The Transition Economies After Ten Years

IMF Working Papers, February 1, 2000

Source details

The paper summarizes the macroeconomic performance of the transition economies over their first decade of reform.
It reviews: initial conditions confronting these economies; the reform strategy proposed a decade earlier; controversies that arose a decade ago.
It accounts for widely different outcomes across countries by highlighting the role of:
- exogenous factors, and
- the macroeconomic and structural policies adopted by the countries.
Core empirical conclusions:
- Both stabilization policies and structural reforms, particularly privatization, contribute to growth.
- The faster is the speed of reforms, the quicker is the recovery and the higher is growth.

Initial conditions and reform strategy:
- The paper reviews the diverse initial macroeconomic and structural conditions that transition economies faced.
- It examines the reform strategy proposed a decade earlier and the controversies surrounding that strategy.
Drivers of divergent outcomes:
- Exogenous factors played a significant role in outcomes across countries.
- The adoption and design of macroeconomic policies and structural reforms explain much of the variation in performance.
Role of specific policies:
- Stabilization policies are linked to better macroeconomic performance.
- Structural reforms, with an emphasis on privatization, are associated with higher growth.
- Speed of reforms is positively correlated with the speed of recovery and magnitude of growth.

Pursue stabilization policies to support macroeconomic recovery and growth.
Implement structural reforms, with priority on privatization where appropriate, to enhance growth prospects.
Accelerate the pace of reforms where feasible, as faster reform implementation is associated with quicker recoveries and higher growth.

Subject: Economic sectors, Fiscal policy, Fiscal stance, Government debt management, Inflation, Macrostructural analysis, Prices, Privatization, Public financial management (PFM), Structural reforms
Keywords: Baltics, CEE country, countries in the CEE, exchange rate, Fiscal stance, Government debt management, Inflation, market economy, OFSU country, Privatization, Structural reforms, transition economy, WP

IMF Working Paper No. 2000/030 — Stanley Fischer and Ratna Sahay, February 1, 2000.

The Transition Economies After Ten Years - WP/00/30
- The Transition Economies After Ten Years - WP/00/30 (Markdown version)
- The Transition Economies After Ten Years - WP/00/30 (PDF)