ECONOMIC REFORMS IN DEVELOPING AND TRANSFORMATION COUNTRIES: INCENTIVE PROBLEMS, CREDIBILITY DEFICITS, AND THE PROSPECTS OF SUCCESS OF COMPREHENSIVE REFORMS

摘要

The transformation countries of Central and East Europe have from the start vehemently resisted comparisons of their efforts towards and experience with reforms with the - partly successful, partly failed - reforms in developing countries. Indisputably, the starting conditions in these two groups of countries were greatly different. In particular the fact that market related institutions at the commencement of the transformation were largely lacking, and that the post-socialist economies were dominated by inefficient state enterprises, increased the complexity of programmes for economic policy reform in Eastern and Central Europe by comparison with the tasks facing developing countries during the 1970s and 1980s. In many cases, however, there was the danger of throwing out the baby with the bathwater, inasmuch as those responsible in the former countries declined to recognise the similarities that exist despite all the differences, and flatly denied that the experience of developing countries had any relevance. Analyses by the Kiel Institute of World Economics, for instance, have shown that the danger of the failure of reforms and the extent of the costs of adjustment are dependent in both developing and transformation countries on the timing andsequencing of reforms. In both cases, what is required is to set in motion a critical mass of reforms, to effectively tighten the budget restrictions of the economic actors, and to avoid essential inconsistencies. These requirements can - as the analyses show - best be satisfied in both groups of countries by reforms as comprehensive and rapidly carried out as possible.