Still, the problems arising for example from the shortage of domestic saving and the deficiencies of the capital markets cast the principal issues in a very different light. The major other components in a reform programme are generally thought to be macroeconomic stabilisation following price liberalisation; opening the economy to foreign trade and competition; and institutional reform, including reform of the legal system and reform to the functioning of the state. 3.2 Case studies of Privatisation in Eastern Europe 3.2.1 One of the seminal examples of privatization has occurred in East Germany, distinguishing this region from the rest of Eastern Europe.
This nation witnessed rapid privatization of state-owned enterprises and a dramatic process of deindustrialization. 3.2.2 Of all the former centrally planned economies (CPEs) in the Eastern European region, Hungary’s shift to a market economy is generally regarded as the most successful. It is also one of the longest standing, having begun with the introduction of the New Economic Mechanism (NEM) in 1968. 3.2.3 The principal concern is privatization when defined as the transfer from state to private owners of full ownership rights.
In Poland from 1989 to 1993, such a transfer has been a significant, but not yet the dominant, cause of the observed fast increase in the share of the private sector in the GDP. Endogenous growth of the private sector, commercialisation of the co-operative sector, and mass leasing of small businesses have so far been the main causes of the share’s increase. 4. The transition Economies: Russia & China 4.1 Economic Performance during the Reform Period in China and Russia 1976 was a landmark year in terms of Chinese economic change. This year witnessed the death of Mai Zedong and the arrest of the Gang of Four.
While important reforms occurred in the immediate aftermath of Zedong’s death, most historians note that the largest changes occurred two years after this time with the Third Plenum of the Eleventh Central Committee of the Chinese Communist Party in December 1978. Conversely, Russia witnessed significant changes with Gorbachev’s election to the position of General Secretary of the Soviet Communist Party in March 1985. In 1986 the policies of perestroika were instituted. These contrasting reform periods produced drastically different results.
4.2 The need for reform of the Chinese and Soviet Systems of political economy There was a small but significant group of critics in both counties who believed that the communist system of political economy only needed small changes to produce greatly improved results.
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