35 New International Poverty Reduction Strategies Edited by Jean-Pierre Cling, Mireille Razafindrakoto and François Roubaud. Based on experiences from Asia and Latin America. Edited by Makoto Noguchi and Costas Lapavitsas.
Notes on contributors
Martin Paldam is professor of economics at the School of Economics, Aarhus University. Erinç Yeldanis Professor of Economics and Chair of the Department of Economics at Bilkent University, Ankara.
Acknowledgements
1 Introduction
A liberalization of the economy caused exports to rise sharply, to levels that were not sustainable in the longer term. At worst, these policy-induced crises are the inevitable outcomes of the actions of.
Developed countries
2 Stable growth with slow and expensive adjustments
Relatively low variability and robustness to shocks
First, the evidence comparing economic variation across world regions is considered. But almost all of the drop is at the low end when microstates are Table 2.1 The standard terminology.
Structural change and the development of the economic system
The change from the old pattern to the new occurred slightly earlier than the change at the public sector level. It is interesting to compare the development of the US and the other OECD countries.
The slowness and high costs of adjustment after the Oil Crisis of 1973
After a few years, unemployment began to rise, reaching 12 percent in the late 1970s. Many even insisted that high oil prices had something to do with “the major underlying environmental crisis.”
The contradiction
The demand side is treated in the literature on Voting and Popularity Functions; look e.g. Nannestad and Paldam (1994) and Lewis-Beck and Paldam (2000). The supply side is treated in the political business cycle literature; see Paldam (1997) and Alesina, Roubini and Cohn (1997).
3 Reform failure and poor economic performance
As table 3.3 shows, employment in the public sector increased by more than 1 million people, or more than about 20 percent of the total labor force. Employment in the internationally competitive engineering industry fell despite the large devaluation of the krona. Absence from work due to illness amounted to about 3.5 percent of the labor force in the mid-1960s.
What are the reasons for this sharp drop in unemployment during the unemployment years of the early 1990s.
4 The role of European integration in the reform process
First, the Convergence Program, which serves as a macroeconomic guideline for meeting the Maastricht criteria. Stabilization and convergence efforts continued and intensified with the full support of the European Commission. For an introduction to the stabilization program, see Bank of Greece (1986) and Garganas et al. (1989).
For a presentation of the deregulation measures of the Greek banking system, see Gortsos (1995), Hondroyiannis et al.
5 The political economy of reform failure and macroeconomic mis-
Erinç Yeldan and Sabit Khakimzhanov
- Introduction
- Phases of macroeconomic adjustment in Turkey
- Macroeconomic adjustment under post-financial liberalization: overall assessment
- A game-theoretic approach to credible disinflation programme
- Concluding comments
The macroeconomic performance of the economy within the disinflation program is presented in table 5.3. During this process, the total stock of short-term debt of the banking sector had increased to This return is calculated as the rate of difference between the highest (nominal) interest offered in the domestic economy and the (nominal) depreciation rate of the TL.
Yeldan, Erinç (2000) "The impact of financial liberalization and the rise of financial rents on income inequality: the case of Turkey", in A.
Transition countries
6 On the political economy of transformation
Towards a coherent transformation agenda
Thus, stabilization in the sense of dealing with the excessive money emissions of the past should be pursued quickly, with great intensity, without much succession, perhaps with little sectoralism and inclusiveness in monetary variables. The same applies to the precise meaning of building political pluralism and a market economy, especially in TEs with a weakly anchored democracy (see section 6.4). Any comprehensive transformation strategy must pay attention to the proper sequencing of the various components and subcomponents of the policy package.
These in turn inevitably affect other attributes of the policy package, including the ability to correct in time for unforeseen obstacles or to seize newly created opportunities.
The rationale for specifying a road map
In societies as polarized as TE's on the eve of regime change (Brabant 1998, p. 74ff.), it is necessary to do something bold rather quickly if we want to lift economic entities from lethargy and prevent a return to the old regime. Depriving politicians and bureaucrats of the economic resources they previously managed can be highly desirable. In formulating transformational policies such as those desired by TE, it is crucial to be clear that the market is essentially a set of human-made institutions and not an immutable part of the natural environment.
If only for that reason, if one puts aside market fundamentalist ideology (Petrella 1999), one can seek relief through non-market intervention, when the latter is not itself subject to failure, the costs of which exceed the dimension of the market distortion.
Transformation – an evolving agenda subject to uncertainty
Nor does it provide an ironclad guarantee that minimal separation of powers can be implemented at an affordable cost, given other priorities (Laffont 1999). In other words, in designing the transformation agenda, one must investigate how quickly functioning markets can be set up and what can be done in the interim to mitigate the market failure that is endemic to the suigenic nature of transitions typical of economies that work towards new modernization, and those widespread even in mature market economies. (3) monetary uncertainty, including the viability and stability of the national currency, affects almost all nominal sizes or titles, undermining confidence in holding money or fragmenting the security of nominal instruments; (4) substantial legal uncertainty prevents prompt adjudication of most contract disputes and can only be remedied gradually (Pistor 1999, pp. features of society such as homogeneity, ethnic or religious strife, or submission to authority;.
