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Economies of Transition

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Economies of transition are those that are shifting from being centrally planned into laissez faire ones (Wikipedia 2007, online]). The ironic bit in the usage of the term economies of transition stems from the fact that it was Marx and Engels who first popularised the usage of the term to denote those economies of transition that were shifting from market economies into socialist model (Kevos, 2002). The fall of the Ancient Regime after the French Revolution drove many societies in Europe and elsewhere to look for “social justice” in form of socialism, a process that ultimately suffered a spectacular failure some 200 years later (Jeffries, 2001). The economies that were considered to be in a transition phase in the recent past (mainly the former Soviet block countries) started as capitalist, or were in the late feudal stage. They combined private enterprise with some degree of state intervention. The system produced some great social inequality which was socially unacceptable. The mainly communist system was seen as the bastion of equality and those countries turned to it. This issue looks at the major issues that face economies of transition when they finally decide to let go of the controls based on previous practice.

 

At the very onset, economies of transition face the problem of resource allocation that is mainly blamed on structural inefficiencies (Meyendorff, 2002). The chief concerns for many economies in transition are to achieve macroeconomic stability and to conduct large scale privatisation that is required to orchestrate true transition.

 

The other major issue that faces economies of transition is the inherent lack of legal and institutional structures that takes care of corporate transformation in order to protect the various players, and especially the creditors. In a well developed capitalist economy, the corporate sector enjoys the presence of a wide range of financial instruments that are responsive to most of their needs, for instance, it is possible to convert debt into equity in such countries. Collateralized Debt Obligation (CDO) is another instrument available in developed financial markets that involve many kinds of investors with different rights that usually commensurate with the amount of risk involved. Economies of transition have no such luxury.

 

The governments of the economies of transition usually create a situation whereby they create monopoly of power (Kevos, 2002). This is perhaps the greatest challenge for the economies in transition. The various economies of transition that have faced this problem have resolved it with varying degrees of success. True transition takes place when there is pluralisation, which is development of institutions and mechanisms that enables a market formation of prices of goods and services as well as the prices of the factors of production. The governments of economies of transition should also step in to provide the necessary legal and institutional infrastructure to facilitate the legality and acceptability of the whole process.

 

The economies of transition countries are Cambodia, China, Laos, Mongolia, Thailand, Vietnam, Albania, Bosnia and Herzegovina, Croatia, Macedonia, Montenegro, Serbia, Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyz Republic, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine and Uzbekistan.

 

 

References

 

1. URL http://en.wikipedia.org/wiki/Transition_economy. Last accessed 28, October 2007.

2.  MEYENDORFF, A, THAKOR, V (2002). Designing Financial Systems in Transition Economies, MIT Press, Boston.

3. YOUNG, AE, KEVOS, P (2002). Economies in Transition: Conception, Status and Prospects. World Scientific, Washinton DC.

4. JEFFRIES, I (2001). Economies in Transition. Routledge, Oxford.

C/E/144. Do the exits from communism of small, newly independent states leaving communist federation, such as Estonia and Slovenia, show special features not found in the 'revolutions of '89'? Can Regime change in these societies be adequately explained using conventional theories of revolution and /or transition?

C/E/128. Critically review Russian economy from Planned to Market economy with a particular focus on Russian consumers' major purchasing changes/behaviour

C/E/127. Transitional Economies

C/E/124. Transitional economies and economic globalisation. Empirical evidence from Central Europe and Commonwealth of Independent States Countries

C/E/121. Transitional economies and economic globalisation. Empirical evidence from Central Europe and Commonwealth of Independent States Countries

C/E/103. Transitional Economies

C/E/98. The development of the banking sector in the transitional economies prior to the 1998 financial crisis

C/E/97. What factors contributed to the collapse of Soviet Union? Was the collapse inevitable?

P/E/315. Dissertation. Impacts of sovereign credit ratings on transition economies (with focus on Serbia)

P/E/313. Objectives and goals of transition economies

C/E/92. How well has the Eurozone performed over the last 3 years? What roles did the European governments and European Bank play in this performance?

C/E/91. Level and type of capital inflows into Poland. How have they responded as the financial and economic conditions in Poland changed?

P/E/271. Problems of SME in transitional economies

P/E/267. Successes and challenges of transition economies

P/E/266. Economy of Armenia through transition models

P/E/235. Privatization programs in transition economies

P/E/228. Public-private partnerships in health care

P/E/207. Eastern and Western Germany: closing productivity gap

P/E/199. Dissertation. Transition economies: analysis of reform strategies

S/E/44. A COMPARATIVE STUDY OF INFLATION IN TWO TRANSITION ECONOMIES: Poland and Hungary

P/E/173. Master's Dissertation. Ukraine Vs Hungary: 1990-2000 Period Economic Transition

S/E/53. Discuss the challenges facing economies in transition and assess their current progress

P/E/151. Relative Performance of Different Transition Economies

C/E/48. Dissertation. Transition from Planned to Market Economy: A Critical Review of Russian Economy

C/E/47. Dissertation. The loans for shares auctions and the emergence of the Russian oligarchs

C/E/46. Discuss the reasons why the different CEE countries adopted different economic reform approaches such as the big bang, shock therapy and gradualist approach, highlighting any problems and difficulties arising along and suggesting the role of European Union.

C/E/42. Recession Vs rapid economic growth: Russia and Argentina Vs China and Ireland

C/E/40. Explain Specificities of Competition in Banking and Its Effect on Restructuring of the Banking Systems in Countries of Central and East Europe

C/E/29.Dissertation. Transition to a Market Economy in Kazakhstan

S/E/28. What were the major weaknesses of the Soviet economic system?

P/E/106. Hungary's Economy of Transition

P/E/104. Chile: "Island of Economic Success"

P/E/103. Post-Communist Transformation in the Baltic Countries

P/E/102. Dissertation. China: Monetary and Fiscal Reforms

C/E/39. What were the Major Factors Contributing to the Collapse of Soviet-Type Economies?

P/E/71. What are the main economic consequences of corruption? Discuss the extent to which it is possible to design the economic characteristics of public policy in developing and transitional economies in order to minimise the impact of corruption.

P/E/30. What are the major economic functions of government in transition economies? Should government play a minimalist role in transition economies?

C/E/14. Economies of Transition. What are the main causes of the recession following transition? Are they avaidable? Movement from plan to market economy

P/E/23. How in principle do a) market economies and b) planned economies solve the economic problem? Discuss the practical limitations of both systems by reference to the experience of european economies since 1980

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