jaromír Šindel eces introduction into the transformation puzzles the puzzles of central and...

Jaromír Šindel

ECES

Introduction into the Transformation Puzzles

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About the Course• Syllabus http://sindel.webpark.cz/puzzles/puzzles.html • Exam Midterm and Final. Presentation.

• Presentation 20 % of grade, abstract for colleagues, talk 10-15 min., questions for discussion, parallel between selected topic and experience in your country.

• Readings Reading will be announced on Wednesday and will be

discussed next week during Tuesday’s and Wednesday’s lectures. • Why Puzzles? Heterogeneity of the economic policies. • What it is C&EE? CEE4 also Vysegrad’s countries; CEE8 =

EE4+Baltic and Slovenia; CEE10 = CEE8 + Romania, Bulgaria • Analyse with EU and USA• Form of Lecture Lectures (1,5 hour) are twice a week. Introducing

into topic. News related to topic from CEE region.Intuitive visit in related economic theory. Presentation. Lecture.

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http://sindel.webpark.cz/puzzles/puzzles.html







Topics• CEEC?• Introduction into the Economic Policy

– Impossible trinity (capital, interest and inflation differentials), …

• From Communism to Capitalism• Why Transformation Puzzles

– Initial conditions, methods of solutions, differences in transition process, …

– Gradual vs. rapid liberalization and deregulation, privatisation, transformation slowndown, law and transformation, monetary or exhchange rate based stabilization programmes, financial and bank crisis, foreign direct investment, structural changes, labor market, welfare state, …

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CEEC?T

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CEEC?T

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GDP per capita in 1997

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Clusters of Region in 1996

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Employment Structure 1998

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Unemployment Ratio in 1998

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Youth Unemployment Ratio 1998

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Female Unemployment Ratio

1998

From Communism to CapitalismT

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ueSource: Agnew - The Czechs and the Lands of the Bohemian Crown .


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President Edvard Beneš approves Prime Minister Klement Gottwald’s reorganized government on February 25, 1948. (ČTK photo)


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May Day parade on Wenceslas Square, 1953. (ČTK photo)


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While it lasted, the largest monument to Stalin in the Soviet Bloc stood in Prague,photographed May 4, 1955. (ČTK photo)


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Alexander Dubček’s reception among the workers at the ČKD factory in 1968 reflected his genuine popularity among Czechoslovak citizens. (ČTK photo)


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Soviet soldiers listen to Czech protests on Prague’s streets, August 21, 1968.(ČTK photo)


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Leading normalizers at an NF meeting on January 27, 1971: from left to right, Gustav Husák, Ludvík Svoboda, and Lubomír Štrougal. (ČTK photo)


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Students and riot police face off on National Avenue, November 17, 1989. (ČTK photo)


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Václav Havel addressing the crowds on Wenceslas Square with the news of the first non-communist government since 1948, December 10, 1989. (ČTK

photo)


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Economic Indicators in Czechoslovakia, 1990–1992 (ANNUAL % CHANGE)


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Czech and Slovak Opinion on the Preffered Form of State (in %)


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•Key questions

• Why did growth slow down so dramatically in the communist countries in the 1970s and 1980s?

• In what sense were the communist economic systems ‘unreformable’?

Theoretical concepts of transformation

– no coherent theoretical concept of transformation (see above)

- the neoclassical economics - the Austrian School (Mises, Hayek); - the Freiburg´ School – Ordoliberalism (Eucken);- the Chicago´ monetarist (Friedman, Stigler);- the Public Choice (Tullock, Buchanan);- the School of Ownership Rights (Coase);- the New Institutionalism (Olson).

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Gradual vs. rapid liberalization and deregulation

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PrivatisationT

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Privatisation and Foreign Direct Investment - comparison

Period Czech Rep. Hungary

The share of privatisation revenue in foreign currency in the total of privat. revenue

1990-96 15 63

1997-99 80 40

The share of privatisation revenue in foreign currency in the total FDI inflow

1990-96 80 47

1997-99 50 20

Source: Hunya (2000), from Schejbal, J. (2002)

Transformation Slowdown

Note: P – Poland, C – Czech R., S – Slovakia, H – Hungary, B - Bulgaria Source: Blanchard, O.: The Economics of Post-Communist Transition

The Evolution of GDP (value in the year before transition = 1.00, year 0 means the year of trasformation beginning)

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Law and Transformation

Source: CERGE: Czech Republic 2005: Year After. www.cerge-ei.cz

Duration of Bankruptcy Proceedings

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Monetary or Exchange Rate Based Stabilization Programme

Inflation differentials, nominal and real ER of the CEE countries

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Where is Dolar´s origin?

– Jaochimsthaler was silver currency from the Jáchymov

– In 1519 was established new stronger silver currency Tolar

– Jaochimsthaler –> Thaler –> tolar –> dolar

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Financial and Bank Crisis

Overdue loans in Hungary and Czech rep., 1993-1998 (% of all loans)

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Note: Maďarsko = Hungary, ČR = Czech Republic.Source: Polouček (1999) and Srholec, M. (2001), from Schejbal, J. (2002)

Share of foreigners on equity in Czech Rep. and Hungary, 1993-1998 (in % at the end of year)

Foreign Direct InvestmentFDI in Czech Republic, Hungary, Poland in 1990-1999. What is behind? (USD)

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Structural ChangesTechnological Levels of Manufacturing Production (constant prices, %)

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Labour Market

Source: UNECE. Economic Survey of Europe, 2000 No. 2/3. www.unece.org

Unemployment and employment rates in the CEECs, 1996 and 1998 (Percentages)

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Welfare StateGini Coefficient

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Pre-transition Mid-transition Post-transition Percentage change from

Country 1987-1989 1996-1997 2001-2002 pre- to post-transition

Czech Republic 19.8 23.9 23.4 18

Estonia 28.0 36.1 39.3 40

Hungary 22.5 25.4 26.7 19

Latvia 26.0 32.6 35.8 38

Lithuania 26.3 30.9 35.7 36

Poland 27.5 33.4 35.3 28

Slovakia 19.4 24.9 26.7 38

Slovenia 21.0 24.0 24.4 16

CEE 8 23.8 28.9 30.9 29

EU 15 26.9 27.8 28.6 7

Source: Kornai, J., 2005.

jaromír Šindel eces introduction into the transformation puzzles the puzzles of central and...

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