“A very orderly retreat”: Democratic transition in East Germany, 1989-90

East Germany's 1989-90 democratisation is among the best known of East European transitions, but does not lend itself to comparative analysis, due to the singular way in which political reform and democratic consolidation were subsumed by Germany's unification process. Yet aspects of East Germany's democratisation have proved amenable to comparative approaches. This article reviews the comparative literature that refers to East Germany, and finds a schism between those who designate East Germany's transition “regime collapse” and others who contend that it exemplifies “transition through extrication”. It inquires into the merits of each position and finds in favour of the latter. Drawing on primary and secondary literature, as well as archival and interview sources, it portrays a communist elite that was, to a large extent, prepared to adapt to changing circumstances and capable of learning from “reference states” such as Poland. Although East Germany was the Soviet state in which the positions of existing elites were most threatened by democratic transition, here too a surprising number succeeded in maintaining their position while filing across the bridge to market society. A concluding section outlines the alchemy through which their bureaucratic power was transmuted into property and influence in the “new Germany”

The Polish motor vehicle industry as a case study in Eastern Europe's transition

This thesis examines the impact of shock therapy on the Polish economy, and within it, on the motor vehicle industry. It is argued that shock therapy has not proved satisfactory as a theory of economic transformation. The following reasons are provided:- ● Shock therapy fails to provide an adequate explanation of the collapse of the command economy. Its emphasis on problems being largely monetary, rather than structural, is misguided, as this leads to the erroneous conclusion that with a strong monetary and fiscal shock, increases in utility will ensue, despite a fall in real income. ● The above may partially explain why shock therapy has failed to satisfactorily predict the outcome of the reform programmes. The assumption of post-reform growth rates following the path of a "J-Curve" has not been borne in reality. The forecasts of various improvements after the first year of the Balcerowicz Programme in Poland were, with the exception of exports, highly inaccurate. By the end of 1993 (after four years of reforms), only one indicator (inflation) registered an improvement over the respective pre-reform level. There was, therefore, no "delayed positive response". It is argued that the major reason for the failure of shock therapy reforms is that the theory largely neglects the significance of market failures. In particular, sufficient consideration has not been given to the problems of information gaps, absence of capital markets, structural rigidities, investment coordination and high levels of risk and uncertainty, all of which constrain the ability of agents to effectively respond to a liberalised economic regime. The role of careful government intervention - to attempt to remedy market failures - has been undervalued. Failure to take appropriate measures with respect to market failures most important in transforming economies has led to unnecessary costs. The case study on the motor vehicle industry provided evidence that shock therapy's policy for microeconomic restructuring - trade liberalisation in conjunction with privatisation and FBI - has not proved successful, with the notable, but unusual exception of FSM. The severe recession, in combination with strong important competition, led to a slump in sales, output, and underutilisation of capacity; leading productivity to decline from already very low levels. With respect to enterprise restructuring, it was found that this was either slow, or largely neglected in all the main determinants of plant productivity considered, i.e., work organisation, high tech capabilities, supplier network, and the Just-in-time system. In regard to management-labour relations, it was found that both parties viewed these as having improved. However, severe "macro" problems frequently override the purportedly better relations at the micro level, so that considerable friction remains - which occasionally spill over into major disputes that act against the restructuring process. The industry has experienced a severe contraction in capacity utilisation and employment - a fact that is very much at odds with the government's wish to preserve the bulk of the industry. It is concluded that an industrial policy for the motor sector would have been more appropriate than the policy that has hitherto been used.</p

Ar reali pereinamosios ekonomikos šalių konvergencijos perspektyva

To make a proper evaluation of transition it is necessary to appreciate the reasons for slow convergence in the former Soviet bloc as well as many other of the world’s poorer economies. One of the most important reasons lie in the long run spatial inequalities caused by the historical development of the world economy. Estimates of output per capita for the year 1800 already reflect the economic gap between the richest and the poorest regions of Europe the latter including the area of modem Eastern Europe.The nature of the transition crisis can be considered from other four points: the restructuring process compressed into half a decade which forced these economies downward in the international division of labour; the fact that the developing economies are chasing a moving target - the advanced economies that have continuous)y grown; the transition process started in a period of general slowdown in the world economy and finally the recovery results in divergence in many transition economies.There are long run development problems in Eastern Europe and Russia as well as on the global scale. These problems cannot be solved by any regime or policy since they are rooted in the historical development of the world economy. And although the people of the regions are promised a more prosperous future in absolute terms, the facts do not promuch evidence of it.Straipsnyje nagrinėjamos pereinamosios ekonomikos šalių problemos, įvertinant lėtos konvergencijos buvusiose sovietų bloko šalyse priežastis. Pereinamosios ekonomikos šalių problemų negalima sieti tik su vidaus trūkumais, o vien rinkos mechanizmų taikymas problemų neišsprendžia. Lėtą šių šalių integraciją į pasaulinę ekonomiką lemia bendresnė pasaulinės ekonomikos raidoje susidariusi nelygybė bei kiti svarbūs veiksniai, pavyzdžiui, per trumpą laikotarpį įvykęs restruktūrizacijos procesas, nuolat vykstanti technologijų pažanga išsivysčiusiose šalyse, pasaulinės ekonomikos augimo tempų sulėtėjimas. Ekonominis atsigavimas, be kita ko, sukuria regioninius ekonominius skirtingumus daugelyje pereinamosios ekonomikos šalių.Autoriai teigia, kad ilgalaikių raidos problemų yra ne tik Rytų Europoje ar Rusijoje, bet ir pasauliniu mastu, ir daro išvadą, kad joks režimas ar politika nepajėgi išspręsti istorinės plėtros nulemtų kliūčių konvergencijai pasiekti

‘Somewhere Over the Rainbow’: The Post-Soviet Transition, the Market and the Mythical Process of Convergence

Metadata onlyAt the core of thinking about the post-communist transition has been the goal of convergence with the advanced West. This article accepts the legitimacy of this goal but argues that the prospects for its achievement are not good. Neo-classical theorists have misled and continue to mislead policy makers about the ease with which the goal can be achieved and the necessary conditions. The global pattern of growth and development suggests that 'convergence' is not a general characteristic of the world economy. A realistic appraisal of the potential in the transition bloc has therefore to address both regional problems and the overall pattern of global inequality