Transcript TRANSITION

2. TRANSITION
Privatization
Macroeconomic stabilization
CHANGES OF THE ECONOMIC SYSTEM
Ownership
State or social
Private
Centralised
state/
centralised
Soviet Union
private/
centralised
South Korea
Decentralised
social/
decentralised
Yugoslavia
private/
decentralised
USA
Management
COMPONENTS OF TRANSITION
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2.1. Privatization
- objectives - efficiency, justice, democracy
- complexities of privatization
- privatization models
- outcomes of privatization
2.2. Macroeconomic stabilization
- assumptions and Washington consensus
- transformational depression
2.3. Microeconomic restructuring
2.4. Creation of a new economic system
A Case: Slovenia; Could SEE countries follow
Slovenian experiences?
DILEMMAS OF PRIVATISATION MECHANISM
Distribution
to whom
to everybody - to employees
- equally
- by age
- by years of employment
- Patterns
- direct
- indirect
- Restitution
- in kind
- compensation
Sales
to whom
to citizens - to foreigners
- Patterns
- stock market
- auctions
- workers-managers by outs
- debt equity swaps
- direct sales
- increase of capital
Privatizations in CEE Countries
Czech Republic: a rigid socialist system, 96.7% of production in state industries,
Vaclav Klaus, shock therapy to market without adjectives, restitution (100.000
units), small privatization - sales (12300 units), large privatization – public auctions,
public tender, direct sales, sales of shares for vauchers, employees stock ownership
plans; vauchers collected by private investment funds, direct sales of companies
Avia Praha, Skoda auto, Tabak Kutna Hora, banks, telecomunications etc. To foreign
owners
Estonia: small scale privatization in 1990, large scale Privatization Act of 1992direct sales to foreign investors, vauchers in 1994 marginal, Eesti Telekom, Estonian
Air (Denmark), Estonian Shipping Company (American/Norwegian), Tallina Vesi
(utilities), electricity, banking sector
Hungary: “gulash socialism”, centralized privatization for small scale privatization,
management by-outs, former owners, new phase in 1995 by selling companies to
multinationals, golden share in some companies
PRIVATIZATION BAROMETER
SHARES OF FOREIGN STOCK IN CEE COUNTRIES
Country
stock FDI/GDP in %
1994
1999
2003
Czech Republic
Estonia
Latvia
Lithuania
Hungary
Poland
Slovakia
Slovenia
11.0
9.2
7.6
0.7
17.1
4.1
6.1
9.2
14.1
19.3
13.9
5.7
25.3
5.8
4.2
9.5
48.0
77.6
35.1
27.2
51.8
24.9
31.5
20.7
Share of foreign banks
in assets 2001
90.0
98.9
65.2
78.2
88.8
68.7
85.5
20.6
MACROECONOMIC STABILIZATION
Assessment of economic situation: D>S, Washington
consensus;
Increase of Supply: liberalization of imports, pure
socialist production goods;
Decrease of Demand: price liberalization, restrictive
credit policy, restrictive fiscal policy; freeze of wages,
fixed exchange rate;
Results: economic depression, measured and actual,
unemployment, social diferentiation;
Slovenian transition model; ignorance of Washington
agreement, gradualism, floating exchange rate
ASESSSMENTOF ECONOMIC SITUATION IN
SOCIALIST COUNTRIES
Aggregate supply and demand curves
Prices
Supply
Demand
Equilibrium price
Price in
socialism
Shortage
Supply
Demand
output
TRANSFMATIONAL DEPRESSION
120
index 1990=100
110
CEE
100
Vzhodna Evropa
90
80
70
nekdanja SZ
60
CIS
50
90
91
92
93
94
95
96
97
98
99
00
TRANSITION MODELS IN CEE
1.Baltic
2.Visegrad
3. Slovenia
Starting position
EE, LT, LV
CZ, HU, PL, SK
Privatization
sales to
foreigners
sales to
foreigners
free distribution
MW by-outs
Stabilization
fixed ex.rate
fiscal discipline
switching
adaptable
floating
adaptable
Social Considerations
absent
present
important
Restructuring
absent
by FDI
decentralized
Problems
CA deficit
emigration
CA deficit
budget deficit
balance
EMU problems
MODEL
neoliberal
emmbeded
neoliberal
neocorporativist
SI
PUBLIC EXPENDITURES AND SOCIAL
COHESION
