Creating Market Economy in Eastern Europe — страница 6

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This was the focus of the New Economic System in the GDR and of the New Economic Mechanism introduced in Hungary in 1968. The potential for genuine economic reform was certainly limited by Soviet influence. Indeed in some cases (such as Czechoslovakia in 1968), reform was abruptly forestalled by Soviet intervention. In other cases, such as Hungary, reform attempts dating from the late 1960s were sustained on a limited basis, to become the background for more serious reform in the present era. There were, then, numerous attempts at reform in Eastern Europe. What were the major forces promoting these efforts? First, as was the case in the Soviet Union, rates of economic growth in Eastern Europe have undergone a long-term secular decline. The magnitude of this decline (see Table 1)

has varied from case to case, but overall it has been pervasive. Moreover, these countries had taken pride in being high-growth economies, even if the costs, such as little growth of consumer well-being, were also high. At the same time, growth in productivity slackened, especially in the late 1970s and 1980s. And inflation quickened, though it was most serious in Poland and Yugoslavia. Repressed inflation, though difficult to measure, grew in importance in the 1980s. Second, East European countries relied heavily on foreign trade as a means of stimulating economic growth in the 1970s. Their strategy was to promote exports in Western markets so that the imports required both to stimulate technological change in industry and to enhance consumer well-being could be obtained without

the growth of hard-currency debt. Unfortunately, this strategy was not successful. The energy crisis led to a significant slackening of Western markets at the very time when East European nations were becoming more aggressive in these markets. East European imports were sustained, but largely by means of building a substantial hard-currency debt. The magnitude of debt repayment subsequently led to considerable internal belt-tightening for these countries in the 1980s — precisely the opposite of what had been intended. Third, one could argue that in Eastern Europe, the possibilities for eco­nomic growth through extensive means had initially been less promising than in the Soviet case and had been exhausted more quickly. In light of the level of economic development in

Eastern Europe compared to that in the Soviet Union, it is not surprising that the imperative for reform was strong and that developments of the Gorbachev era quickly spilled over into Eastern Europe. In the absence of Soviet backing, interest in the administrative command model faded fast. Table 1. Economic Growth and Performance in Eastern Europe: The Background to Reform 1961-70 1971-80 1981-85 1985 1986 Eastern Europe 3.4 2.4 1.0 .2 2.2 Bulgaria 5.0 2.3 .1 -3.2 4.7 Czechoslovakia 2.4 2.3 1.0 .4 1.9 East Germany 3.2 3.5 1.7 3.3 1.6 Hungary 3.1 2.5 .6 -2.3 2.4 Poland 3.3 3.0 1.0 .2 2.1 Romania 4.2 3.5 -.6 -1.4 3.1 East European Reform Programs: Similarities and Differences In this chapter we pay special attention to Poland and Hungary. We do so because these countries are both

examples of aggressive reform but have employed different strategies. However, before we consider these cases in greater detail, it is useful to summarize the East European reform experience, noting important similarities and differences among the various cases. To do so will entail some repetition of basic themes. First, economic reform in Eastern Europe (at least in Poland, Hungary, and Czechoslovakia) is generally described as a transition in that these countries seek to replace the planned economy with a market economy rather than attempting merely to modify the former. Second, transition programs have varied in speed and intensity. Some coun­tries have pursued reform on a "gradual" basis, whereas others, like Poland, have pursued what is often termed a

"big bang," or rapid, approach to reform. However, we must remember that even in those countries not pursuing a "big bang" or "shock therapy" approach, the process of transition in Eastern Europe has been relatively rapid, especially when compared to reforms of the past - and notably so when compared to the recent Soviet record. It is important, therefore, to be aware of the basic issues associated with transition and of the extent to which the attempted speed of transition alters the overall reform experience. Third, although it is possible to examine and understand the basic elements of economic reform and even of transition from one system to another, we really do not have a general theory of change in economic systems. In some cases — for