The Economics of Transition: Developing and Reforming Emerging Economies

399 Pages·2019·17.072 MB·English

by  Ichiro Iwasaki

“The collapse of communism and the transition to capitalism caused major upheavals
not only in the economies of Eastern Europe and the Soviet Union but also in eco­
nomics. This volume provides an invaluable service by surveying the literature on
transition in a systematic way, mainly via meta-analysis. It brings authoritative clar­
ity to the controversies about transition and should be read by all economists inter­
ested in transition, development and policy making.”
─ Josef C. Brada, Professor Emeritus, Department of Economics,
Arizona State University
“With a talented team of contributors, Iwasaki has produced a masterful work that
uses meta-analysis to draw on thousands of academic studies to evaluate central
issues in transition economics—from privatization and growth to poverty and corrup­
tion. In addition, the chapters provide valuable syntheses of the main debates on
these topics. Anyone interested in economic development and transition should read
this book.”
─ Timothy Frye, Marshall Shulman Professor of Post-Soviet Politics,
Department of Political Science, Columbia University
“After the fall of the Berlin Wall in 1989, socialist countries embarked on
a monumental transition from centrally planned to market-based economies. This pro­
cess has been one of the greatest transformations of our time but even now many elem­
ents of the process continue to generate heated debates. This important book provides
a bird’s eye view on 30 years of research in transition economics. Academics, policy­
makers and students should find this book’s synthesis most informative.”
─ Yuriy Gorodnichenko, Professor, Department of Economics,
University of California Berkeley
“This book presents one of the most systematic and comprehensive surveys of tran­
sition experiences in the former socialist transition economies. By applying meta-
analysis to the extensive literature, it lucidly summarizes what we have learnt from
the grand scale of transformation in economic systems. As the most important
achievement in surveying wide-ranging issues on transition, it is clearly a must-read
for scholars and graduate students in this field.”
─ Byung-Yeon Kim, Professor, Department of Economics,
Seoul National University
“Thirty years after the fall of the Iron Curtain, the Economics of Transition provides
a comprehensive, yet deep, assessment of its economic consequences. It masterfully
blends essential theoretical discussions of reform and emerging markets with state-of­
the-art syntheses of all of the related research evidence. For scholars, policy makers and
students, Economics of Transition reveals the important lessons of three decades of tran­
sition research like no other scholarly work.”
─ T. D. Stanley, Professor of Meta-Analysis, School of Business and Law,
Deakin University

THE ECONOMICS OF TRANSITION

In the last three decades since the fall of the Berlin Wall, there has been a vast
amount of study looking at transforming the planned economy to a market economy
from both theoretical and empirical aspects. This book provides an overview and
insight into transition economies in the recent decades and looks at key economics
topics from the so-called “transition strategy debate” to environmental reform.
The book also includes an analytical review and meta-analysis of the existing litera­
ture. By integrating theoretical discussions and synthesizing empirical findings in
a systematic manner, this book may help to enlighten the debate on the timing,
speed, and policy sequence of economic transition.
The book will particularly appeal to researchers, policy makers, other practitioners,
and under- and post-graduate students who are interested in transition economies in
Eastern Europe, the former Soviet Union, Southeast Asia, and China. It aims to be
read as an advanced reader.
Ichiro Iwasaki is Professor at the Institute of Economic Research of Hitotsubashi
University, Tokyo, Japan.
Routledge Advanced Texts in Economics and Finance
27. Regional Economics, Second Edition
Roberta Capello
28. Game Theory and Exercises
Gisèle Umbhauer
29. Innovation and Technology
Business and Economics Approaches
Nikos Vernardakis
30. Behavioral Economics, Third Edition
Edward Cartwright
31. Applied Econometrics
A Practical Guide
Chung-ki Min
32. The Economics of Transition
Developing and Reforming Emerging Economies
Edited by Ichiro Iwasaki
For more information about this series, please visit www.routledge.com/Routledge­
Advanced-Texts-in-Economics-and-Finance/book-series/SE0757
THE ECONOMICS OF

TRANSITION

Developing and Reforming Emerging

Economies

Edited by Ichiro Iwasaki
First published 2020
by Routledge
2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
and by Routledge
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Routledge is an imprint of the Taylor & Francis Group, an informa business
© 2020 selection and editorial matter, Ichiro Iwasaki; individual chapters, the
contributors
The right of Ichiro Iwasaki to be identified as the author of the editorial material,
and of the authors for their individual chapters, has been asserted in accordance
with sections 77 and 78 of the Copyright, Designs and Patents Act 1988.
All rights reserved. No part of this book may be reprinted or reproduced or utilised
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British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging-in-Publication Data
Names: Iwasaki, Ichiro, editor.

