Full text: The Economics of Transition.

historical experience about similar large scale disposition of 
public property would seem to show the danger of being submerged 
in a mire of corruption.lt would seem to be more cautious, 
therefore, to try and improve (where necessary to replace ) the 
management of the state concerns and put pressure on them to 
improve quality of their products. 
The transition and the outside world. 
The extent of the transition problem is reflected in particular 
also in the relations to the capitalist world ( the "west" ).With 
a productivity of one half or less the former socialist countries 
can not expect to be able to establish relations of liberal trade, 
convertibility and free capital movements with the outside 
world.An intensive communication with this world is necessary in 
order to obtain the technology and organisational know how which 
is so badly lacking in the east. At the same time the unrestricted 
opening of the country would lead to a one sided stream of 
products from the west to the east which is not made more 
acceptable or easier to manage by a stream of labour in the 
opposite direction. 
Needless to say, dynamic problems of this large dimension can not 
be treated by an abstract static theory. According to such a 
theory it would always be possible to find a rate of exchange and 
a ratio of real wage at which an equilibrium of imports and 
exports could be established. But if the preference for foreign 
goods is very large and the structure of production does not leave 
much room for exports the depreciation may have to go so far as to 
establish a real wage which is absolutely unacceptable and the 
terms of trade will be turned against the unfortunate country to 
such an extent as to make it a paradise for tourists who will be

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