chapter  Chapter 3
43 Pages

Developments in Transition Economies

WithBruno S. Sergi

The literature has focused on another posttransformation syndrome, the “mortality crisis.” The causes, demographic effects, and resulting macroeconomic performance were the aspects of analysis. During the centrally planned economy, the causes ranged from permanent shortages to lack of competition and the low quality of services provided by the state. At the very beginning of transition, economists continued to counsel Eastern governments about the best polices to carry out in order to embrace capitalist markets while suffering the least costs. Resorting to less expensive food was important, but resorting to the gray economy was no less important to supplement modest incomes. The collapse of the Council for Mutual Economic Assistance’s trading system in 1991, demand shocks due to attempted macroeconomic stabilization programs, credit tightness, and supply-side inefficiencies explained the syndromes.