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When Is Transition Over?

Annette N. Brown, Editor

Western Michigan University

Introductory chapter | Table of Contents

The transition process in which a country moves from a planned economy to a market economy offers a unique opportunity for economists and policymakers to observe and understand the effects of major institutional, legal, and political changes on economic systems. But one feature of the process that has not been considered is when is the process over? When has a transition progressed far enough to ensure that a market system will survive and mature? Are there institutional, economic, and political standards that countries reach that measure the level of transition attained or, indeed, show that they have completed transition?

Read what János Kornai, Jan Švejnar, Nicholas Lardy, and other noted scholars have to say on these subjects for the transitions occurring in Europe and China. Included are
Related titles
  • From Socialism to Market Economy, William S. Kern, Editor
  • What is Still Missing? Marie Lavigne, Institute of Applied Mathematics and Economics, Paris, and University of Pau, France. Lavigne provides an overview of what the process of transition entails. She also describes how legacies such as social values can affect the transition process, and then catalogs the basic elements of a transition package and their likely outcomes depending on how they are implemented. Transition is complete for Central and Eastern European countries, she says, when they gain acceptance into the European Union (EU).
  • The End of Transition? Alan H. Gelb, The World Bank. Gelb details the options available to policymakers during transition. He argues that whichever processes are chosen, to be successful they should be broad-based, because of their interdependence, and sustained, because their cumulative effects far outweigh their immediate impacts in determining outcomes. Gelb also says that the process is over when "the problems and policy issues confronted by today's 'transition countries' resemble those faced by other countries at similar levels of development."
  • The End of Rent-Seeking: The End of Post-Communist Transformation, Anders Åslund, Carnegie Endowment for International Peace. Åslund focuses his attention on one possible explanation for the differences in outcomes among transition countries: rent-seeking. He identifies the various types of rent-seeking and the benefactors of each, and explains why rent- seeking was more prevalent in the former Soviet Union than in East and Central Europe. The level of transition achieved, says Åslund, is related to the reduction in rent-seeking.
  • China's Unfinished Economic Transition, Nicholas R. Lardy, The Brookings Institution. Lardy turns his attention to transition in a single country, China, finding fault in the gradualist reforms implemented there beginning in the 1970s. He begins by comparing China's reforms with those of Eastern Europe and the former Soviet Union, and argues that, despite China's strong economic performance, its reforms are unsustainable. The level of transition achieved in China is, he feels, related directly to three problem areas: enterprise performance and debt; nonperforming bank loans; and declining tax revenues.
  • The Transition Is Not Over, but Note the Merits of the Central European Model, Jan Švejnar, William Davidson Institute and University of Michigan. Švejnar begins by describing a "Central European" model of transition, then compares it to "Asian" and "Russian and NIS (Newly Independent States of the former Soviet Union)" models. He feels that transition is over when the living standards in a transition country are similar to those in OECD and EU countries so that there is, essentially, an integrated market.
  • Reforming the Welfare State in Postsocialist Economies, János Kornai, Harvard University and Collegium Budapest, Institute for Advanced Study. Kornai takes up the issue of what comes after transition: post-transition policy. He begins with a discussion of transformation, the processes following transition that fine-tune the workings of a capitalist system, then highlights the importance of reforms to the welfare state. Kornai says transition is over when three criteria are met: a communist party no longer has monopoly power; the dominant means of production are in private hands; and the market is the dominant coordinator of economic activities.
    "This would be an excellent supplement to use in a number of undergraduate courses." Josef C. Brada, Journal of Comparative Economics

    "[This] book will clearly be of interest to scholars specializing in transitional economies and as reading for university students in classes dealing with this subject. It is not too technical so it may also interest a wider audience." International Journal of Social Economics

    135 pp. $40 cloth ISBN 0-88099-196-8 / $14 paper ISBN 0-88099-195-X / 1999.

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