Full text: The Economics of Transition.

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THE ECONOMICS OF TRANSITION. 
The former socialist countries have to effect a transition from 
one economic regime to another. The distance they have to travel, 
the difference between the two regimes, can be measured by the 
production gap between "east" and "west". In comparison to western 
european countries this gap will for most of them be at the least 
1 to 2 if not greater. This still does not take account of the 
greater environmental damage in the east which is the equivalent 
of an additional cost, nor of the consumers discomfort ( queues, 
lack of repair facilities ). 
The reasons for the productivity gap are broadly speaking 
1) Backward technology which is in good part embodied in equipment 
and plant, so that it requires investment to change it. 
A special aspect of it is the neglected infrastructure which is 
overaged and therefore also technically obsolete. 
2) Defective organisation, both within the industrial and other 
concerns, and in the economy at large, as exemplified by the 
neglect of the distribution system and all services including 
repairs. 
3) Inadequate motivation and bad discipline of workers. This 
problem has probably increased in the last stages of the old 
regime and especially in the turmoil of the attempted creation of 
a new one. 
Each of these factors accounts for a large part of the gap and 
each of them takes a long time to remedy. 
Investment. 
The task of building up a largely new infrastructure and a 
modernised industry has been compared to the reconstruction of
	        

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