ECONOMICS OF TRANSITION

1 Module, 2002/2003

Professor: Vladimir Popov
Vpopov@nes.ru, (office 2113)

TA: Dmitry Prudnichenko

The overall aim of this course is to understand the processes of transition from a socialist, centrally planned economy to a capitalist mixed market economy, using the Russian economy as the primary example. Extensive comparisons are made with the experience of other economies in transition including China. We examine to what extent differences in economic performance in post-communist countries during transition are associated with the initial conditions and chosen reform paths (shock therapy or gradual transition), institutional capacities of the state and macroeconomic and industrial policies (import substitution vs. export oriented growth). Current transition issues, such as macroeconomic stabilization and currency crises, industrial structure and industrial policy, privatization strategy and experience, emerging banking and financial systems, are analyzed. "Comparative Economic Systems and CPE" is a logical pre-requisite for this course.

Lectures on mondays (11.45 - 13.15) and on wednesdays (17.45-19.15); consultations after lectures.

components of the final grade: Mid-term test, in-class (40% of final grade) - questions 1 to 24 (approximately) on september 25,
Final exam (60% of final grade) - all questions at the end of the course. There will be 2 questions (40% of the final grade each) and 1 problem (20% of the final grade).

1. Monetary overhang during gorbachev reforms (1985-91).

* imf, world bank, oecd, ebrd. A study of the soviet economy, 1991, vol. 1,2,3, ch. Iii.1 - iii.3.

World development report. From plan to market. World bank, 1996, ch. 1,2, 6,7.

Popov, v. The rise and fall of the non-monetary economy in russia: puzzles multiply faster than resolved. Review of d. Woodruff's book "money unmade. Barter and the fate of russian capitalism". - journal of policy analysis and management, may 2001.

* guriev s., popov v. Three-head hydra of demonetization. Non-payment, barter, money substitutes: how they appeared in russia and how we can fight with them. - expert, #9 (269) 5 march 2001 or http://www.nes.ru/~sguriev/nemonetar.doc

Ebrd transition report, 1997, ch. 1,2,7; 1998, ch. 1,2,3.

2. Macroeconomic policy in the period of transition. Currency crises.

Montes, manuel and popov, vladimir. The asian crisis turns global. Institute of southeast asian

Studies, singapore, 1999. In russian - montes i., popov v. "asian virus" or "dutch disease"? The theory and history of currency crises in russia and other countries. I., "delo publishers", 1999. See also: popov, vladimir. Currency crisis in russia in a wider context. C.d. Howe institute commentary, 2000 (http://www.cdhowe.org/pdf/popov.pdf); popov, v. Russia's financial collapse. - nira review, vol. 6, no. 6, winter 1999 (http://www.nira.go.jp/publ/review/99winter/popov.html); popov, v. Currency crises in russia and in southeast asia. Paper prepared for the conference "transition and reforms in korea and russia: a comparative perspective" seoul, november 23-24, 2000 (http://www.tongilnet.net/forum3/speech_2-1.html).

Ebrd transition report, 1997, ch. 1,2,7; 1998, ch. 1,2,3.

Stiglitz, joseph e. Capital market liberalization, economic growth, and instability. World development, volume 28 (6) 2000, pp. 1075 - 1086.

3. Industrial restructuring, industrial policy.

*world development report. From plan to market. World bank, 1996, ch. 8.

*popov, vladimir. Will russia achieve fast economic growth? - communist economies and economic transformation, vol. 10, no. 4, 1998, pp.421-49.

*ebrd transition report, 1997, ch. 3-6.

4. External economic links.

*gregory, paul and stuart, robert. Russian and soviet economic performance and structure. Harper collins college publisher, 6th edition, 1998, ch. 9

Imf, world bank, oecd, ebrd. A study of the soviet economy, 1991, vol. 1,2,3, ch. Iii.4, iv.3-iv.4; appendix ii.3, ii.4.

*lavigne, marie. Conditions for accession to the eu. - comparative economic studies, fall 1998, vol. 30, no. 3, pp. 38-57.

Lavigne, marie. The economics of transition. From socialist economy to market economy. Macmillan press ltd., 1999, ch. 6 (transition through breaking up).

Olcott, martha b., aslund, anders, and garnet, sherman w. Getting it wrong. Regional cooperation and the commonwealth of independent states. Carnegie endowment for international peace, washington, d.c., 1999, ch. 2.