40
36
PL
Inequality coeffocient
RO
HU
32
CY
MT
SK
28
CZ
BG
24
LT
7
LV
EE
Gini coefficient
8
LT
SI
LV
6
PL
EE
5
CY
SK
4
BG
20
HU
RO
MT
CZ
SI
3
32
36
40
44
48
Public expenditures/GDP
52
56
32
36
40
44
48
Public expenditures/GDP
52
56
EXPENDITURES FOR HEALTH AND EDUCATION
1994-2003
14
% GDP
13
12
11
10
9
8
C ZE
EST
H
LAT
LIT
PL
SLK
SLN
GINI COEFFICIENTS, 2000-2006
40
LT
Gini(2 0 0 0 )=2 8 .4
Gini(2 0 0 6 )=3 0 .2
EE
LV
35
HU
30
PL
RO
MT
EU15
CY
SK
25
20
BG
CS
SI
SOCIAL COHESION INDICATORS IN NMS
2000
2006
Public expenditures/GDP
41.6
40.5
Gini coefficient
28.3
30.3
Inequality coefficient
4.35
4.91
Social Security
Expenditures/GDP
11.9
10.9
ECONOMIC PERFORMANCE IN 2007
EU27
BG
CZ
EE
LT
LV
HU
PL
RO
SI
SK
61.0
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
100
38.1
81.3
70.6
58.0
7.8
63.5
53.8
40.6
90.9
68.6
2.9
6.3
6.8
10.4
11.9
5.8
4.1
6.2
8.2
5.9
8.5
2.3
7.6
3.0
6.7
10.1
4.3
7.9
2.6
4.9
3.8
1.9
7.1
6.9
5.3
4.7
6.0
-1.2
7.4
9.6
6.4
4.9
11.1
-0.9
3.4
-1.6
2.8
0.0
17.3
-5.5
-2.0
-2.5
-0.1
-2.2
58.7
18.2
28,7
3.4
9.7
-13.7
66.0
45.2
13.0
24.1
29.4
-0.6
-21.5
-3.3
-17.3
-22.9
6.3
-4.9
-3.7
-14.1
-4.9
-5.7
4.8
3.5
3.5
5.5
7.9
5.5
5.6
5.3
3.4
4.0
(1) GDP/capita, (2) GDP growth, (3) inflation, (4) unemployment, (5) budget deficit/GDP, (6) public
debt (7) current account, (8) inequality coefficient
EMPLOYMENT FUNCTION
rE=a+b*rQ+c*D
Labor market
“a”
“b”
“c”
traditonal
socialism
+
0
0
no labor market, high hidden
unemployment
selfmanaged
socialism
0
0.3
-
growing hidden unemployment
low open unemployment
classical (US)
capitalism
-
1
0
flexible labor market
open unemployment
traditional European
capitalism
-
0.5
-
low hidden unemployment
high social protection
neo-evropean
capitalism
-
0.7
+
growth of open unemployment
hysteresis
rZ- growth of employment, rQ – growth of GDP, D- dummy,
a-autonomous growth, b-elasticity, c- assymetry
consequences
EMPLOYMENT MECHANISMS
Centraly planned economy
Selfmanagement
Social market economy
OUTPUT
Pure capitalism
Neo-European capitalism
JOBLESS GROWTH?
16
une mpl.
r ate
%
93
14
94
95
2000
01
97
12
02
03
99
10
96
04
05
98
G D P gr owth %
8
0
1
2
3
4
5
6
RESTRUCTURING BY FDI
SPILL-OVER EFFECTS OF FDI
THEORETICALLY POSITIVE (OECD 2003)
•
•
•
•
•
FDI transfers technology and know-how;
FDI contributes to enterprise development and restructuring;
FDI contributes to international trade integration;
FDI bolsters competition;
FDI supports human capital formation;
IN REALITY
.
FDIs were acqusitions rather than greenfield investments, thus not
•
•
•
•
•
investments in the macroeconomic sense;
FDIs concentrated to finance, trade, and communications;
FDIs increased imports more than exports;
FDIs increased specialization within a multinational cutting links with the
rest of the economy;
FDI brought strong monopolies forcing small emerging domestic firms out of
business;
FDI creates addiction, income account deficit, and gap between GDP and
GNP;
SUSTAINABLE GROWTH?
8
CA/G DP
%
99
98
97
03
6
96
2000
02
01
04
05
4
95
2
94
0
93
G DP gr owth %
-2
0
1
2
3
4
5
6
RESTRUCTURING BY FDI
FDI, CURRENT ACCOUNT, AND INDEBTEDNESS
CA/GDP FDI/GDP Net external stock FDI/GDP foreign banks
10 years average position 2004 1994
2003
in assets 2003
Czech R.
Estonia
Hungary
Latvia
Lithuania
Poland
Slovakia
Slovenia
-4.05
-7.46
-4.40
-5.48
-8.36
-2.64
-6.37
-0.51
5.80
6.03
4.31
5.96
3.42
2.73
3.44
1.04
-34.6
-99.7
-96.9
-55.0
-38.9
-53.3
-37.5
-18.0
11.0
9.2
17.1
7.6
0.7
4.1
6.1
9.2
48.0
77.6
51.8
35.1
27.2
24.9
31.5
20.7
90.0
98.9
88.8
65.2
78.2
68.7
85.5
20.6
Average
-4.91
4.10
-56.7
9.3
39.6
74.5
THE STRUCTURE OF CURRENT ACCOUNT IN
CEE COUNTRIES
10000
mil l. Eur os
tr ansfe r s
se r vi ce s
0
goods
-10000
inc ome s
-20000
-30000
1998
c ur r e nt ac c ount
1999
2000
2001
2002
2003
2004
2005
2006
SHARE OF INCOME ACCOUNT IN CURRENT
ACCOUNT DEFICIT
120
%
100
80
CAI/CA
60
40
20
0
1999
2000
2001
2002
2003
2004
2005