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World Bank Policy Research Department Transition Economics Division

Works: 29 works in 60 publications in 1 language and 879 library holdings
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The emerging legal framework for private sector development in Viet Nam's transitional economy by Pham van Thuyet( Book )
3 editions published in 1995 in English and held by 73 libraries worldwide
July 1995 Private (especially foreign) investors find Vietnam's legal framework the most serious impediment to investment. Policy changes to reverse the former command system may be enough to initiate the transition. But without an appropriate legal framework, they will be insufficient for long-term development. A major objective of Vietnam's transition to a market economy has been to reactivate the private sector in a mixed economy. Several new laws have been introduced in the past five years to implement this policy and to create an enabling environment for the private sector. Thuyet reviews some of the more important laws and regulations that affect Viet Nam's private sector activities, including laws on real property, intellectual property, companies, domestic investment, foreign investment, bankruptcy, contracts, and dispute resolution. Anti-monopoly law has not yet been introduced in Vietnam. The issue of competition is addressed in the context of trade law, the relative roles of the state and private sector, and restrictions in company law. These areas all establish the foundation of a legal framework for a market economy. Among Thuyet's conclusions: * Vietnam's legal framework, like China's, is still influenced by ideology, which causes problems in such areas as private ownership of real property and with such fundamental legal concepts as due process of law. * The private sector is constrained by the lack of an independent judiciary, the absence of private land ownership, other uncertainties in property law that limit the development of financial markets, and the inherent bias of the system in favor of the state sector (and collective ownership). * A law-abiding attitude, equally important to development, has been slow to develop. * Vietnam's foreign investment process is too complicated, and its company law too restrictive. A first priority should be to streamline regulations. Vietnam has been slow to privatize its state enterprises, another step essential for development. Trade policy also needs to be liberalized. * Export processing zones may be a useful interim instrument to attract foreign investment but should be phased out over time. More important in the long term is a good investment climate resting on a strong legal foundation. This paper--a product of the Transition Economics Division, Policy Research Department--is part of a larger effort in the department to understand the legal and institutional requirements for transition from socialism to a market economy
Poverty and inequality during structural adjustment in rural Tanzania by M. Luisa Ferreira( Book )
5 editions published in 1996 in English and held by 69 libraries worldwide
August 1996 Growth attributed to structural adjustment has benefited the population generally, shifting a significant portion of the population from below the poverty line to above it. Only that smaller fraction of the population with extremely low incomes was unable to benefit from the economy's improved performance -- probably because the liberalization process that encouraged growth rewarded those with education, excluding from benefits those with little education. Ferreira measures structural adjustment's impact on growth and on the poor in Tanzania. Adjustment reforms have contributed to robust growth. The rural average per capita income in 1991 was, in real terms, significantly higher than in 1983. The Economic Recovery Program, launched in 1986, has positively affected income, although the increase is not yet reflected in such basic social indicators as infant mortality rates or levels of primary schooling. Structural adjustment appears to have benefited many poor households. The population living in poverty declined from 65 percent in 1983 to 51 percent in 1991. The population near the poverty line benefited the most, while those with extremely low incomes appear to have become somewhat poorer. Increases in the inequality of income distribution eroded some of the potential for poverty reduction that would have otherwise resulted from growth. In both years, the stock of human capital was low for the poor, as measured by educational achievement. Possibly the lower incidence but greater severity of poverty is attributable to a liberalization process that rewards those with education, who are better able to respond to new opportunities. This suggests the importance of improving the quantity and quality of education to increase the ability of the poor to benefit from market reforms. Targeting human capital investments to the very poor should be a high priority during adjustment. This paper -- a product of the Transition Economics Division, Policy Research Department -- is part of a larger effort in the department to study the social effects of transition
Unemployment insurance and duration of unemployment evidence from Slovenia's transition by Milan Vodopivec( file )
4 editions published in 1995 in English and held by 65 libraries worldwide
December 1995 Would shortening the duration of unemployment benefits shorten the period of unemployment? In Slovenia, and probably in other transition economies with generous benefits, the answer is yes. Why not consider converting unemployment benefits into hiring subsidies? Between 1990 and 1992 in Slovenia, recipients of unemployment insurance (UI) benefits tended to remain (formally) unemployed until their benefits expired, before taking a job. Institutional set-up suggests, and labor surveys show, that many of the recipients were actually working while collecting UI benefits. In the spirit, if not in the letter of the law, the UI system was abused. Vodopivec shows that the escape rate of the recipients of unemployment compensation to employment increased dramatically just before the potential exhaustion of unemployment benefits -- and decreased equally dramatically after benefits were exhausted. When grouped by the potential duration of benefits, unemployment length varies significantly. The unemployed with longer potential benefits stay unemployed longer. Because these groups differ in their characteristics (for example, in age), this does not prove the waiting behavior of the recipients. However, exits to employment dramatically increase just before exhaustion -- and that does prove waiting behavior. The pattern of an increased escape rate just before benefits are exhausted and its dramatic fall thereafter is more rigorously demonstrated using hazard model estimation. Possibilities for informal employment are abundant in Slovenia, and the environment of transition economies generally seems conducive to misuse of the UI system. Legislative loopholes and failure to enforce the labor code allowed the unemployed to work and to collect benefits. And the monitoring of job searches was lax. Vodopivec's calculations suggest that reducing the duration of benefits would reduce the incidence of unemployment, its duration, the amount spent on UI benefits, and the inefficiencies generated by raising taxes to finance unemployment insurance. At the same time, reducing the duration of benefits would not impair job matches or crowd out jobs for nonrecipients. True, despite increased efficiency