Got a tricky question? Receive an answer from students like you! Try us!

Economic Transition from Centrally Planned to Market Economy - Essay Example

Only on StudentShare
Masters
Essay
Politics
Pages 7 (1757 words)

Summary

The collapse of the Soviet Union in 1991 had serious repercussions for countries in Eastern and Central Europe. For many years these countries had been under the influence of Soviet economy. Under communism economic activity was centrally planned but now there were being forced to change to market economy over-night.

Extract of sample
Economic Transition from Centrally Planned to Market Economy

These are countries such as Russia, Ukraine, Baltic Republics, Belarus, Georgia, Kazakhstan, etc. These former Soviet Union (FSU) countries had the biggest challenge.
The FSU countries had all been centrally controlled from Moscow. The removal of that control left them with a vacuum at the top. Camdessus (1994) observes that "the old structures of planning and control were disintegrating, creating conditions of economic and political crisis." They had to build administrative capacity and also take control of companies that were also controlled from Moscow. The challenge these countries faced was of a political transition from communism to democracy which was happening at the same time with economic transition.
Their first challenge was to have a currency of their own and start formulating their monetary and fiscal policies. The currency had to be stabilized and be made convertible. They inherited weak inefficient industries surviving on subsidies. It was important to ensure that while price controls are removed inflation does not get out of hand. Programs to revive industrial production had to be in place to ensure that the economy would begin to function. Inevitably inflation soared in all these countries due to collapse of production and lack of resources to import commodities. ...
Download paper
Not exactly what you need?

Related Essays

Economy of Finland
This led to movements for independence and self assertion on the part of Finland as early as the First World War. In this regard, the relationship between the Soviet and Finland remained inconsistent, until Finland declared itself independent in 1912, following an upheaval by the Bolsheviks. This was a period when the Finnish German ties were looking up. Following Soviet aggression as well as…
36 pages (9036 words)
Globalisation Transationals and Economic Policy
136-137). Assuming that Boeing has a headstart, the likely outcome is that of Airbus deciding not to produce the aircraft, in favor of 0 loss, rather than to enter the market against Boeing, in which both firms would each incur losses amounting to -5. However, once Europe decides to subsidize Airbus, the outcome of the game shifts in favor of Airbus, and it can decide to go head-on with Boeing in…
12 pages (3012 words)
Post-Soviet Russia
The primordial president of the Russian Federation was Boris Yeltsin, a former member of the old Soviet Politburo who declared the moribund of the old Soviet-style regime. The reforms that he advocated pointed the country in the direction of democracy and a free-market economy. A small vested group and advisers took control from the debilitated president, and they ran the country as an oligarchy,…
12 pages (3012 words)
Chinese Economy Master Case Study
Or is that true Chinese market for instance, has rolled out from the planned economy to a free market economy to a degree retaining its own planned model in the core of the change. At this level, the impact of the planned economy and the change that it has brought into China has been impressive1. This paper targets to present both the sides of the market economies. An analysis has been done at the…
10 pages (2510 words)