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

Ten years of post-socialist transition lessons for policy reform

Listed author(s):
  • Koldko, Grzegorz W.
Registered author(s):

    It is naive to believe that a market economy can be introduced by"shock therapy,"the author argues. In the several cases when it has been attempted, it has brought problems. A market economy requires adequate institutions and appropriate behavior, both of which can be introduced only gradually because they require new organizations, new laws, and changes in behavior of various economic entities. In 1989 influential financial organizations, political bodies, and professional economists seemed to agree - the so-called Washington consensus - on the main points of economic policy reform. Although the economic policies underlying that consensus were developed with no concern for post-socialist transformation, they have significantly influences economic thought and action in Eastern Europe and the countries of the former Soviet Union. And because those policies were not designed for the overhaul of post-socialist economies. The have failed, especially since they have not yet brought sustainable growth. A new post-Washington consensus is developing. Based on lessons from experience so far. Post-socialist occurrences are also contribution to developing policy reorientation. Among realities policymakers must recognize: A) Above all, appropriate institutional arrangements are needed for growth. B) Institution-building by its very nature must be gradual. C) the size of government is less important that the quality of government policy and how the government changes. D) If the formation of institutions is left to spontaneous forces unleashed by liberalized markets, the vacuum will be filled by informal institutions. E) The judiciary system must be transformed to serve the market economy. F) Deregulating the post-socialist economy requires shifting competence and power from central to local governments. G) The development of nongovernmental organizations must be accelerated. H) Government concern about equitable growth and income policy is important during the transition. I) With the support of international financial institutions, countries must monitor and control short-term capital liberalization. J) The Bretton Woods organizations should reconsider their policies toward transition economies - and should especially provide more support for institution-buildings and equitable growth.

    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:
    Download Restriction: no

    Paper provided by The World Bank in its series Policy Research Working Paper Series with number 2095.

    in new window

    Date of creation: 30 Apr 1999
    Handle: RePEc:wbk:wbrwps:2095
    Contact details of provider: Postal:
    1818 H Street, N.W., Washington, DC 20433

    Phone: (202) 477-1234
    Web page:

    More information through EDIRC

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

    in new window

    1. 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.
    2. Maxwell J. Fry, 1993. "The Fiscal Abuse of Central Banks," IMF Working Papers 93/58, International Monetary Fund.
    3. Burgess, Robin & Stern, Nicholas, 1993. "Taxation and Development," Journal of Economic Literature, American Economic Association, vol. 31(2), pages 762-830, June.
    Full references (including those not matched with items on IDEAS)

    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:wbk:wbrwps:2095. 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: (Roula I. Yazigi)

    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.