Skip to main content Accessibility help
×
Hostname: page-component-7c8c6479df-ws8qp Total loading time: 0 Render date: 2024-03-29T09:59:51.306Z Has data issue: false hasContentIssue false

1 - From Plan to Market: Patterns of Transition

Published online by Cambridge University Press:  09 October 2009

Mario I. Blejer
Affiliation:
International Monetary Fund Institute, Washington DC
Marko Skreb
Affiliation:
National Bank of Croatia
Get access

Summary

INTRODUCTION

The transition from a planned economy to a market economy involves a complex process of institutional, structural, and behavioral change. Formerly communist countries have moved along this transition to varying degrees. This essay places these countries into a comparative perspective. It emphasizes the cornerstone of the early reforms – economic liberalization, for which an index is developed – and its interaction with growth and inflation: How do these outcomes relate to progress with reform? It also considers the macroeconomic and sectoral patterns underlying these interactions.

The findings here help to explain two paradoxes of transition. One is that the attempt to maintain employment and output by fiscal and quasifiscal transfers to enterprises results in larger output declines than a policy of hard budget constraints introduced along with economic liberalization. The other paradox is that the liberalization of prices results in lower inflation than do continued price controls. In both cases, liberalization leads to stabilization in a way that is not selfevident to policy makers accustomed to socialist pricing and output conventions.

The core countries analyzed are 26 in Central and Eastern Europe (CEE) and the former Soviet Union (FSU), plus Mongolia. China and Vietnam are also included for comparative purposes, although these countries are distinctive in many respects. The period covered is 1989 through 1994. The starting point is the last year before the initial postcommunist transitions, although Poland, Hungary, the former Yugoslavia, and China had previously initiated significant reforms and other countries had also taken some reform steps.

Type
Chapter
Information
Publisher: Cambridge University Press
Print publication year: 1997

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Save book to Kindle

To save this book to your Kindle, first ensure coreplatform@cambridge.org is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about saving to your Kindle.

Note you can select to save to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be saved to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.

Find out more about the Kindle Personal Document Service.

Available formats
×

Save book to Dropbox

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Dropbox.

Available formats
×

Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

Available formats
×