Title: The economics of transition: developing and reforming emerging economies/

edited by Ichiro Iwasaki.

Description: Milton Park, Abingdon, Oxon; New York, NY: Routledge, 2020. |

Series: Routledge advanced texts in economics and finance | Includes

bibliographical references and index.

Identifiers: LCCN 2019053717 (print) | LCCN 2019053718 (ebook) | ISBN

9780367210335 (hardback) | ISBN 9780367210342 (paperback) | ISBN

9780429264979 (ebook)

Subjects: LCSH: Developing countries–Economic conditions–20th century. |

Developing countries–Economic conditions–21st century. | Economic development–

Developing countries–History–20th century. | Economic development–Developing

countries–History–21st century.

Classification: LCC HC59.7 .E3143 2020 (print) | LCC HC59.7 (ebook) | DDC

338.9009172/4–dc23

LC record available at https://lccn.loc.gov/2019053717

LC ebook record available at https://lccn.loc.gov/2019053718

ISBN: 978-0-367-21033-5 (hbk)

ISBN: 978-0-367-21034-2 (pbk)

ISBN: 978-0-429-26497-9 (ebk)

Typeset in Times New Roman

by Integra Software Services Pvt. Ltd.

Visit the eResources: www.routledge.com/9780367210342
Contents

List of figures ix
List of tables xi
List of contributors xiv
Preface xv
Abbreviations xvii
Chapter 1 The economics of transition: Aim, methodology, and structure 1
ICHIRO IWASAKI
Chapter 2 Transition strategy debate: Radicalism versus gradualism 25
ICHIRO IWASAKI AND TAKU SUZUKI
Chapter 3 Transformational recession and recovery: Determinants of the
J-curved growth path 67
ICHIRO IWASAKI AND KAZUHIRO KUMO
Chapter 4 Economic transition and poverty: Changes in the determinants of
poverty 119
KAZUHIRO KUMO
Chapter 5 Social confusion and corruption: Investigating the causes and effects
of a breakdown of ethics 145
TAKU SUZUKI AND SATOSHI MIZOBATA
Chapter 6 Privatization, corporate ownership, and enterprise restructuring 179
ICHIRO IWASAKI AND SATOSHI MIZOBATA
CONTENTS
Chapter 7 Human resource management in transition 239
NORIO HORIE AND KAZUHIRO KUMO
Chapter 8 The collapse of the COMECON system and trade in transition
countries 263
AKIRA UEGAKI AND KAZUHIRO KUMO
Chapter 9 Foreign direct investment in transition economies: Its determinants
and macroeconomic impacts 285
ICHIRO IWASAKI AND MASAHIRO TOKUNAGA
Chapter 10 Regime change and environmental reform 329
MASAHIRO TOKUNAGA
Index 374
Figures
1.1 Hierarchical structure of the literature survey 4

1.2 Synthesizing results from multiple studies (image) 4

1.3 Basic meta-analysis procedure 5

1.4 Example of a funnel plot 9

1.5 Example of a Galbraith plot 10

1.6 Comparison of the ideal types of a socialist planned economy and a

capitalist market economy 13

2.1 Frequency distribution of publication years of all searched literature and

the basic collection 28

2.2 Breakdown of the basic collection by literature attribute 30

2.3 Overall structure of the transition strategy debate 35

2.4 Breakdown of the basic collection by debate attitude 36

3.1 Output fall and recovery in CEE and FSU countries during 25 years of

transition 72

3.2 Growth path of three clusters of transition economies 74

3.3 Breakdown of collected estimates by growth-determining variable type 85

3.4 Kernel density estimation of partial correlation coefficients and t values

by growth-determining variable type 88

3.5 Funnel plot of estimates by growth-determining variable type 104

3.6 Galbraith plot of estimates by growth-determining variable type 106

4.1 The number of population with income below the poverty line 120

4.2 Poverty headcount and Gini coefficients of income in Russia, 1980–2016 121

4.3 Poverty headcount and GNI per capita in Russia, 1980–2016 122

4.4 The number of papers by target country, by keyword searches using

“poverty” and country names of CEE and FSU 126

4.5 The number of research article on poverty, targeting transition

economies and published in academic journals,

January 1989–December 2015 127

4.6 The number of poverty studies in general in academic journals, poverty
studies on transition economies in journals, and the ratio of poverty