The Economics of Transition.

Steindl, Josef

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Document type:: Works

Collection:: Josef Steindl Collection

Title:: The Economics of Transition.

Author:: Steindl, Josef

Scope:: Typoskript, 11 Seiten, nummeriert

Year of publication:: 1991

Source material date:: [25.09.1991]

Language:: English

Description:: In this article Steindl makes some propositions for the economic transition of the former socialist countries and points out the necessity to avoid unrealistic promises of quick recovery. He suggests a two sector model of transition that will need ten or twenty years - a policy of gradual adjustment to avoid mass unemployment. The model demands that the modern sector should gradually expand to the extent the old sector should gradually shrink. This shift would most naturally be operated by a a wage differential. Therefore it will be imperative to protect the old sector from foreign competition in some form for a certain period of time. Furthermore he argues that there are advantages and disadvantages concerning the question of property and especially the privatisation of state owned concerns, but that it would be irresponsible policy to throw away these assets at this particular time the more so that historical experience had shown that similar large scale dispostion of public property contains the danger of a mire of corruption. The transition requires intense communication with the capitalist world, but unrestricted opening would lead to a one sided stream of products while fuel and raw material reserves will be sold at bargain prices. Therefore Steindl proposes a special form of protectionist policy and a control of capital movements. However, there will be a shift in income distribution and an increase in the inequality of incomes.

Note:: Unveröffentlichtes Typoskript.

Topic:: Economic policy

JEL Classification:: P20 [Socialist Systems and Transitional Economies: General]

Shelfmark:: S/M.58.6

Access:: Free access

8 able to live for next to nothing while the fuel and raw material reserves of the country, unless controlled, will be sold at bargain prices. The trade problem is of course aggravated by the strong need of these countries for imports of technology in the form of equipment or of licences. There is therefore no way of avoiding a protectionist policy, whatever its special form. Equally, there is need for the control of capital movements which does not at all exclude favoured treatment for the foreign direct investors who want to transfer their gains. The promise made by an official of the Soviet Union recently to establish convertibility of the rouble within two years is worth mentioning as an example of the kind of talking through one's hat which has become customary among enthusiastic politicians concerned with reform. Two or three years ago the Yougoslav government announced that it had estblished the dinar at parity with the German mark without convincing anybody that it had the reserves to defend this rate. It seems extremely unkind to remember this now but I can not help it. Additional structural problems. It should be mentioned that the two sector model of transition is complicated by the existence of additional structural problems. There is first the well known bias in the socialist countries in favour of basic industries (especially serious now in face of the decline for various reasons of these industries in the west) and against services, including the whole system of distribution and the provision of repairs which plagues the consumer and harms the functioning of industry also. The other structural problem is the existence of a top heavy armament sector which contains a great part of the best labour,engineering,scientific and management

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