Who Gains from Restructuring the Post-Soviet Transition Economies, and Why?
AbstractTo explore the mixed economic results and huge distributional changes experienced by post-Soviet economies, I set up a series of theoretical and numerical simulation models using an approach based upon heterogeneous firms, where 'reform' means closure of inefficient capacity. In the presence of significant costs to new firm entry and international capital mobility, restructuring and privatisation can lead to falls in GDP and real wages, while capital is transferred abroad. This situation can occur even under perfect competition, but is worse when industrial production is concentrated and trade costs are high. By contrast, workers can gain when costs of establishing new firms are low, and/or when the inefficient industries are capital-intensive. For countries with high costs of firm set-up and of trade, capital controls may be justified to protect wages.
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Bibliographic InfoArticle provided by Taylor and Francis Journals in its journal International Review of Applied Economics.
Volume (Year): 20 (2006)
Issue (Month): 4 ()
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Other versions of this item:
- T. Huw Edwards, 2004. "Who gains from restructuring the post-Soviet transition economies, and why?," Discussion Paper Series 2004-16, Department of Economics, Loughborough University, revised Jun 2004.
- P30 - Economic Systems - - Socialist Institutions and Their Transitions - - - General
- D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
- D33 - Microeconomics - - Distribution - - - Factor Income Distribution
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