Transition Economies: How Appropriate is the Size and Scope of Government?

IMF Working Papers, May 1, 2001

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Assesses changes in the size and scope of government in 24 transition economies.
Governments have retrenched in terms of public expenditures in relation to GDP, as well as public employment as a share of population.
Some indicators suggest that size remains high: rising indebtedness, a heavy regulatory burden, and prevalence of noncash transactions.
The scope of government activities—although evolving—has not necessarily become appropriate.
The paper provides recommendations for aligning the scope of government with the increasing market orientation of these economies.

Retrenchment observed in:
- Public expenditures in relation to GDP.
- Public employment as a share of population.
Indicators pointing to continued large size:
- Rising indebtedness.
- Heavy regulatory burden.
- Prevalence of noncash transactions.

Scope is evolving but not necessarily appropriate to market orientation.
The mismatch between evolving markets and government activity is a central concern of the analysis.

Provide recommendations to align the scope of government with increasing market orientation of the 24 transition economies.
Emphasis on reshaping government activities rather than only reducing headline measures of size.

International Monetary Fund. "Transition Economies: How Appropriate is the Size and Scope of Government?", IMF Working Papers 2001, 055 (2001).

Transition Economies: How Appropriate Is the Size and Scope of Government? - WP/01/55
- Transition Economies: How Appropriate Is the Size and Scope of Government? - WP/01/55 (Markdown version)
- Transition Economies: How Appropriate Is the Size and Scope of Government? - WP/01/55 (PDF)