Patterns of Transition from Plan to Market

Martha de Melo, Cevdet Denizer () and Alan Gelb

The World Bank Economic Review, 1996, vol. 10, issue 3, 397-424

Abstract: The transition from a planned economy to a market economy involves a complex process of institutional, structural, and behavioral change. This article develops an index of economic liberalization and analyzes its interaction with growth and inflation, using data from twenty-six transition countries for 1989-94. The article reveals two paradoxes of transition. First the attempt to maintain output by subsidizing enterprises results in larger declines in output than occur under a policy or reducing subsidies. Second, price liberalization results in lower inflation than occurs under a policy of continued price controls. Strong common patterns exist among countries at similar stages of reform. The common legacy and the associated changes that result from initial disruptions in the socialist economic coordinating mechanisms and subsequent liberalization measures go a long way toward explaining the transition experience. Because strong interactions between liberalization and stabilization are likely, stabilization becomes a priority for the resumption of growth. Copyright 1996 by Oxford University Press.

Date: 1996
References: Add references at CitEc
Citations: View citations in EconPapers (180)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:wbecrv:v:10:y:1996:i:3:p:397-424

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

The World Bank Economic Review is currently edited by Eric Edmonds and Nina Pavcnik

More articles in The World Bank Economic Review from World Bank Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK. Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press ().