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Über dieses Buch

Transition economies offer a test case for concepts and theories, for broader ideas and for the methods of scientific enquiry, but also for the multiplicity of ideological interpretations. This volume addresses the major issues of transformation, institutional design, the redistribution paradigm and the macroeconomic decisions to be made.



Institutional Transformation: The Ownership Paradigm


Chapter 1. An Essay in Modeling of Institutional Change

Economic analysis carried out with the help of models has been suffering from a lack of expression of institutional settings. Yet institutional change is at the heart of numerous transition processes around the globe. This chapter illustrates a way of modelling institutional arrangements through the game theoretic framework, involving utility functions and game-forms. Illustrative analysis is provided for a well-defined classical case of land tenure institutions. Then, the chapter gives an analysis of a broader domain involving law-making, its effectiveness and enforcement. The chapter implies that the limits to market mechanisms ought to be taken into account when designing the institutional frameworks for the transition societies and economies.
Leonid Hurwicz

Chapter 2. When do Stakes in Restructuring put Restructuring at Stake?

Frequently the shareholders of privatized transition firms also hold stakes in the firm they own. This two-sided role of an agent may give rise to potential conflicts when the restructuring strategy of a firm has to be decided. This shareholder/stakeholder conflict is analyzed in a simple framework including the corporate control dimension of the problem. It is found that for feasible specifications of the conflict, restructuring in the economy will fall short of complete efficiency. However, for certain parameter values the shareholder/stakeholder issue turns out to be a non-problem.
Philipp J. H. Schröder

Chapter 3. Privatization, Efficiency, and Economic Growth

Privatization is shown to increase national economic output in a two-sector full-employment general-equilibrium model by enhancing efficiency as if a relative price distortion were being removed through price reform, trade liberalization, or stabilization. The static output gain from reallocation and reorganization through privatization is captured in a simple formula in which the gain is a quadratic function of the original distortion stemming from an excessive public sector. Substitution of plausible parameter values into the formula indicates that, in practice, the static output gain from privatization may be large. The potential dynamic output gain from privatization also appears to be substantial.
Thorvaldur Gylfason

Chapter 4. How the System Worked, or: The Herring Barrel Metaphor

A metaphor is presented, illustrating the mechanism of functioning of the communist system. The metaphor, which is called the herring barrel metaphor, and is developed on the basis of very few initial presuppositions, provides a very detailed image of the way the communist system worked, along with a number of characteristic and unique side-effects, like quasi-non-existent unemployment, low wages, shortages, etc. It can therefore be treated as a verbal model, which might in at least some of its aspects turned into a quantitative model. Most importantly, the model shows that shortage was the driving force and the basis of functioning of the system, the main consequence being that the shortage-based exchange power rather than income or any other status indicator decided of people ‘s positions and capacities.
Jan W. Owsiński

Redistribution, Government, Technology, and Human Capital


Chapter 5. Transition and Stability of Redistribution Policies

The chapter presents a simple theoretical model of a society subject to choice, expressed through voting, on a potential move away from the status quo. This move is interpreted in term of choice between (more of) capitalism and (more of) socialism, expressed through parameters corresponding to degree of equality/redistribution and economic effectiveness. Seemingly paradoxical voting behavior patterns, bearing a striking resemblance to some of the actually observed ones, are thereby explained.
Jean-Luc Schneider

Chapter 6. Fiscal Policy and Transition: The Case of Poland

In this chapter, a version of the Cass-Koopmans economy is used for the purpose of studying the impact of fiscal policy changes on capital accumulation. The focus of the study is on transitional dynamics. It is shown that even moderate change in fiscal policy can have sizeable level effects on income levels along the transition path.
Scott Baier, Gerhard Glomm

Chapter 7. Knowledge Management and the Strategies of Global Business Education: From Knowledge to Wisdom

The chapter emphasizes the role of knowledge and social infrastructure in the development of nations. It starts with the critique of the Lisbon strategy, in view of the fact that this strategy concentrates on wrong goals and relies on declarations and exhortations rather than on doing. Then, discussion turns to some World Bank studies implying that prosperity of nations is closely correlated with reliance on human and social capital. Finally, the notion and taxonomy of knowledge is discussed along with the emergence of strategic wisdom project, measurement of knowledge via added value and the institution of entrepreneurial university as main strategic concepts for achieving competitive success in the global economy.
Milan Zeleny

Chapter 8. Modelling of the Labour Market in a Transition Economy

Labour market in a transition economy is considered as the market with imperfect competition. A new approach, based on dynamic macromodels of interaction between monopsonic labor market and market of goods and services is developed and analyzed. Conditions of economic stabilization and emergence of economic cycles for these models are investigated. Essential aspects of employment theory for the early stages of transition are discussed.
Mikhail Mikhalevich


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