Fifteen Years of Transformation in the Post-Communist World

The collapse of the Soviet empire freed hundreds of millions of people from communism. In most of the post-communist world, political freedom was followed by economic liberalization. The transition from central planning to the free market was uneven, however. In the early days after the fall of communism, two schools of thought about economic reform emerged. Some economists argued for a rapid break with the past, whereas others favored a more gradual approach. With the passage of time, it is now clear that rapid reforms were on the whole better than gradual reforms. Countries that adopted farreaching reforms tended to experience higher growth rates and lower inflation and received more foreign investment. Inequality increased less among rapid reformers than among gradual reformers. The same is true with respect to poverty rates. Importantly, rapid reformers developed better institutions than countries that opted for gradualism. In fact, all of the rapid reformers developed into liberal democracies, whereas in many of the gradual reformers, such as Russia, small groups of super-wealthy oligarchs captured the state and dominated its economic decisionmaking. The efficiency of large-scale privatizations was not dependent on the speed but on the transparency and honesty of the process. Future reformers should not be afraid of adopting rapid reforms. To gain maximum benefits from economic reforms, however, they need to ensure that the privatization process is more transparent than it has been in the past. In countries where the state has been captured by a small clique of oligarchs, rapid reforms may be politically impossible in the short run. Still, liberalization of the business environment, especially with regard to small and mediumsized enterprises, could stimulate the economy without being seen as a threat by the ruling oligarchy

Recovery and Growth in Transition: A Decade of Evidence

This paper reviews a range of studies that examine differences in growth performance among transition countries. There is a consensus in the literature about the core elements of transition and the policies necessary for sustainable growth, although considerable differences remain about how to implement these policies and about their proper sequencing. The empirical work identifies stabilization and structural reforms (e.g., market liberalization, private ownership) as important determinants of growth, but underlines the role of initial conditions and institutions.There is divergent evidence, however, on the importance of specific reforms. Traditional factor inputs have as yet no role in explaining growth. Copyright 2002, International Monetary Fund

Trade liberalization and the transition to a market economy

The focus of this paper is on the transition from a trade regime in a socialist economy to one based on a (more) liberal market economy. Thus, there is no need to detail the past and current nature of trade institutions, patterns and performance. However, the sorts of problems that a transition policy must address emanate from the initial conditions. This paper outlines the framework of trade policy, noting the role trade plays in development, the main elements of the policy package, and their relation to the overall economic policy picture. It summarizes the main conclusions from trade liberalization experiences worldwide, includes some discussion of their applicability to formerly-socialist economies, and discusses external constraints and opportunities presented by GATT and the Uruguay Round and relations with the EEC. The role of the government in a liberalized economy is also discussed. Finally, the paper concludes by presenting and analyzing the principal differences between Eastern European countries and others regarding trade liberalization, and discusses how the generally advised path toward trade liberalization would be altered in Eastern Europe.Environmental Economics&Policies,Economic Theory&Research,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Trade Policy,Transport and Trade Logistics

European trade patterns after the transition

This paper concentrates on geographic direction of trade only. It applies a fairly conventional gravity model technique to answer the question: What would be the geographic pattern of trade of East and Central Europe (ECE) if their trade were determined by the same factors as those that affect market economies? It consists of the following sections: (a) a general introduction to this question and the paper's objectives; (b) a presentation of the model and the estimation results for a sample of non-socialist countries; and (c) a report on the ECE simulations. The paper concludes by predicting a dramatic shift in trade patterns and discusses the implications of such a shift.TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Economic Theory&Research,Environmental Economics&Policies,Trade Policy,Trade and Services

IS THE TRANSITION OVER?

While many observers thought it was premature for Czech Prime Minister Klaus to suggest in 1995 the transition was over except for fine-tuning , as we approach the 20th year after the fall of the Berlin Wall on Nov. 9, 1989,-and the 18th after the dissolution of the Soviet Union at Byelovezha- it is surely relevant to ask the question again. The first new contribution of this paper is to show that ,for all practical purposes, the post-communist transition is over in eight or nine early reformers of Central Europe and the Baltics; but it is not over for other transition countries –though many are close, and only a few very far behind. The second and perhaps more important novelty of this paper is that it goes beyond the qualitative expert judgments in earlier studies addressing this question. With one or two exceptions, earlier studies did not start with an explicit analytical definition of transition and its end-point, and evidence provided was selective often mixing partial quantitative measures with qualitative judgments-albeit well reasoned ones. This paper proposes an analytical definition of transition and its end-point , as well as ways this can be measured quantitatively without undertaking impossibly massive econometric exercises .transition, efficient allocation, share of consumption, share of industry, direction of trade, trade openness, comparative advantage

Is the transition over?

