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CSS 320
Economies in Transition
Spring 2010
Friday:  2:00 p.m. - 4:00 p.m.

Course Information

 Description

The transition of the formerly centrally planned and bureaucratically managed economies of the now-defunct Soviet bloc to market economies based on private property and individual initiative is an event unparalleled in history. The course begins by examining the early period of transition with consideration of legacies and initial conditions.  It continues by tracing the progress of transitioning countries over the last two decades.  Issues considered include liberalization, stabilization, privatization, and growth. The prospects for sustainable growth and the development of the institutional infrastructure are considered. Comparisons across countries are used to draw policy implications.  After developing a framework for studying transition based on the varied experiences of transitioning countries, we turn attention to China as a country that is both transitioning to a market-oriented economy and developing rapidly into a global economic power.

Each student will become an expert advisor to one transition country by researching its pre-transition background, learning about its transition experiences, and following its progress throughout the semester.  Each student will prepare a country expert report dealing with a policy issue of current concern to the chosen country.

Texts  (available for purchase at Broad Street Books)

        Aslund, Anders, How Capitalism Was Built: The Transformation of Central and Eastern Europe, Russia, and Central Asia, Cambridge University Press, 2007 (hereafter: Aslund)

        Naughton, Barry, The Chinese Economy: Transitions and Growth, MIT Press, 2007 (hereafter; Naughton)

Other Readings    

Several articles published in (The) Journal of Economic Perspectives (hereafter: JEP) appear on the course outline that follows.  Other journal articles may be added to the list of required readings at the instructor’s discretion as the course progresses.   

All journal articles will be accessible electronically in JSTOR.  Go to Indexes on the Wesleyan library page and type JSTOR in the search box. From the JSTOR page, browse by Title to find the journal and use the citation in course outline to find the article.

COURSE NOTES

 Weekly Assignments 

An individual written assignment will be due at the tutorial each week.  The first three assignments are four to seven page tutorial papers described below.  The assignments for weeks four through six are similar in nature.  The assignment for week #7 is the completed country expert report described below.

The Country Expert Report                (10 – 15 pages) 

Each student will become an expert advisor on one transitioning country.  A background paper will be prepared for week #1.  Your chosen country’s experiences with the relevant topics are included in the papers in weeks #2 and #3. A research prospectus is included in the assignment for week #4.  The country expert report treats in depth some policy issue of current concern in transition.  Revisions of the earlier country work may (should) be incorporated in the final report, which will be due in week #7. 

Choosing Your Country:  From a List of Thirty                            

Aslund considers 21 transitioning countries: the 3 Baltic countries, 4 Central European countries, 2 Southeast European countries and 12 Commonwealth of Independent States (CIS) countries.  Transitioning countries missing from this list are the following 8 countries: Slovenia, Albania, Bosnia and Herzegovinia, Croatia, FYR Macedonia, Montenegro, Serbia, and Mongolia. Taken together, these 29 countries (and Turkey) make up the set of countries for which the European Bank for Reconstruction and Development (EBRD) was constituted to provide support in the transition to a market economy.  The EBRD website provides some background information about each country: http://www.ebrd.com/index.htm   You may find it useful to consult this source to help in making a country choice.  In addition to these 29 EBRD countries (excluding Turkey), China is a transitioning and developing giant.  The best source for background information on China is Naughton.  When China is added to the list, you have 30 countries from which to choose. 

Choose your country judiciously.  Policy advisors who switch countries lose credibility!

 
COURSE OUTLINE and Partial Reading List       

Week 1:  Getting to Know Your Country 

Aslund:  Introduction and Chapter 1

Week 2: The Transition as “Process” 
 

 Aslund:  Chapters 2 & 3 & Conclusion

Murrell, Peter, "Symposium on Economic Transition in the Soviet Union and Eastern Europe," JEP,  5:4, 1991, pp. 3 - 9.

Fischer, Stanley and Gelb, Alan, "The Process of Socialist Economic Transformation,"

                JEP, 5:4, 1991, pp. 91 - 105.

 Murrell, Peter, "How Far Has Transition Progressed?”  JEP,  10:2, 1996, pp. 25 - 44.

Week 3: The (un)Holy Trinity   

         Aslund:  Chapters 4 & 5 & 6 & 10

 Fischer, Stanley, Sahay, Ratna, and Végh, Carlos A., “Stabilization and Growth in Transition Economies: The Early Experience,” JEP, 10:2, 1996, pp. 45 - 66. 

Brada, Josef C., “Privatization is Transition - or Is It?” JEP, 10:2, 1996, pp. 67 - 86.

