StudentShare solutions
Triangle menu

Transition Economies - Essay Example

Nobody downloaded yet
The centrally planned economies existed in Soviet Union. The problem in the central economies was its inability to generate wealth and raise the living standard. The production and distribution would come from central government, deciding for the states, what to produce and how to distribute in what quantities. The workforce was assumed to be fully employed and salary was predetermined, regardless of the potential of the worker (Greenspan, 1997).
In these economies there was no effective market clearing mechanism, the result was huge surplus of unwanted goods by population on one side and shortage of goods, which were in needed. This imbalance in demand and supply led to rationing the quota, as the quantity of the goods was limited. As production and planning was followed through state orders rather than by market demand, the finance had no control over the actions that were remotely planned by the center without following the market rules (Greenspan, 1997).
In such economies, there was nothing like credit, interest or market values, as every thing belonged to the state. Due to the lack of a developed financial system, these economies as a consequence wasted their resources as much as much five to seven times more than Western European economies, yet without any productive result, which led to the dismemberment of Soviet Union and the rest of Eastern Bloc in early 1990s (Greenspan, 1997).

These countries started the free market polices for the following reasons (IMF, 2000)
The free market economy allows prices to be determined by demand and supply with little market barriers.
The macroeconomic stabilization process after initial burst of high inflation stabilizes the inflation and allows the liberalization to take place, which keeps a tight control over the state budget and growth of money allowing the growth of progressive fiscal system to develop.
The privatization process creates a strong financial sector allowing the companies to produce the goods, which are in demand in the market.
The presence of a legal and institutional reforms establish the rule of law by state leading to the creation of competitive policies.

These economies had no financial infrastructure; they had to develop their economies from scratch allowing liberalization, macroeconomic stability and market mechanism, despite the surmounting hurdles in their ways. It was thought by these states that the hardship phase will be temporary and will be vanish with time (Greenspan, 1997).

This transition started liberating their economies, and in initial phase went into full swing of inflation and reached 450 percent a year in Central EU States and nearly 900 percent in the Baltic states, but stabilized by 30 percent in later years (IMF, 2000).

The experiment of free market in the transition economies has not been a real success as it was thought to be; however according to IMF, the transition economies became more democratic with greater freedom of speech and expression. And now the countries of Central Europe, such as Czech Republic, Hungry and Slovakia are developing very fast and are ...Show more


The first part of this assignment deals with "Transition Economies" and explores the reasons for joining in the "Free Market also depicting the impact of this change. The 2nd essay describes "Advantages and Disadvantages of European Monetary Union", while the 3rd essay elucidates the "Corporation Social Responsibility", exploring the concept of social responsibility from ancient times to modern day corporations.
Author : connellytalia
Transition Economies
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the essay on your topic
"Transition Economies"
with a personal 20% discount.
Grab the best paper

Check these samples - they also fit your topic

Transition and Loss. How Managers can understand the Issue
Transition and Loss. Transition is a passage or movement from one state to another for instance from adolescence to adulthood. It could be the period taken by something to change from one state to another. Loss on the other hand could be defined as reduction in value of a given object.
8 pages (2000 words) Essay
To What Extent Was the Effectiveness of Transition Strategies Dependent on the Initial Conditions of the Transition Economies
From an overarching context the research established the understanding that there has undeniably been significant differences between the successes of transition strategies in certain countries. The research has then argued that the two major pre-liberalization factors that impact transition strategies are the countries’ macroeconomic state and the extent that steps were taken to achieve greater levels of privatization during the period of central control.
7 pages (1750 words) Essay
Economics of Transition
Rent Seeking 6 4. Lender of the Last Resort 8 5. Conclusion 9 6. References 11 1. Introduction A remodelling of the economic structure during the last century has ensued in substantial transformations in the social and political spheres. In the annals of history, the competition between socialist and capitalist economies will remain as one of the most imperative events that occurred in the twentieth century.
8 pages (2000 words) Essay
Labor Reallocation in The Transition Economics
The process of transition can affect the lives of billions. The economic conditions of the population have witnessed a drastic change in the countries where transformation of the economic institutions has taken place. The event will be remembered for the contest between the two economic systems, capitalist and the socialist and the former defeated the later.
8 pages (2000 words) Essay
Poland: Business Culture As Source of Inner Strength For a Transition Economy
Taking Poland as a case study, we maintain that the underlying strengths or weaknesses in the cultural values of these transition economies ultimately tell on how they measure up to the challenges of change and reform. According to Hofstede, G. (1980), the characteristics of culture "seep into the business organizations operating in one country such that society and organization reflect each other structurally." If that were so, the rough sailing of a number of the transition economies may be traced to a shortcoming of culture.
8 pages (2000 words) Essay
Creating and Sustaining Growth In the Transition Economy of Brazil
As a result, there is a great variance in the performance of today's transition economies. Some flounder and others succeed, and some make good at the initial burst only to stumble before adverse external factors. This only shows that growth is harder to predict, create and sustain in the once centrally planned economies.
12 pages (3000 words) Essay
Free Economic Zones in Transition Economies and Its Impact of Economic Development of a Country
llion people that are working at the – more or less – 900 to 3000 FEZs or Free Trade Zones (FTZs), Export Processing Zones (EPZ), Industrial Free Zones (IFZ) and Technological Free Zones (TFZ) that are situated in 90 to 116 countries and regions around the world. 1 2 FEZs
40 pages (10000 words) Essay
What kind of challenges and opportunities are there for managers in helping their team and service users deal with transition and loss in health and social care
Transition could lead to loss and loss is also likely to result to transition. For instance managers who frequently experience loss in their
8 pages (2000 words) Essay
To what extent was the effectiveness of transition strategies dependent on the initial conditions of the transition economies
Within this context of understanding one recognizes that a central area of concern has been transition economies. Transition economies are those where a nation is shifting from a centrally planned economy to a free market. Within the modern world environment this has become a
8 pages (2000 words) Essay
How can rent-seeking activity by banks disrupt the process of hardening budget constraints in the transition economies
This competition not only transformed the contours of politics in the twentieth century but also led to the creation of two parallel and competing economic systems. Transition can be defined as the race of transformation of centrally planned
8 pages (2000 words) Essay
Comments (0)
Click to create a comment
Let us find you another Essay on topic Transition Economies for FREE!
Contact us:
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
Join us:
Contact Us