Links:
[1] http://www.iesabroad.org/study-abroad/programs/vienna-music
[2] http://www.iesabroad.org/study-abroad/programs/vienna-european-society-culture
[3] http://iie.com/publications/papers/aslund0409.pdf
[4] http://www.bruegel.org/Public/Website.php?ID=2
[5] http://www.cer.org.uk/pdf/bnote_new_europe_feb09.pdf
Transition to Market Economy in Central and Eastern Europe
A comparative study of the problems of economic transition in the former Soviet bloc states of Central and Eastern Europe and the role Western Europe and US play in this process. The course deals with the origins and nature of the economic and structural upheaval, with the reform strategies, and problems associated with introducing market economies. It analyzes the issues of the Soviet-type system, reasons of its collapse, reviews the transitional strategies, the issues of monetary stabilization, ownership changes, fiscal problems, developments in the labor markets. The course reviews the relationship to the International Monetary Fund and the entry process in the European Union. Special emphasis will be put on the more reform oriented economies: Czech Republic, Hungary, Poland, Slovakia and Slovenia. Their development will be contrasted with the Russian and the Balkan economies’ transformation. The economic policy changes in the new EU member countries will be presented.
Studies in macro- or international economics are required
By the end of the course, students should be able to:
understand the economic and social development of the central –east European countries;
gain specific knowledge on the various countries’ economic transition to the market-type system; get expertise how to evaluate and analyze the central-east European countries’ recent economic transformation;
have a detailed and thorough knowledge on this region;
have specialized knowledge on the economic development of the CEE countries and by this expertise they will be more able to work in the business sector or in government agencies.
Lectures and group discussions, teamwork.
Take home mid-term (35%),
Final written in-class examination (40%),
class participation (10%),
policy paper and its presentation(15%)
Students are expected to attend class regularly and to participate in discussions. Students must complete each reading assignment before class and come prepared to discuss the material. Students write a policy paper; its topic: ‘ New EU m emb er s: cha l l en g es t o i n t rod u ce t h e eu r o’ . Size of the policy paper: 10 pages, 1.5 spaced, 12 letter format + bibliography. Statistical tables and diagrams should be included in the text. The aim of the policy paper is to present and analyze an economic problem. It has a descriptive and an analytical part. Sources should include minimum one book or a longer research paper and 5 economic journal articles. Also, it will be based on the following sources: IMF, EU, EBRD, ECB and the national websites of the new EU members (Central bank, Ministry of Finance, various research think tanks).
1. Post Second World War economic reconstruction. Mixed economies (1945-48): Monetary reforms. Nationalizations and land reforms. Soviet economic and political interest in Central and Eastern Europe. Introduction of the Soviet-type system in the CEE countries (1948-1953) Heavy industrialization. Agricultural collectivization. Command economy. Cold war years. Major features of the Soviet-type planning. Extensive economic growth. Economic imbalances. Excess demand. Soft budget-constraint
Reading:
Chapter 1. Real Socialism. Aslund, p. 11-15
2. Economic reforms. Socialist market economy. National variations of economic reforms. Economic decentralization. Regulatory bargaining.
First and second oil crisis in the seventies. Import-led growth. Foreign indebtedness. Economic policy under Gorbachev.
Reading:
Chapter 1. The Decline and Fall of Socialism. In. Aslund, p. 15-20
3. Collapse of the Soviet-type system. Economic-social and political reasons. Transition from command to market-type economies. Strategies and priorities of the economic transformation. Macroeconomic stabilization and economic liberalization. Gradualism versus shock-therapy. The Polish, Czechoslovak and the Hungarian models.
Reading:
Chapter 2. Shock Therapy versus Gradualism. In: Aslund p. 29-38
4. Transformation recession and second transition crisis. Twin deficits. Austerity packages. Adjustment policies in Bulgaria, Czech Republic, Hungary, Romania and Slovakia in the mid 1990s
Reading:
Chapter 3. Output: Slump and Recovery. In: Aslund, p. 57-69
Chapter 5. From Hyperinflation to Financial Stability. In: Aslund, p. 111-116, 123-127, 138-142
5. Models for privatization. Centralized and decentralized privatization. Sale to outside owners. Management and employee buy-outs. Equal-access privatization. Foreign acquisition. Foreign direct investments. Role of the multinational companies.
Reading:
Chapter 6. Privatization: The Establishment of Private Property Rights. In: Aslund, p. 143-164
6. The labour market and social transformation. Changes in the employment structure. Wage policy. Unemployment. Social costs and benefits of the transition. Transformation of the social welfare system.
Reading:
Chapter 7. An Inefficient Social System. In: Aslund, p. 182-194
7. The Russian economy. Disintegration of the Soviet Union. The economy from Yeltsin to Putin.
Reading:
Aslund, Anders (2009): The Russian Economy: More than Just Energy? Testimony for the Committee on Foreign Affairs of the European Parliament.
8. CEE countries and the outside world. Western strategies toward the East. The European Union and the Association Agreements. Accession to the European Union. Entry criteria. Nominal and real convergence. East-East cooperation.
Reading:
Zsolt Darvas, Jean Pisani-Ferry (Dec. 2008), Avoiding a New European Divide, Bruegel Policy Brief, Brussels,
9. Economic climate in the new EU member countries. Prospectives of stabilization and growth. Chances for a sustainable economic development.
Reading:
Barysch, Katynka (Febr 2009): New Europe and the Economic Crisis, Centre for European Reform, London, UK
10. Current economic situation in Central Eastern Europe. Stabilization and liberalization policies.
Echange rates. Reasons for controversial economic reforms. Relation between political and economic changes.
Aslund, Anders (2007) How Capitalism Was Built. The Transformation of Central and Eastern Europe, Russia, and Central Asia, Cambridge University Press, ISBN 978-0-521-68382-1
Aslund, Anders (2009): The Russian Economy: More than Just Energy? Testimony for the Committee on Foreign Affairs of the European Parliament. http://iie.com/publications/papers/aslund0409.pdf [3]
Zsolt Darvas, Jean Pisani-Ferry (2008), Avoiding a New European Divide, Bruegel Policy Brief, Brussels, Belgium. www.bruegel.org/Public/Website.php?ID=2 [4]
Barysch, Katynka (2009):New Europe and the Economic Crisis. Centre for European Reform, London, UK www.cer.org.uk/pdf/bnote_new_europe_feb09.pdf [5]
Outline package – contains the slides of the lectures
Gross Daniel and Alfred Steinherr [2004]: Economic Transition in Central and Eastern Europe.
Planting the Seeds. Cambridge University Press, UK, 2004, p. 362 ISBN 0 521 53379 1
Tamás Réti earned PH.D. in economics from the Corvinus University of Budapest. He is doctor of habilitatus in the field of economics. He was visiting professor at the Bologna University and at the Ohio State University. Also, he worked as a fellow at the Woodrow Wilson International Center for scholars in Washington DC. Since 1989 he has taught lectures and seminars at the Corvinus University of Budapest. His field of interest is the European economy in the global world and the economics of the central-east European countries. Among his more recent publications:’ From Eastern Bloc to EU: Organized Labor’s Struggle for Relevance’ Georgetown Journal of International Affairs, Edmund A. Walsh School of Foreign Service, 2007 Winter/Spring, and ’Visegrad Economies: Chances of Convergence’. Masaryk University, Brno, Czech Republic, Working paper 2005.