The depth and scope of the latter depend on the inherited weaknesses, the boldness of the implemented transformation program and the 'luck' and 'plucking' of transition managers, including in obtaining assistance from abroad.
On the politics of transformation
The initiative and independence of the executive power are, under certain conditions, crucial for the inherited situation to be greatly complicated. Second, the politics of transformation requires that a minimum sociopolitical consensus be achieved and maintained, or regained if lost, regarding the total amount of the burden of transformation and its distribution within society and over time. This, by definition, goes beyond the night watchman role of the state at the core of neoliberalism.
As long as the compass of the state, provided that governance skills are available or can be acquired relatively quickly, must be wider than that of the night watch, the state must be an essential institution of the nascent market.
Success and failure with transformation policies
None of the "indices" of transformation that I am familiar with even come close to agglomerating the diverse elements of any comprehensive transformation agenda. It all depends on the specific element of the transformation agenda being addressed. This of course needs to be individualized so that one can ideally compare what needs to be done with what has actually been achieved in the dimensions of the transformation agenda that matter.
Few, if any, are on a self-sustaining growth trajectory, as recent events in the wake of the Russian crisis have amply underlined.
On the starting conditions of economic transformation
The extent to which these groups participated in the transfer of power and were able to govern depended most importantly on the conviction of the population at large of the desirability of moving towards political pluralism to arbitrate political rivalry and the extent to which instead of interest and various interest groups and the opposition had benefited from political liberalization before the fall of state socialism. Pro-independence sentiment determined the extent and urgency of the need to build a new nation, i.e. the extent to which political leadership could focus primarily on economic transformation. But it is unstable as his unstable united front rests on opposition to the regime in the country rather than on a shared understanding of the changes that will begin.
There may have been remnants of experiences with democratic traditions (as in Czechoslovakia) and market economy (the Baltic states and some Eastern European countries).
Economic and political intermediation, markets, and transformation
Instead, the policy should focus on the components that are absolutely necessary for the smooth allocation of resources. But this also depends on the acceptable costs of adaptation, including error correction, and unexpected events that may require fine-tuning. Measures that reduce transaction costs have an important place in the central agenda of transformation, as they strengthen the search potential of companies that seek more cost-effective ways of producing higher quality products.
This certainly applies to the rapid establishment of the key institutions of the market, to ensure that the "institutional" legacies of state socialism are soon eradicated, and the introduction of protective measures during the transformation to prevent the legacies of state socialism from encroaching on the emerging market economy or nipping it in the bud.
Towards a constitutional framework for political coordination
A modern society must also enable all those who are willing to be integrated into its framework and respect its parameters until they can be changed by consensus. A society that deliberately gives the individual the feeling of being at the mercy of authority cannot be considered "modern", regardless of its ability to create material prosperity. At the same time, a modern society must embrace a social policy that protects the losers and cannot tolerate more than a certain degree of dissatisfaction, anomie and alienation.
It requires that residents can not only participate, but actually participate in shaping their environment; that they should not feel at the mercy of authority, but should determine their own destiny; and that they accept as binding certain rules of moral conduct in business, political and social interactions.
On success and failure of transformation policies
Gains in income, wealth, and well-being for broad sections of the population have been modest at best. Despite all the dynamism of the new private sector, there is still plenty of room in most TEs to mobilize domestic savings for productive investment. Many other less bright features of the transition could be listed, even without delving into its non-economic, especially political and social aspects.
It simply subtracts GDP growth from the sum of unemployment and inflation rates (Brabant 1998, p. 135).
Conclusions
1993a), "Lessons from the wholesale transformations in the east", Comparative Economic Studies, Vol. 1993b), Industrial Policy in Eastern Europe—Managing the Transition (Dordrecht, Boston, MA and London: Kluwer Academic Publishers). Hay, Donald (1993), "The assessment: competition policy", Oxford Review of Economic Policy, Vol. 1990), "Market design and competition as a constraint on self-interested behavior", in Economic Policy and the Market Process – Austrian and Mainstream Economics, edited by K. Sztompa, Piotr (1996a), "Looking back: the year 1989 as a cultural and civilizational rupture ”, Communist and Post-Communist Studies, Vol. 1996b), “Trust and Emerging Democracy: Lessons from Poland”, International Sociology, Vol.
Williamson, John (1993), "Democracy and the 'Washington consensus'," World Development, Vol. 1994), “In search of a manual for technopols”, in The Political Economy of Policy Reform, geredigeer deur John Williamson (Washington, DC: Institute for International Economics), pp.
7 A chequered history
It was not until the end of 1990 that the Albanian Labor Party gave in to the demands of the emerging political opposition. Undisclosed sums of money were spent supporting Democratic Party candidates. Does this mean that Gligorov's analysis of the Albanian scene should be abandoned?
Jarvis, Chris (2000), 'The rise and fall of pyramid schemes in Albania', IMF Staff Papers, vol.
8 Bulgaria
The next section examines the macroeconomic aspects of the crisis and the post-crisis period in the context of CBA. This structural policy was one of the main causes of unemployment growth in the second half of 1999. The real exchange rate of the leva during the CBA period generally follows the same dynamics as the inflation rate (see Figures 8.1 and 8.6).
The current account balance and the overall balance of payments registered sharp declines during the first period of the CBA era in Bulgaria.
