IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Models of Transition in Eastern Europe with Untransferable Eastern Capital

Listed author(s):
  • Leamer, Edward E.

    (University of California, Los Angeles)

Economic liberalization in Eastern Europe allows access to a superior foreign technology. The initial adoption of the new technology is limited by the adaptability of current Eastern productive inputs to Western technologies. Further adoption is limited by the rate of Eastern investment in suitable inputs. Both the immediate amount and the continuing flow of adoption can be increased if capital is available from Western sources. Privatization that takes the form of a forced transfer of assets to the advanced sector is not necessarily desirable if all assets are not fully transferable. If the initial Eastern capital/labor ratio is high enough, it is desirable to allocate some of the new entrants in the labor force into the state-supported backward sector even as all new capital investment is placed in the advanced sector. Generally the East should concentrate its product mix on the capital-intensive products using the backward technology and the labor-intensive products using the advanced technology. If privatization is the only option, it is better to privatize the labor-intensive sector, or more accurately the sector that uses intensely those inputs that are most readily transferable to the advanced technology. Because of the preservation of the capital-intensive state-supported sector, the East may initially export the capital-intensive products made with the backward technology. Over time, with capital accumulation and depreciation, the product mix and the trade mix will shift in favor of the labor-intensive product made with the advanced technology.

If 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.

File URL:
File Function: First version, 1994
Download Restriction: no

Paper provided by Institute for Advanced Studies in its series East European Series with number 12.

in new window

Length: 18 pages
Date of creation: Oct 1994
Handle: RePEc:ihs:ihsrop:12
Contact details of provider: Postal:
Josefstädterstr. 39, A-1080 Vienna, Austria

Phone: ++43 - (0)1 - 599 91 - 0
Fax: ++43 - (0)1 - 599 91 - 555
Web page:

More information through EDIRC

Order Information: Postal: Institute for Advanced Studies - Library, Josefstädterstr. 39, A-1080 Vienna, Austria

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:ihs:ihsrop:12. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Doris Szoncsitz)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.