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Liberalization and the Behavior of Output During the Transition From Plan to Market

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  • Ernesto Hernández-Catá
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    Abstract

    This paper deals with liberalization and the evolution of output during the transition from plan to market. It explains why strong liberalization leads to a comparatively steep fall in output early in the transition, but a relatively strong recovery later on. Because it takes time to restructure the capital stock inherited from the old system, liberalization initially leads to transitional unemployment of capital and the contraction of the old enterprise sector. By making room quickly for the new, more efficient enterprises, however, liberalization also sets the stage for recovery and a much higher level of income in the medium term.

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    Bibliographic Info

    Paper provided by International Monetary Fund in its series IMF Working Papers with number 97/53.

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    Length: 29
    Date of creation: 01 Apr 1997
    Date of revision:
    Handle: RePEc:imf:imfwpa:97/53

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    Cited by:
    1. Gaitan, Beatriz & Pavel, Ferdinand, 2000. "Is 'Getting The Prices Right' Always Right? How Trade Liberalization Can Fail," 2000 Annual meeting, July 30-August 2, Tampa, FL 21881, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Nauro F. Campos & Fabrizio Coricelli, 2002. "Growth in Transition: What We Know, What We Don't, and What We Should," William Davidson Institute Working Papers Series 470, William Davidson Institute at the University of Michigan.
    3. Fabian Gouret, 2003. "Méthodes de privatisation et évolution de l'output dans les économies en transition," Cahiers de la Maison des Sciences Economiques j04028, Université Panthéon-Sorbonne (Paris 1).
    4. Géomina Turlea & Philippe Rusin & Gérard Duchêne, 2001. "Innovation, mobilité du travail et croissance dans la transition," Revue d'Économie Financière, Programme National Persée, vol. 6(1), pages 481-499.
    5. Alex Segura-Ubiergo & Alejandro Simone & Sanjeev Gupta & Qiang Cui, 2010. "New Evidence on Fiscal Adjustment and Growth in Transition Economies," Comparative Economic Studies, Palgrave Macmillan, vol. 52(1), pages 18-37, March.
    6. de Melo, Martha & Denizer, Cevdet & Gelb, Alan & Tenev, Stoyan, 1997. "Circumstance and choice : the role of initial conditions and policies in transition economies," Policy Research Working Paper Series 1866, The World Bank.
    7. Flabbi, Luca & Paternostro, Stefano & Tiongson, Erwin R., 2007. "Returns to education in the economic transition : a systematic assessment using comparable data," Policy Research Working Paper Series 4225, The World Bank.
    8. E. Abdul Azeez, 2002. "Economic reforms and industrial performance: An analysis of capacity utilisation in Indian manufacturing," Centre for Development Studies, Trivendrum Working Papers 334, Centre for Development Studies, Trivendrum, India.
    9. Ichiro Iwasaki, 2004. "Evolution of the Government–Business Relationship and Economic Performance in the Former Soviet States – Order State, Rescue State, Punish State," Economic Change and Restructuring, Springer, vol. 36(3), pages 223-257, September.
    10. Wanki Moon & Wojciech J. Florkowski & Larry R. Beuchat & Anna V. A. Resurreccion & Manjeet S. Chinnan & Pavlina Paraskova & Jordan Jordanov, 1999. "Effects of product attributes and consumer characteristics on attitude and behavior: The case of peanuts in a transition economy," Agribusiness, John Wiley & Sons, Ltd., vol. 15(3), pages 411-425.
    11. Hans Pitlik, 2000. "Explaining economic performance during transition: What do we know?," Intereconomics: Review of European Economic Policy, Springer, vol. 35(1), pages 38-45, January.
    12. Zuzana Brixiova & Wenli Li, 1998. "Skill Acquisition and Private Firm Creation in Transition Economies," William Davidson Institute Working Papers Series 162, William Davidson Institute at the University of Michigan.
    13. Domac, Ilker & Peters, Kyle & Yuzefovich, Yevgeny, 2001. "Does the exchange rate regime affect macroeconomic performance : evidence from transition economics," Policy Research Working Paper Series 2642, The World Bank.

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