Structural Adjustment, Efficiency, and Economic Growth
AbstractThis paper is intended to make four main points that are relevant for previously planned economies in transition to a market economy. First, national output can be increased by reducing or eliminating relative price distortions through price reform and free trade and by thus enhancing macroeconomic efficiency at full employment. Second, the static output gain from removing a single distortion in a two-sector general equilibrium model with full employment can be captured in a simple formula in which the gain is approximately proportional to the square of the original distortion. Third, substitution of plausible parameter values into the simple formula indicates that the permanent, static output gain from structural adjustment may be large in practice. Fourth, in the end, after the economic transformation has been completed, not only will output per head be higher than initially, but it will probably grow more rapidly than before. The potential dynamic output gain from economic reform is also shown to be substantial.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 911.
Date of creation: May 1994
Date of revision:
Contact details of provider:
Postal: Centre for Economic Policy Research, 77 Bastwick Street, London EC1V 3PZ
Phone: 44 - 20 - 7183 8801
Fax: 44 - 20 - 7183 8820
Find related papers by JEL classification:
- F11 - International Economics - - Trade - - - Neoclassical Models of Trade
- F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Frank Wykoff, 2001. "Creating Capitalism: Using Growth Models to Assess Transition," Claremont Colleges Working Papers 2001-16, Claremont Colleges.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.