An Overview

MOCT-MOST: Economic Policy in Transitional Economies -  

Transition, EU Accession and Structural Convergence

The article analyzes that how much and to what directionthe inherited structure of the Central and East Europeancandidate countries was transformed in recent years, andwhat this shift meant for their real convergence in theenlarged EU. A rearrangement of historical importanceoccurred across the main sectors contributing to GDP, inthe framework of which services have been emancipated.Transition in manufacturing was characterized by a largevariation among countries in terms of speed of restructuring.Good output performance, however, is found not necessarilyassociated with large structural shifts. The dominance oflabor intensive products in manufacturing indicates thatproductivity catching up will necessitate further massiveshifts in this sector in some candidate countries. The moveaway from central planning meant also a drastic fall indomestic savings which, from the point of view catching up,shifted the emphasis to the ability to attract foreign savingsand the efficient use of savings in general.  

Output decline and the demise of the CMEA and the USSR: The case of Hungary

The direct effect of market losses in CMEA on Hungarian output was 4%, out of the 18% decline registered in gross output in 1988–1992. Total (direct and indirect) effects amounted to 8%. In the same period Hungary's export expansion in western markets led to direct and total effects equivalent to 2.9% and 5.6% of the 1988 output, respectively. The share of reorientation within this switch from east to west was not negligible, it amounted to 19% of respective trade volumes. The 1991 price explosion of imported inputs inhibited the activity of Hungarian firms only moderately, due to earlier realistic domestic prices. In 1991 Hungary suffered a 26% terms of trade loss, and could have experienced an income terms of trade loss of USD 1400 to 1600 million, had the trade volume of 1990 been repeated. Since adjustments in 1991, much smaller income losses accrued. Due to earlier special tax arrangements, much of the burden of terms of trade losses had to be born by the budget.  

Impediments to Exports in Small Transition Economies

MOCT-MOST: Economic Policy in Transitional Economies -