Week 4: Institutions Matter   

 Aslund:  Chapters 7 & 8 & 9 & 11 & Conclusions 

Week 5: China as a Transitioning Economy   

 Background      Naughton:  Introduction & Chapters 1 & 2

 Legacies             Naughton:  Chapters 3 & 5 & 7 & 8 & 9 & 10 & 11

 China’s Transition   Naughton:  Chapters 4 & 6 & 12 & 13

Week 6: China as a Global Economic Power   

 Background         Naughton:  Chapters 14 & 15 & 20

 Towards Sustainable Growth    Naughton:  Chapters 16 &17 & 18 & 19

 Week 7: Country Expert Reports  

Assignment Week #1: Getting to Know Your Country

Choose the transition country for which you wish to become an expert advisor and on which you will write your country expert report.  Describe the salient economic features of this country. Characterize the economic situation at the beginning of its transition. For example, if you choose China, Naughton dates the beginning of the transition to 1978/79.  If you agree, explain why this is the relevant date.  If you disagree, defend your own chosen start date. If you choose one of the countries considered by Aslund, defend (or dispute) any start date he proposes.  If you chose one of the nine available countries that are NOT considered by Aslund,  provide a date for the beginning of the transition and explain why this is the relevant start date. 

 Identify the most important economic problems facing the policymakers in your chosen country at the beginning of its transition. Characterize the policy options available to policymakers in your country to deal with these problems. Conclude with a conjecture about your country’s prospects for resolving these problems in a timely fashion and explain your reasoning.

N.B.        Your conjecture should be informed only by your research into the economic situation of your country at the beginning of the transition. You should not look at the actual experiences of your country as its transition progressed.

 References:   Provide a short bibliography in which you list all the sources that you consulted to obtain information on your country using the standard format as illustrated in the reading assignment. Electronic sources should be identified by URL.  Do NOT include the assigned reading materials in your bibliography.  You may refer to these readings in your paper and provide a brief citation therein, e.g., (Murrell, 1991).

 N.B.                           The references should be put on a separate page that does NOT count toward the following page limits.

 Expected Length:      No longer than six (6) but at least four (4) double-spaced typewritten pages in standard font of normal size, e.g., this assignment is typed in Times New Roman, size 12, with standard page margins.             

Assignment Week #2: Transition as Process: Speed and Sequencing

Using the readings in this module, explain your understanding of the characterization of transition as “process”. Your explanation should identify the key features that are crucial to (found in) any transitioning economy.  Based on your characterization of transition as “process”, describe in detail the options and tools available to policymakers to deal with the most important economic problems (restate the ones that you identified last week) in your chosen country at the beginning of its transition. If you have reconsidered your opinion, identify the new set of problems and explain your current thinking.  What made you change your opinion?  Discuss the interrelationships among problems and policy options.  Discuss in detail the implications of such interrelationships for sequencing and speed of implementation.  Conclude with perhaps more informed conjectures about your country’s prospects for resolving these problems in a timely fashion and explain your reasoning.  How did your analysis of transition as process lead you to change or to affirm your opinion?

N.B.        Your conjecture should be informed only by the readings in this module and your research into the economic situation in your country at the beginning of the transition (up to the first half decade). You should not look at the actual experiences of your country as its transition progressed.

References:   As before, provide a short bibliography listing any the sources that you consulted to obtain information about your country using the standard formats.  The references should be put on a separate page that does NOT count toward the following page limits.

 Expected Length:       No longer than six (6) but at least four (4) double-spaced typewritten pages in standard font of normal size, e.g., this assignment is typed in Times New Roman, size 12, with standard page margins.             

Assignment Week #3: Transition as Outcomes: Stabilization and Privatization

The (un)Holy Trinity of liberalization, stabilization, and privatization illustrates the interdependencies of transition policies and the difficulties with sequencing and speed.  Fischer et al. assert that only price and trade liberalization coupled with macrostabilization could be done quickly while other elements of the reform process would inherently take time. Brada claims that liberalization of markets, the hardening of budget constraints and macroeconomic stabilization have much to do with efficient resource allocation and the effective governance of firms so that privatization may not be such a crucial component of transition. Taking liberalization to mean the creation of the market economy, your paper should treat in detail the roles played by stabilization and privatization in promoting sustainable growth and an efficient market economy. 

The objective of stabilization is to provide the macroeconomic foundation for the resumption of growth. Using the readings, compare (and contrast) the early (before 1998) experiences of the non-CIS countries with the post-1998 experiences of the CIS countries focusing on the interdependencies between stabilization and growth.  Characterize and evaluate your chosen country’s experiences with stabilization based on this comparison.

The objective of privatization is to provide the microeconomic foundation for a competitive, efficient market economy.  Using the readings, compare (and contrast) the early experiences of the transition countries (on which Brada’s claim is based) with their more recent experiences focusing on the role of privatization in its many aspects on promoting an efficient competitive market economy. Characterize and evaluate your chosen country’s experiences with privatization based on this comparison.

References:                As always, provide a short bibliography listing any the sources that you consulted to obtain information about your country using the standard formats.  The references should be put on a separate page that does NOT count toward the following page limits.

 Expected Length:   No longer than six (7) but at least four (5) double-spaced typewritten pages in standard font of normal size, e.g., this assignment is typed in Times New Roman, size 12, with standard page margins.

 Rest of the Tutorial:  To be Completed

 Assignment Week #4:  Institutions Matter

     -             Details forthcoming; includes a short essay (2- 3 pages) about institutions and a prospectus for country expert (policy) report (3 – 5 pages).

Assignment Weeks #5 & #6:  Two essays (4 – 7 pages) on China; details forthcoming.

Assignment Week #7:  Country Expert (Policy) Report ( 10 – 15 pages)

     -             See details provided above.

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