Upgrade to remove ads
Comparative Eco Test
Terms in this set (24)
What different methods did Poland, Russia and Hungary use in order to switch from a command allocation mechanism towards a market mechanism?
1. Poland and Russia used shock therapy
2. Hungary took a gradual approach
What different methods did Poland, Russia and Hungary use to privatize land?
1. Russia used a voucher system
2. Hungary: extensive privatization of SOE's through cash sales to both domestic and foreign buyers
3. Poland: Poland used a wide a wide range of mechanisms for privatizing SOE's
What was the effect of Russia's voucher system on the economy?
1.the rapid mass privatization resulted in significant macroeconomic imbalances
2. Between October 1992 and JUne 1994 approximately 70% of Russia's large and medium seized enterprises and 80% of small firms were privatized
3. Dramatic increasein inequality due to old and new elites accumulating the vouchers for nothing through the secondary market were they purchased the most desired asset
4. In addition, many SOE's were privatized through noncompetitive worker-management buyouts.
What were Poland's different privatization method and through what did they implement it?
1. The ministry of privatization was established in 1990
2. management and employee buyouts (direct privatization)
3. liquidation of assets (assets sold at auctions)
4. Trade sales to specific buyers (cash sales)
5. offering stock on public capital markets (through the national investment Funds)
6. However due to their inclinement to allow foreigners to buy SOE's, many remained under state ownership.
The SOE's in Poland that were not privatized were put on a ....
How did Hungary implement its gradual reform?
1. centralized planning as it existed in the later 1980's remained in place as well into the 1990's
2. Price decontrol was slowly extended from the levels (over 50%) achieved during the late 1980s
The Hungarian government established which agency and how did it differ from Poland?
The Hungarian government established an agency known as the State Property Agency (SPA) however unlike the MOP which emphasized worker-management buyouts, the SPA focused more on selling firms at full value to cash-paying buyers many of whom were foreigners either on the stock market, in open auctions, or after negotiating with the SPA
Despite gradualism when it comes to privatization......
allowing foreign firms to buy their companies has accomplished substantial privatization to the point where a solid majority of the economy is now in private hands; still the government does retain shares in companies in crucial sectors.
Poland on the other hand avoided selling firms to....
and real estate to foreigners due to the fear that Germany might invade their market.
Both Hungary and Poland automatically after implementation of the reforms began to experience
higher efficiency and productivity in the service & consumer sector as private owners and the market took over demand and distribution
Coincidentally, both Hungary and Poland have had a lack of efficiency in
in the agricultural sector with Polish farmers suffering from a lack of economy of scales and small farms while Hungary agricultural production has declined due to bad weather, the break up of the CMEA and the loss of foreign markets that were not replaced by Western ones.
Hungary's open approach to FDI's and international investment
has caused investors to focus more toward higher-technology and higher-skilled labor export sectors
the Balcerowics plan
called on immediate decontrol of most prices, devaluation and the pegging of the polish currency, removal of all trade barriers, legalization of all forms of private enterprises and called for the privatization of the SOE
Hungary on the other hand......
already had most of the framework for the subsequent economic transition policies in place and focused on a more gradualist approach, which focused on privatization, a fiscal austerity program along with an income policy.
Immediately after the implementation of the Balcerowics plan, Poland was hit by......
hit by hyperinflation due to the sudden decontrol of most prices and monetary overhang that had built up in the Soviet Era, causing it to have negative GDP growth from 1989-1992.
Unlike Poland, Hungary did not....
-suffer from monetary overhang and experienced a moderate level of inflation due to already having had 50% of prices removed from central control in 1979.
-Hungary experienced a recession from a decline in output caused by the planning and privatization reforms
Poland was able to bounce back from its negative GDP growth as
as their devaluation of the kron and pegging it to the dollar made their exports (especially manufactured goods such as chemicals, steels etc) more competitive in the international market
Both Poland and Hungary experienced
unemployment rates in the double digits but that was due to privatization and restructuring of industries. However Poland's unemployment rate has been lower than Hungary's due to the subsidies it has given on occasion to protect the workers and by being incapable of privatizing or shutting down the larger industries due to worker protest.
Hungary has taken a more hard-line approach
refusing zero subsidies under the Bokros reforms in 1995 and by passing a strict bankruptcy law in 1992.
What did both Poland and Russia due with their Price controls
1. Russia did some price liberalization and full convertibility of the ruble, foreign trade liberalization
2. Poland eliminated price controls and implemented a floating exchagne rate for the currency zloty
Russia's simultaneous implementation of privatization and price liberalization substantially
affected income distribution, making it more uenqua
From 1992-1994 Russia
-liberated foreign trade
-and introduced the full converitibility of the ruble
However as a consequence of Russia liberalizing Retail prices and deregulating foreign trade you had what and what?
-however while retail prices were freed from government control, many wholesale prices, however continued to be subject to control. This created arbitrage opportunities for purchasing goods at government controlled prices and re-selling them at market price.
--a repressed inflation came into the open
As a consequence of as well of the arbitrage oppotunities and inflation
capital flight ensued as the wealthy sought to protect their gains from confiscation and the effects of domestic inflation
You might also like...
Globalization Chapter 7
Pol Sci 7 Final MC Ch 8 1/4 sets
International Business Midterm Review (Chapters 5-…
Other sets by this creator
Geology Test 2
Other Quizlet sets
Bio Test #2
Social Psych #2 Test
General Evolution Misconceptions (Bio 311D)
Black Panther (industry and audience)