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

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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File URL: http://homepage.univie.ac.at/Papers.Econ/RePEc/vie/viennp/vie0305.pdf
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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
Contact details of provider: Web page: http://www.univie.ac.at/vwl

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  1. Orazem, Peter F. & Vodopivec, Milan, 1997. "Value of human capital in transition to market: Evidence from Slovenia," European Economic Review, Elsevier, vol. 41(3-5), pages 893-903, April.
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  4. Olivier Blanchard & Michael Kremer, 1997. "Disorganization," William Davidson Institute Working Papers Series 38, William Davidson Institute at the University of Michigan.
  5. Ellman, Michael, 1997. "The Political Economy of Transformation," Oxford Review of Economic Policy, Oxford University Press, vol. 13(2), pages 23-32, Summer.
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  7. Campos, Nauro F & Coricelli, Fabrizio, 2002. "Growth in Transition: What we Know, What we Don't and What we Should," CEPR Discussion Papers 3246, C.E.P.R. Discussion Papers.
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  9. Evgeny Gavrilenkov & Vincent Koen, 1994. "How Large Was the the Output Collapse in Russia? Alternative Estimates and Welfare Implications," IMF Working Papers 94/154, International Monetary Fund.
  10. Roland, G. & Verdier, T., 1997. "Transition and the Output Fall," DELTA Working Papers 97-09, DELTA (Ecole normale supérieure).
  11. Xiaowen Tian, 1999. "Market Orientation and Regional Economic Disparities in China," Post-Communist Economies, Taylor & Francis Journals, vol. 11(2), pages 161-172.
  12. Barbara Petrongolo & Christopher A. Pissarides, 2000. "Looking Into the Black Box: A Survey of the Matching Function," CEP Discussion Papers dp0470, Centre for Economic Performance, LSE.
  13. Braguinsky, Serguey, 1999. "Enforcement of Property Rights during the Russian Transition: Problems and Some Approaches to a New Liberal Solution," The Journal of Legal Studies, University of Chicago Press, vol. 28(2), pages 515-44, June.
  14. Akerlof, George A, 1970. "The Market for 'Lemons': Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, MIT Press, vol. 84(3), pages 488-500, August.
  15. Fan, Chengze Simon & Overland, Jody & Spagat, Michael, 1999. "Human Capital, Growth, and Inequality in Russia," Journal of Comparative Economics, Elsevier, vol. 27(4), pages 618-643, December.
  16. Paul Caskie, 2000. "Back to Basics: Household Food Production in Russia," Journal of Agricultural Economics, Wiley Blackwell, vol. 51(2), pages 196-209.
  17. Morris Bornstein, 1999. "Framework Issues in the Privatisation Strategies of the Czech Republic, Hungary and Poland," Post-Communist Economies, Taylor & Francis Journals, vol. 11(1), pages 47-77.
  18. repec:dgr:uvatin:20000026 is not listed on IDEAS
  19. Roberts, Bryan W. & Rodriguez, Alvaro, 1997. "Economic Growth under a Self-Interested Central Planner and Transition to a Market Economy," Journal of Comparative Economics, Elsevier, vol. 24(2), pages 121-139, April.
  20. Brainerd, Elizabeth, 1998. "Winners and Losers in Russia's Economic Transition," American Economic Review, American Economic Association, vol. 88(5), pages 1094-1116, December.
  21. Wenli Li & Zuzana Brixiova & Tarik Yousef, 1999. "Skill Acquisition and Firm Creation in Transition Economies," IMF Working Papers 99/130, International Monetary Fund.
  22. Blanchard, O. & Aghion, P., 1996. "On insider privatization," European Economic Review, Elsevier, vol. 40(3-5), pages 759-766, April.
  23. Cull, Robert & Matesova, Jana & Shirley, Mary, 2002. "Ownership and the Temptation to Loot: Evidence from Privatized Firms in the Czech Republic," Journal of Comparative Economics, Elsevier, vol. 30(1), pages 1-24, March.
  24. Ales Bulir & Zuzana Brixiova, 2001. "Growth Slowdown in Bureaucratic Economic Systems; An Issue Revisited," IMF Working Papers 01/6, International Monetary Fund.
  25. Holger Schmieding, 1993. "From plan to market: On the nature of the transformation crisis," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 129(2), pages 216-253, June.
  26. Kornai Janos, 1994. "Transformational Recession: The Main Causes," Journal of Comparative Economics, Elsevier, vol. 19(1), pages 39-63, August.
  27. Dariusz K. Rosati, 1994. "Output decline during transition from plan to market: a reconsideration," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 2(4), pages 419-441, December.
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