The Transition Programme: Interdependence between the Key Components
Economic transition consists of changing the system of control rights, incentives and information in an economy. The change should result in a better ‘match’ between control rights and residual claims, making the motivation of economic agents consistent with the aim of value maximization. As discussed in Chapter 1, one important element of efficiency relates to flexibility: the producers should adequately respond and adjust to changes (1) in the real structure of costs (scarcity), and (2) in the set of preferences of buyers. However, it is not only the behaviour of producers, but also of other economic agents, that matters: households should be motivated to save instead of hoarding goods, and investors to chose the long-term best value-adding projects.
KeywordsSugar Europe Income Romania Kazakhstan
Unable to display preview. Download preview PDF.