Professional Documents
Culture Documents
INTRODUCTION
• Output fell sharply
• Private enterprises overtook the state
sector
• Exports rose-Moving toward industrial
countries
• Poverty increased sharply
• Average poverty rates (1990-1998)
Explaining variation in output performance
Initial conditions
External economic shocks
Policies
What initial conditions matter
Conclusion
Output Fell Sharply
Onset of the transition there was a sharp
initial fall
* repressed inflation
* black market exchange rates
* terms of trade loss for the CIS
* reform history
* pretransition growth rate
3) Instutions
* market memory
* location
* new states
External Economic Shocks
Delayed Recory
There is severe shocks. These shocks
are listed as;
* Financial crises of the 1990s (Mexico,
East Asia and Russia)
* War and civil strife (Armenia,
Azerbaijan and Tajikistan 1992-94,
Georgia and Moldova in 1992, Croatia
and FYR Macedonia in 1991-94)
Policies – Do They Matter?
There should be reforms
These reforms ought to be broad
consensus
* macroeconomic stabilization
* price and trade liberalization
* imposition of hard budget constraints
on banks and enterprises
* enabling environment for private sector
development
* reform of the tax system
* legal and judicial reform
* reform of the public sector instutions
The extent of economic policy reform could
be measured by liberalization index
measures reforms for allocating resources
includes reforms to maintain the efficient
functioining of markets
What Initial Conditions Matter
and When Do They Matter?
Initial conditions are more important
factors
Initial conditions explains economic
growth during 1990-1994 with 51
percent
During the decade, initial conditions
define average growth 41 percent
Conclusion
Initial conditions can not be changed
However policies can be advanced
Effective and modern public economy
should composed
Instutional arrangements should be
done
Compliance costs should be decreased
Local and small businesses complain to
defraudation
CSB countries which had good initial
conditions and with radical decisions
were successful
CIS countries could not achieve the
evolution of democracy
Also these countries were unsuccessful
to make reforms
They are not close to the Western
markets
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