Economics and Politics of Transition

Abstract

Transition is a process, a movement from one state to another state, in our case the movement from a stagnant state of central planning to a new dynamic state of a market economy. Essential for the analysis of transition are such questions as:

• — do we know the starting point, the exact state of the system which is to be given up?

• — do we know the final state, the ultimate goal of the process of transition?

• — can we say something about the way from here to there, the trajectory?

• — can we say something about the time needed to get from here to there, the transition period?

• — what are the driving forces or, since we are dealing with man-made systems, who is expected to take what actions at what time?

• — what are the restraining forces, or who is expected to resist the transition by what actions at what time?

• — what are the transition costs and who will gain and who lose?