Abstract
In their remarkably swift adoption of free trade with full current account convertibility in 1990, both East Germany and Poland experienced rapid industrial decline: the collapse — or threatened bankruptcy — in an astonishing wide variety of manufacturing and agricultural industries that turned our expost facto not do be internationally competitive. Are there constraints on how fast currency convertibility, and free arbitrage between domestic and foreign markets for goods and services, is best achieved in a liberalizing socialist economy?
This paper was not presented at the International Economic Conference Building the New Europe. It is a shortened, adapted version of Chapter 12 in the author’s forthcoming book The Order of Economic Liberalization; Financial Control in the Transition to a Market Economy to be published by the Johns Hopkins Press in July of 1991. I would like to thank John Hussman, David Robinson, John Williamson and Michael Treadway for their help in preparing this paper.
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© 1993 SIPI Srl, Rivista di Politica Economica
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Mckinnon, R.I. (1993). Liberalizing Foreign Trade in a Socialist Economy: The Problem of Negative Value-Added. In: Baldassarri, M., Mundell, R. (eds) Building a New Europe. Central Issues in Contemporary Economic Theory and Policy. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-22922-2_6
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