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Globalization and Catching-Up in Transition Economies

Globalization and Catching-Up in Transition Economies

Grzegorz W. Kolodko
Copyright Date: 2002
Edition: NED - New edition
Published by: Boydell and Brewer,
Pages: 120
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  • Book Info
    Globalization and Catching-Up in Transition Economies
    Book Description:

    Kolodko, former finance minister of Poland, considers the links between issues of globalization and post-communist transition, the two most important economic features of the turn of the century. He discusses the pattern of economic growth and contraction of the past fifty years, and reviews the options for the next half century. He accounts for the severity of the transitional recession in Eastern Europe and the former Soviet Union as a result of both the legacies of the past and current policy mistakes, but demonstrates how structural reforms and gradual institutional building have enabled some postsocialist economies to recover. He proposes that, within the wider context of globalization, several of these emerging market economies will be able to catch up with the more advanced industrial countries, but emphasizes the need for quality growth policies and continuing coordination between development strategies and efforts toward structural reform. Grzegorz W. Kolodko is John C. Evans Professor in European Studies at the University of Rochester, and Director of TIGER -- Transformation, Integration and Globalization Economic Research -- at the Leon Kozminski Academy of Entrepreneurship and Management (WSPiZ).

    eISBN: 978-1-58046-671-4
    Subjects: Economics, Business, Political Science

Table of Contents

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  1. Front Matter
    (pp. i-iv)
  2. Preface
    (pp. v-viii)
    Grzegorz W. Kolodko
  3. Table of Contents
    (pp. ix-x)
  4. List of Tables
    (pp. xi-xii)
  5. List of Figures
    (pp. xiii-xiv)
  6. Chapter One Introduction
    (pp. 1-3)

    The historical endeavor of the transformation from a statist-controlled economy to new institutional arrangements of a free market economy is a unique undertaking. Ongoing transition in the former centrally planned economies of Eastern Europe (EE) and the former Soviet Union (FSU)¹ is an indispensable part of globalization. Without this transition globalization would fall short of its full dimension, comprehensiveness and dynamism. Leaving aside the political and ideological concerns, the main argument in favor of transition to a market system has been a wide conviction that the introduction of a market economy should improve competitiveness and efficiency. Hence—after some short...

  7. Chapter Two Globalization and Postsocialist Transformation
    (pp. 4-6)

    The last decade of the twentieth century has been marked by immense changes in the world economy. The new phase of technological revolution occurring within the countries and continents’ borders, on the one hand, and far-reaching internationalization of capital flow, on the other, have changed the patterns of economic performance. Broad trade liberalization, accompanied by growing liberalization of the financial and capital markets, has brought new prospects and new challenges. These challenges must be tackled not only by governments and various international organizations, but to an even greater extent by the private sector and non-governmental organizations (NGOs). Hence, on the...

  8. Chapter Three Transitional Recession and the Great Depression of the 1990s
    (pp. 7-15)

    Before the historic endeavor of transition to a market economy has been launched, the formerly centrally planned economies were growing. Indeed, they were growing fast. Over the four decades preceding the 1990s the annual rate of growth had averaged from 4.8 percent in the former Czechoslovakia to 8.2 percent in Romania.¹ With such a pace of growth the national income was doubled in sixteen years in the former case, and in less than nine in the latter. However, growth under a centrally planned system had numerous specific features. At least five of them are worth mentioning in the context of...

  9. Chapter Four Different Paths of Contraction, Recovery, and Growth
    (pp. 16-26)

    There is a further strong, although indirect argument convincingly proving that policies that have been actually executed are of critical importance for recession and growth, not the legacy from the past, or bad or good luck. The legacy sometimes may help, but in the postsocialist economies it more often hinders. Yet whatever is such a legacy, the policies do decide. This argument is based on the fact that, despite many structural, institutional, geopolitical and cultural similarities between these countries, they have been moving along quite different paths over the first decade of transition (EBRD 1999, Kolodko 2000a, Blejer and Skreb...

  10. Chapter Five Policy Response and the Role of Institution-Building
    (pp. 27-30)

    From an economic perspective, the statist centrally planned system had come to the end because of the lack of ability to adjust. The changing environment of the world economy became a more demanding and thus rigid, inflexible system, enmeshed in numerous distortions, proved to be unable to improve its competitiveness. Whereas on the one hand globalization brought a threat for countries unable to adjust, on the other hand it brought also a chance to overhaul an inefficient system. In addition to growing internationalization of economic links, the ongoing technological progress together with vast political changes were critical catalysts in deciding...

  11. Chapter Six Market Imperfections and the New Role of Government
    (pp. 31-39)

    As the debate continues about the policies that should be used to shift from state socialism to the market economy and from stabilization to growth, it has become the generally accepted opinion—if not a truism—that none of this can happen without proper government engagement (Fischer, Sahay, and Vegh 1995). Even extreme neoliberal zealots in government—not at all a rare occurrence in Eastern Europe—exercise vast amounts of interventionism.¹ The laissez-faire ideology remains where it belongs, in the world of words, in the sphere of ideas and illusions. In the world of real politics and true policymaking, laissez-faire...

  12. Chapter Seven Small versus Big Government and the Quest for Equitable Growth
    (pp. 40-50)

    It is often claimed that the shortest way to recovery and growth following transitional contraction is to diminish the role of the state. As proof of this, mainstream neoclassical economists cite a few carefully selected examples of successful nations with small governments and fast growth. However, in light of experiences in the world economy, the supposed alternative between big government and a lower rate of growth or small government and a higher rate of growth does not really seem to be an entirely valid one. If there were such a clear choice, then small government might be a better option,...

  13. Chapter Eight External Shocks and the Catching-up Process
    (pp. 51-58)

    The strongest argument, both economic and political, behind the rationale to push towards postsocialist transition to a market system is a widespread conviction that such a system must bring better allocative efficiency and hence higher competitiveness. In due time it must bring higher output and eventually a better standard of living for the people. Yet to accomplish such a result, not only the pre-transition level of output must be recovered—and even reaching this target in some countries will take another decade or two of hard work—but these economies must be put on the path of quick growth.¹ Furthermore,...

  14. Chapter Nine Passive Scenarios and Active Policies for the Twenty-First Century
    (pp. 59-79)

    Against such a background it seems possible to outline some passive scenarios of catching-up in transition economies as well as to provide some policy recommendations for the actions that ought to help realize more positive results among those scenarios.

    In a certain sense the transition ought to be seen as a specific historical endeavor shifting part of global economy from one model of growth and development to another. Although their expansion was following the pattern of cycles typical of a centrally planned system, already in the past all these countries were the growing economies. Hence, there was also catching-up with...

  15. Chapter Ten Policy Conclusions
    (pp. 80-84)

    Having said that much, it is now time to ask one more essential question: are all these analyses and conclusions correct, and especially are the forecasts reasonable, if they happen to have been wrong so many times in the recent postsocialist past? The answer consists of three parts. First, there were many warnings and predictions that accurately were pointing to the risks and to the future unpleasant occurrences, yet they had not been taken sufficiently into account by the policymakers, including international organizations. Second, theoretical assumptions that the transition countries can become fast-growing economies have been correct, nonetheless the conditions...

  16. Statistical Appendix: From Growth Cycles under a Centrally Planned Economy to Business Cycles under a Market Economy, 1950–2004
    (pp. 85-91)
  17. References
    (pp. 92-96)
  18. Index
    (pp. 97-102)
  19. Abstract
    (pp. 103-103)