementarities and economic performance in China: A 'Varieties of Capitalism' approach

The paper focuses on institutional change and institution building as integral parts of economic transition in China. China's success, particularly compared with other advanced transition economies, implies a puzzling observation: China did not apply theoretically-derived policy recommendations. Instead, authorities followed a gradual, pragmatic approach to reform, decentralize, and transform the economy. Notable examples of non-orthodox policy measures, which worked effectively in China, include so-called transitional institutions such as the dual-track approach to industrial restructuring, anonymous banking, the establishment of special economic zones or the priority given to create competitive structures while postponing large-scale privatization of state-owned enterprises. Hence, it is not evident what kind of market economy will emerge in China in the long run. The paper aims at (i) applying the Varieties-of-Capitalism (VoC) framework to China and assessing its suitability in a transition context; (ii) addressing the question of what kind of market economy is emerging in China; (iii) analyzing the impact which the emerging type of capitalism will have on the economy's allocative and dynamic efficiency; and (iv) elaborating policy implications which may help generate or strengthen potential institutional complementarities in the long run

Independent organizations in author-itarian regimes: Contradiction in terms or an effective instrument of developmental states

This contribution explores the importance of independent organizations in authoritarian regimes. While some authoritarian governments delegate policy tasks to (relatively) autonomous agencies simply in order to improve their domestic or international image as modern political leaders or to build up democratic facades to conceal the actual nature of their regime, other political leaders do so in order to make their genuine commitment to economic growth and development more credible. This relates to the central questions of this paper: Why do political elites in authoritarian regimes craft, or accept the emergence of, (relatively) independent organizations? Which specific forms and functions of these organizations can be identified? The main observation of this paper is that authoritarian governments of so-called developmental states have effectively used (relatively) independent organizations in order to implement market-oriented reforms, to improve private-sector coordination, and to foster economic growth and development in the long run

EU-Osterweiterung: Erfordert eine steigende Heterogenität der Mitglieder flexiblere EU-Institutionen?

Die für 2004 geplante Erweiterung der Europäischen Union auf 25 Mitgliedstaaten bringt enorme Herausforderungen für das institutionelle Regelwerk mit sich. Besonders brisant ist die Zuordnung einzelner Politikbereiche auf nationale oder europäische Entscheidungsinstanzen. Der vorliegende Beitrag rückt die Meinung der europäischen Bürger zu dieser Frage in den Mittelpunkt. Auf der Grundlage von Umfragen des Eurobarometer quantifizierten Prof. Dr. Joachim Ahrens, European Business School, International University Schloß Reichartshausen, und Martin Meurers, ifo Institut, die Heterogenität im Meinungsbild in der gegenwärtigen und in einer erweiterten Union und analysieren anhand der ermittelten Präferenzen für oder gegen eine EU-Kompetenz in einzelnen Politikbereichen die Implikationen für die Entscheidungsprozesse im Europäischen Ministerrat

Economic reform and institutional change in Central Asia: Towards a new model of the developmental state?

Widely ignoring recommendations from mainstream economics, the some Central Asian countries have achieved remarkable economic growth rates since their transformational recession in the 1990s. While Kazakhstan, Uzbekistan, and Turkmenistan have greatly benefitted from increasing world market prices for natural resources, particularly Kazakhstan and Uzbekistan have pursued distinct country-specific policies and built up politico-institutional structures which may have also contributed to bring about economic and social progress. This paper investigates the politico-institutional foundation of these emerging market economies in Central Asia and addresses the question whether or not these marketdeveloping autocracies are on a way to become developmental states with a firm commitment to economic development in the future