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Modelling the transition from a socialist to capitalist economic system

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  • Kitov, Ivan

Abstract

The transition of several East and Central European countries and the countries of the Former Soviet Union from the socialist economic system to the capitalist one is studied. A recently developed microeconomic model for the personal income distribution and its evolution and a simple functional relationship between the rate of the per capita GDP growth and the attained level of the per capita GDP are used to describe the transition process. The developed transition model contains only three defining parameters and describes the process of real GDP per capita evolution during the last 15 years. It is found that the transition process finished in the Central European countries several years ago and their economic evolution is defined by pure capitalist rules. In the long run, this means that the future of these countries has to follow the same path, i.e. dependence on the per capita GDP growth rate of the per capita GDP itself, as the developed countries have had in the past. If the best GDP evolution scenario occurs for the studied countries, they will be able to maintain the absolute lag in per capita GDP relative to most developed countries including the USA. But they will never catch the advanced countries if they follow the same rules of development. In Russia and some countries of the Former Soviet Union the transition process is still far from complete.

Suggested Citation

  • Kitov, Ivan, 2005. "Modelling the transition from a socialist to capitalist economic system," MPRA Paper 2740, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:2740
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    File URL: https://mpra.ub.uni-muenchen.de/2740/1/MPRA_paper_2740.pdf
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    References listed on IDEAS

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    1. Ivan O. Kitov, 2005. "A model for microeconomic and macroeconomic development," Working Papers 05, ECINEQ, Society for the Study of Economic Inequality.
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    Cited by:

    1. Ivan O. KITOV, 2009. "The Evolution Of Real Gdp Per Capita In Developed Countries," Journal of Applied Economic Sciences, Spiru Haret University, Faculty of Financial Management and Accounting Craiova, vol. 4(2(8)_ Sum).
    2. Kitov, Ivan, 2006. "The Japanese economy," MPRA Paper 2737, University Library of Munich, Germany.
    3. Kitov, Ivan, 2006. "Real GDP per capita in developed countries," MPRA Paper 2738, University Library of Munich, Germany.

    More about this item

    Keywords

    socialism; capitalism; transition; economic modelling; GDP per capita;

    JEL classification:

    • P2 - Economic Systems - - Socialist Systems and Transition Economies
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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