While many observers thought it was premature for Czech Prime Minister Klaus to suggest in 1995 the transition was over except for fine-tuning , as we approach the 20th year after the fall of the Berlin Wall on Nov. 9, 1989,-and the 18th after the dissolution of the Soviet Union at Byelovezha- it is surely relevant to ask the question again. The first new contribution of this paper is to show that ,for all practical purposes, the post-communist transition is over in eight or nine early reformers of Central Europe and the Baltics; but it is not over for other transition countries -though many are close, and only a few very far behind. The second and perhaps more important novelty of this paper is that it goes beyond the qualitative expert judgments in earlier studies addressing this question. With one or two exceptions, earlier studies did not start with an explicit analytical definition of transition and its end-point, and evidence provided was selective often mixing partial quantitative measures with qualitative judgments-albeit well reasoned ones. This paper proposes an analytical definition of transition and its end-point , as well as ways this can be measured quantitatively without undertaking impossibly massive econometric exercises

Institutional Convergence

In this chapter, we describe the essence and role of the institutions in the modern economic systems, the main issues concerning the institutional convergence in relation to the EU integration, the institutional capital and the impact of the quality and effectiveness of the institutions on filling the economic gap between countries, in the context of the implementation of the European integration strategy. * Study within the CEEX Programme Project No. 220/2006 Economic Convergence and Role of Knowledge in Relation to the EU Integration

Labour Migration from the Eastern Partnership Countries: Evolution and Policy Options for Better Outcomes

This study is part of the project entitled Costs and Benefits of Labour Mobility between the EU and the Eastern Partnership Countries for the European Commission1. The study was written by Luca Barbone (CASE) Mikhail Bonch- Osmolovskiy (CASE) and Matthias Luecke (Kiel). It is based on the six country studies for the Eastern Partnership countries commissioned under this project and prepared by Mihran Galstyan and Gagik Makaryan (Armenia), Azer Allahveranov and Emin Huseynov (Azerbaijan), Aleksander Chubrik and Aliaksei Kazlou (Belarus), Lasha Labadze and Mirjan Tukhashvili (Georgia), Vasile Cantarji and Georgeta Mincu (Moldova), Tom Coupé and Hanna Vakhitova (Ukraine). The authors would like to thank for their comments and suggestions Kathryn Anderson, Martin Kahanec, Costanza Biavaschi, Lucia Kurekova, Monica Bucurenciu, Borbala Szegeli, Giovanni Cremonini and Ummuhan Bardak, as well as the dbaretailed review provided by IOM. The views in this study are those of the authors' only, and should not be interpreted as representing the official position of the European Commission and its institutions

Transition, Integration and Convergence. The Case of Romania

This volume comprises several studies and papers published in the last decades. They have been selected and ranged so that to provide a minimum of coherence concerning the phases which Romania has crossed in her way to the advanced socio-economic system of European type: transition to the market economy, accession to the EU, the economic convergence in the three fundamental domains: institutions, real economy, and nominal economy. The readers may find in this volume a description of debates, difficulties and solutions adopted for building-up the market economy by a state being in a profound transformation from weak transition institutions towards hard democratic institutions. Because the transition to the market economy and the association of Romania with the EU and then the integration presenting strategic political decisions, I have included in this work two studies devoted to the political forces state and political parties that elaborated and applied these strategic decisions underlining their structure, role and function and their transformation. Integration into the EU of a country like Romania, which emerged from a different system comparing with the West-European one, has proved to be difficult and lasting many years because of the structural transformations. In five chapters I am referring to the essential characteristics of the integration process, such as: market liberalization, competitiveness of the local (national) firms on the national and EU markets, institutional reforms so that the institutions of candidate countries have to become compatible with those of the EU and finally the perspective assessment to find out the real and nominal convergence. Putting into practice the EU competitivity and cohesion principles, Romania has good prospects to close, in a reasonable time, the economic gap and to be admitted into the Euro Zone. Although the real convergence of Romania with the EU requires higher growth rates for the former, a new approach is compulsory to take into consideration the environment quality, the natural resources and the equity between the present and the future generations as natural resource consumers. Just these problems have determined me to include in this volume the last two chapters which, on the one hand, try to prove the necessity of the economy growth harmonization with the environment evolution as well as the saving of the energy resources, and, on the other hand, to point out the main ways to be followed and instruments to be used