Towards A Market Economy

Much attention has been focused in recent years on the transformation of the economies of Eastern and Central Europe and the former Soviet Union. However, a growing demand for policy advice, technical assistance and expertise is also coming from Asian reforming countries such as China, Mongolia, Vietnam, Laos and Cambodia. In addition, business communities abroad are increasingly interested in exploring investment and marketing opportunities in these reforming countries. Such developments are too important to overlook or ignore.The transformation of socialist economies towards market-based systems entails an unusually wide range of problems. Studies of related topics are complicated by the speed of the changes and the lack of clear historical precedents. Although the structural features of Asian reforming economies are in important ways different from those of the Eastern European economies, all socialist economies share similar fundamental conditions on the eve of economic reform which raise a similar set of reform issues.This volume brings together a rich collection of expertise and information in an attempt to shed some light on the transitional process in Asia. The contributions are by no means exhaustive. However, they provide the reader and analyst with an excellent starting point to the problems and prospects which are specific to Asian transforming economies.

This paper proposes an operational interpretation of the concept of economic governance. It argues that the capacity of governments to credibly ensure a secure economic environment provides an important benchmark against which governance can be evaluated. Such an environment—which is essential for sustained growth in a market economy—can be established through a rules–based system which ensures freedom of entry into the market, access to information, and sanctity of contracts. Since creating a secure economic environment involves profound, far–reaching social change, it has historically been a complex and lengthy process in most societies. However, basing policy prescriptions on this benchmark helps avoid possible conflicts between different social and moral values.

In 1990, the countries of Central and Eastern Europe began or accelerated their transition to a market economy. This book addresses among others the following questions: (I) What are the fundamental causes of the collapse of the Soviet-type economic systems? (II) What major steps could be taken to make the transition process to a market economy irreversible and less painful? (III) What can be learned from West Germany's outstandingly successful postwar economic reforms? (IV) Is the issue of gradualism versus shock therapy still relevant? (V) If macroeconomic stability is a precondition, what is the role of privatization, deregulation and trade liberalization? (VI) What is the optimal sequence of steps in privatization, deregulation, liberalization and currency convertibility? (VII) How quickly may privatization be achieved? (VIII) Is the USSR really a special case and, if so, in what respects and for what fundamental reasons? (IX) How long in the transition period may the initial phase of disorder, chaos and decline last? (X) What can be learned from the experiences gathered so far in the major ex-communist countries?

Some rapid and complex changes have taken place during recent years in the former Soviet Union. These incredible changes occurred not only in political policy and behavior, but also in social life and within framework of economic rules, especially the aspects concerning the key factor of new and advanced economies, which is based on Innovation Technology (IT). In fact, IT is becoming to be a key factor or, at least, the enzymatic factor necessary for activating asolid economy, based on advanced products and manufacturing, and with an incredible and unforeseeable impact on human lifestyle and wellbeing. This tool of development coupled to a world-wide movement towards a post-industrial era, with poorly defined economic, social and cultural boundaries is rapidly gaining support all over the world, supporting and creating a "global market". This globalization, intended as market expansion and flooding, is really a deeper and more complex phenomenon, surely mainly deriving from a cultural movement (the origin and aim ofthe use of IT as a tool for World Globalization). The process of globalization of the Innovation Market, which might have originated the economy failure of Eastern Europe with a risk of disintegration, is really the only way to solve the problem; therefore, the integration within the whole of Europe should be based on the paradigm of an Innovation Policy.

The book is about economic developments and policies in the first decade or so after the independence of the fifteen countries that emerged from the dissolution of the Soviet Union in 1991. From 1992 to 2003, the author was in charge of the IMF’s work on the fifteen countries that emerged from the former Soviet Union. In those years, the countries were beginning the transition from the Soviet central planning system towards market economies. The book focuses on the role of the IMF in this transition. It explains what the IMF was trying to do and why.

This paper examines China’s reform experience since 1978, reviewing major initiatives taken and assessing their impact on economic structure and their implications for macroeconomic management and stability. It identifies some of the special conditions before and during the reform process that impinged on China’s capacity to implement reforms, and, in particular, those where China may differ from other countries undertaking reform, including former CPEs. A further consideration is the choice of the sequence and pace of reform and the structural and institutional changes that are needed to reorient the economy towards the market.

This volume's aim is to promote thought in readers interested in what kind of economic policies, market systems, welfare systems, and socialist systems should each pursue under the pressures of accelerating change? Should there be more government or less government? This is the central question addressed by this internationally drawn group of experts. The book features major case studies on the People's Republic of China, Canada, Ghana, Great Britain, South Africa, Taiwan, and West Germany. Contributors include, Richard L. Brinkman, from the United States, James C.W. Ahiakpor and Tillo E. Kuhn from Canada, Dieter Loesch and Herbert Schmidt from Germany, and Geert L. deWet from South Africa. For technical economists interested in world trade, business people concerned with expanding markets, and policy analysts concerned about how technology, culture and politics drive economic systems, this book is essential reading. As the editor points out, indicative targeting, as the latest weapon in the arsenal of economic science, makes it possible to systematically discover signals that could become points of reference--landmarks--for the way into the future. The approach taken by the authors enables us to trace future trends by extrapolating current data onto new territory. It will help the policy maker identify desirable trends and ideas; and at the same time, provides some early warning signals about high-risk trends and patterns. Bodo B. Gemper is professor of economics at the University of Siegen in Germany. He previously edited a Transaction volume, Structural Dynamics of Industrial Policy, and in German, Protectionism in the World Economy.

A comprehensive assessment of the Hungarian economy, first published in 1998.