Kaminski, bartlomiej. The eu factor in trade policies of central european countries (november 1999). Wb policy research working paper no. 2239 (http://wbln0018.worldbank.org/research\workpapers.nsf/view+to+link+webpages/510e90b7b66ba95a8525682c006784fc?opendocument)

* nuti, d. Mario. The costs and benefits of euro-isation in central-eastern europe before or instead of emu membership. William davidson institute working paper 340 (http://eres.bus.umich.edu/docs/workpap-dav/wp340.pdf)

*bevan, alan a. And estrin, saul. The determinants of foreign direct investment in

Transition economies. William davidson institute working paper number 342.

October 2000 (http://eres.bus.umich.edu/docs/workpap-dav/wp342.pdf)

5. Privatization. Financial system, control over corporations and investment financing.

*world development report. From plan to market. World bank, 1996, ch. 3, 6.

*popov, v. The financial system in russia as compared to other transition economies: the anglo- american versus the german-japanese model - comparative economic studies , no. 1, 1999. See: (http://www.econ.cbs.dk/institutes/cees/workshop/pdf/popov.pdf). In russian -popov v. Puzzles for the financial analyst. Expert, 1999, october 10 (http://novosti.online.ru/issue/expert/99/38/expert02.htm).

*ebrd transition report, 1998, ch. 5-8.

Roland, gerard. Transition and economics: politics, markets, and firms. Mit press. Cambridge, ma, london, 2000, ch. 4,10, 12.

6. Social issues and social policy in transition economies.

* in russian - kapelushnikov r. Russian labor market: adaptation without restructuring. M. Hse, 2001.

*g.a. Cornia. Transition approaches, institutions and income inequality. In: transition and institutions: the experience of gradual and late reformers . Edited by giovanni andrea cornia and vladimir popov. Wider, oup, 2001. Ch. 12

*cornia, a. (1997). Labor market shocks, psychological stress and the transition's mortality crisis. Wider/unu, helsinki, april 1997.

Shapiro, j.(1995). The russian mortality crisis and its causes. In: aslund a, ed. Russian economic reform at risk. London: pinter, 1995.

7. Transition theory and growth in transition economies. Political economy of reforms.

In russian - polterovich v. Institutional traps and economic reforms. Economics and mathematical methods,1999,35.

Campos, nauro f. Back to the future: the growth prospects of transition economies reconsidered. Center for european integration studies, august 2000 (http://www.zei.de/download/zei_wp/b00-13.pdf).

* popov, vladimir. Shock therapy versus gradualism: the end of the debate (explaining the magnitude of the transformational recession), comparative economic studies, no. 1, vol.42, spring 2000, pp. 1-57;

In russian -popov v. Production dynamics in the period of transition: initial conditions versus economic policy. ( economic issues, 1998, ? 7); strong institutions are more important than the speed of reforms (economic issues, 1998, ? 8); shock therapy versus gradualism: the end of the debate. - expert, 21 september 1998, (http://novosti.online.ru/issue/expert/98/35/pereh.htm).

See also: popov, v. Circumstances versus policy choices: why has economic performance of fsu states been so poor? Paper prepared for the conference "ten years after the collapse of the soviet union: lessons and perspectives", princeton university , october 13-14, 2000. (http://www.wws.princeton.edu/~cis/popov.pdf)

Popov, v. Reform strategies and economic performance of russia's regions. - world
Development 2001, no 1. For a short russian version see: mirovaya ekonomika i
Mezhdunarodniye otnosheniya (meimo), no.9, 2000; ng-politekonomiya, sept. 12, 2000
(http://politeconomy.ng.ru/research/2000-09-12/7_reform.html).
Ebrd transition report, 1999, ch. 5, 6.

* ebrd transition report, 1999, ch. 5, 6.

* m. Castanheira, m., popov, v. Framework paper on the political economy of growth in transition countries. Eerc, 2000. See: http://www.gdnet.org/grproject/grprojectpapers.f1ml and http://www.eerc.ru/publications/newsl99-2/popov.htm

Political economy of growth in russia by v. Popov. Ponars working paper series, no. 17. Davis center for russian studies. Harvard university, 2000 (http://www.fas.harvard.edu/~ponars/policy%20memos/popov129.html).

Roland, Gerard. Transition and economics: politics, markets, and firms. Mit press. Cambridge, ma, london, 2000, ch. 1,2,3,13.

Pomfret, r., growth and transition: why has china's performance been so different ?,

Journal of comparative economics vol. 25, no 3, december 1997. Pp. 422-440.