Growth in Transition: What We Know, What We Don't, and What We Should

Abstract

This essay surveys macroeconomic issues that marked the transition from centrally planned to market economy in Central and Eastern European and former Soviet Union countries. We first establish a set of stylized facts of the transition so far, namely: (1) output fell, (2) capital shrank, (3) labor moved, (4) trade reoriented, (5) the structure changed, (6) institutions collapsed, and (7) transition costs. We then critically survey the theoretical literature on transition, discussing various explanations for the initial output fall as well as medium term issues, such as optimal speed of transition, disorganization, institutions and sectoral reallocation as a source of output dynamics. Last, we review the empirical literature to assess how well it translates the theoretical models and explains the stylized facts. The essay concludes with a succinct list of suggestions for future research.

Feeling good about the iron rice bowl: Economic sector and happiness in post-reform urban China

“…This institutional segmentation is the breeding ground for inequalities in social welfare benefits to impact subjective well-being. This analysis indicates that further privatization of the economy without a concomitant growth in welfare benefits in the private sector is a cause for concern, as suggested in prior studies (Campos and Coricelli, 2002). These findings highlight the need in contemporary China for a social safety net – including unemployment support – both to reduce the hardship of those displaced from the state sector and to encourage workers to work in the private sector.…”

“…We realize that this comparison is crude, for it does not account for structural forces that may select workers into different sectors (Haltiwanger, Lehmann, and Terrell, 2003) and also influence self-reported happiness. Empirical findings from Eastern Europe reveal that substantial unemployment, as well as labor mobility from the state sector to the private sector, occurred when a market transition took place (e.g., Campos and Coricelli, 2002; Sorm and Terrell, 2000). Job mobility in China also accelerated after the mid-1990s, most of it occurring either within the non-state sector or from the state to the non-state sector (Li, J., 2013).…”

The Great Transformation of Central Eastern Europe: Success and Disappointment

“…I am mentioning some of the recent publications of academic authors that are often cited by the experts: Campos and Coricelli (2002), Csaba (2005), Kolodko (2000), Kornai (2000), Roland (2000), Stiglitz (1999) and Svejnar (2002). 3 It is not within the scope of my presentation to offer a definition of the term 'Western civilization', or to enumerate its characteristics or delineate its borders.…”

Innovation for European competitiveness and cohesion: opportunities and difficulties of co-evolution

“…Growth appears to be better explained as the outcome of a combination of initial conditions and reform policies rather than by growth determinants related to capital and technology accumulation (see Campos and Coricelli, 2002 for an overview). Given their income levels, the Central and Eastern European countries (CEECs) continue to have relatively large numbers of research scientists and engineers (RSE), and many have a favourable education structure.…”