Journal of Economic Perspectives: Vol. 5 No. 4 (Fall 1991)


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Microeconomic Issues in the Transition to a Market Economy

Article Citation

Svejnar, Jan. 1991. "Microeconomic Issues in the Transition to a Market Economy." Journal of Economic Perspectives, 5(4): 123-138.

DOI: 10.1257/jep.5.4.123


The socialist system introduced microeconomic distortions that probably transcend those observed in the third world. The recent developments in Poland, Yugoslavia, and the Soviet Union also support the hypothesis that macro stabilization will be difficult to achieve in the transforming socialist economies in the absence of adequate micro adjustments. In this paper, I address what I consider to be the most important micro issues related to the transition from socialist to market economies. First I summarize the initial microeconomic conditions, covering labor, capital, and energy markets; the product markets, industrial organization, and trade; and the market for land and housing. Then, I describe the main changes that have taken place in the early stages of the transition. Finally, I discuss the micro policy agenda that needs to be addressed if the transition is to be successful

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Svejnar, Jan (U Pittsburgh)

JEL Classifications

P21: Socialist Systems and Transitional Economies: Planning, Coordination, and Reform


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