Post-Soviet-Type Economies in Transition.

• Author: Elliott, John E.

This book contains a collection of papers written between 1990 and 1992. It provides impressive theoretical and empirical analyses of two (sets of) central issues of "Post-Soviet-Type" economies in transition: stabilization and (market) liberalization; privatization and institutional reforms. The economies primarily referred to are Poland (heavily), Hungary and Czecho-Slovakia (moderately), Yugoslavia and East Germany (lightly). Major topics addressed include an explanation of the "steep fall in industrial output" in these countries (chapter 1); the initially promising, but subsequently disappointing, transition in Poland (chapter 2-3); an insightful typology of developments (expected versus unexpected; actually happened versus did not happen) (chapter 4); a rousing, though partisan, review of privatization theory (chapter 5); a short, but instructive, primer on the major mistakes "damaging to successful privatization" [p. 169, chapter 6]; and, saving the best until the last, an explication of the need for and some examples of institutional reforms without which transition policies may trigger less successful, indeed perverse, consequences (chapter 7). These topics are preceded by an Introduction, which benefits from having been written after the papers which comprise the book and helps to provide linkages and cohesion which a compendium of papers, even when prepared by a single author, often fails to exhibit. Each chapter is succeeded by a list of references, including numerous recent contributions by Winiecki.

In chapter 1, the author addresses the dramatic fall in industrial output (30% to 45%) in the initial phase of transition. Some, notably that associated with the transition program's "initial macroeconomic squeeze," is a genuine transition cost and "actually reduces welfare." But the "major pan" has "no impact" on welfare and is, instead, a temporary accompaniment of the shift from a less efficient to a more efficient economy. For example, the shift out of central planning enables a "shrinkage of the oversized industrial sector" relative to western market economies and permits enterprises (and households) to reduce the ratios of inventories to production (and consumption).

In Poland, Winiecki observes, transition pains were intensified in the early 1990s by both policy errors and surviving vestiges of behavior patterns from the pre-transition economic system. Policy mistakes included an unrealistic attempt to finetune, overly...