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Socialism, Capitalism, and Transition-Coordination of Economic Relations and Output Performance

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Dirk Bezemer ()
Uwe Dulleck ()
Paul Frijters ()

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Abstract

In this paper, we relate the differential development of market and planning systems to the creation and destruction of contacts. In our general equilibrium model, a greater stock of relational capital (business contacts) increases the sold output of a representative firm. Besides this direct effect of contacts, the replacement of some contacts is needed for innovation. Replacement involves negative external effects on the relational capital of other firms in the economy. Here systems differ: whereas the market system allows everybody to to do so. Given a limited span of control, and strong political lobbying against contact destruction, a planner was less able to replace old cal progress in the planned economy. The technological gap created characterize steady states of the two systems and simulate the output development for socialism and the transition process to capitalism. We discuss how a dual track approach, insider privitization, and a civil society may impact on transition paths.

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Paper provided by University of Vienna, Department of Economics in its series Vienna Economics Papers with number 0305.

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Date of creation: Mar 2003
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Handle: RePEc:vie:viennp:0305

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Find related papers by JEL classification:
P21 - Economic Systems - - Socialist Systems and Transition Economies - - - Planning, Coordination, and Reform
P51 - Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems
O33 - Economic Development, Technological Change, and Growth - - Technological Change - - - Technological Change: Choices and Consequences; Diffusion Processes

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