generally, the workers with the least job mobility might suffer hardships -- and might need social assistance. The tradeoff between increased hardships for the least mobile group and greater efficiency generally would have to be resolved in the political sphere. Redesigning the system for better targeting would be less controversial. One way to reduce UI spending without seriously curtailing incentives to work would be to reduce the benefits in proportion to earnings from irregular work. Another possibility is stricter monitoring of the job searches of the unemployed. To reduce spending and make double dipping less attractive, old-age insurance could be removed from the package of benefits the UI system offers. And counselors who help the unemployed find jobs (and who may thus develop a close relationship with them) should perhaps not be expected to be able to make impartial decisions about disqualification for benefits; someone else should do that. In addition to better targeting, a benefit transfer program -- a voluntary program that converts UI benefits (through vouchers) into hiring subsidies -- seems particularly attractive for Slovenia and other transition economies. In a way, such a program would legalize the double-dipping that has been taking place in Slovenia and possibly elsewhere. It would legalize practices that have undermined the system's credibility. But it might improve fiscal savings while sustaining the incentive to find jobs. This paper -- a product of the Transition Economics Division, Policy Research Department -- is part of a larger effort in the department to investigate labor markets in transitional economies. The study was funded by the Bank's Research Support Budget under the research project Labor Market Dynamics during the Transition of a Socialist Economy (RPO 677-20)
Poverty, inequality, and social policy in transition economies by Branko Milanović( file )
4 editions published in 1995 in English and held by 65 libraries worldwide
November 1995 What happens to poverty and income inequality during the early period of transition to a market economy? Poverty is on the rise, and income inequality widens. Better targeting of social assistance and pension reform are the necessary policy reforms. In examining what happens to poverty and income inequality during the early period of transition to a market economy, Milanovic covers the period up to 1993. His analysis includes almost all transition economies that were not affected by wars, blockades, or embargoes. (In economies so affected, the intrinsic issues of transition are overshadowed by more basic issues of war or quasi-war economy and survival.) The two key issues of social policy in transition economies are pension reform and better targeting of social assistance. Pensions represent 70 to 80 percent of cash social expenditures. No reduction of current levels of social spending (which is unsustainable) can be envisaged without pension reform. Better targeting of social assistance is needed because many universally or enterprise-provided benefits have been terminated, poverty has increased, and social programs lack funding. If poverty is on the rise and money is scarce, better targeting is the only option. This paper -- a product of the Transition Economics Division, Policy Research Department -- is part of a larger effort in the department to study social effects of transition
Income inequality, welfare, and poverty an illustration using Ukrainian data by Nanak Kakwani( file )
5 editions published in 1995 in English and held by 61 libraries worldwide
January 1995 The standard of living in Ukraine increased significantly in the 1980s, and income inequality declined. But in 1991-92 income inequality and poverty increased again, partly because government benefits went more to richer families than to those in need. Ukraine is now faced with economic crisis on an unprecedented scale. The government has to follow rigorous demand management policies, which entail lowering the population's standard of living. To design policies that protect the poorest and most vulnerable groups in the society, it is important to understand the nature of poverty and income inequality. Kakwani addresses the following questions: What is the extent of income inequality and is it increasing? How can observed changes in inequality be explained? Is the burden of income tax evenly distributed across the population? The Ukrainian data base is far from satisfactory, so Kakwani's findings are only tentative. Among them: * The standard of living increased significantly in the late 1980s, then fell in the 1990s. Real per capita family income grew by an average 7 percent in 1989-90, then fell about 24 percent in 1991-92. Per capita income for families dependent on government transfers fell by more than one-half. * Income inequality declined in the 1980s, to rise again in 1991-92. In particular, the family incomes of state and collective farm workers -- relative to industrial workers -- improved between 1980 and 1991. The increase in inequality that occurred in 1991-92 came about, among other reasons, because government benefits tended to be redistributed to richer families, not those in need. Poverty in Ukraine declined over the period 1980-91, from 38 percent of the population to 9 percent. But in 1992, 30 percent of the population was poor again, an alarming increase attributable both to a decline in real per capita income and an increase in income inequality. Still, income inequality was lower in Ukraine than in most other former republics of the Soviet Union. This paper -- a product of the Transition Economics Division, Policy Research Department -- is part of a research project on income distribution and poverty during transition
From plan to market : patterns of transition by Martha De Melo( Book )
3 editions published in 1996 in English and held by 38 libraries worldwide
January 1996 Among the findings from this analysis of patterns of transition: Liberalization is essential to stabilization despite an initial spurt in prices. And economic recovery depends on the duration as well as the intensity of liberalizing internal and external markets and facilitating private sector entry. In analyzing the transitional experience of countries in Central and Eastern Europe(CEE) and the former Soviet Union (FSU), de Melo, Denizer, and Gelb find strong common patterns for countries at similar stages of reform despite differences in initial conditions. To establish rankings, the authors create a reform index combining the intensity and duration of economic liberalization. Freeing domestic prices is one element of reform captured by the index; it was needed to enable governments to cut subsidies and restore macroeconomic balance. Other dimensions of reform captured by the index are liberalization of external trade, including foreign currency convertibility, and facilitation of private sector entry through privatization of state enterprises and improvements in the environment for private sector development. Some countries moved faster on reform than others, and one major reason appears to have been the pace of political liberalization. Liberalization has encouraged capital and labor to reallocate from industry toward services, many of which were previously repressed; and the repressed sectors fueled the return to positive growth in fast reformers. For slow reformers, the main problem in achieving stabilization has been the continued monetization of fiscal and quasi-fiscal deficits, associated with attempts to maintain employment in the old system. Among the policy implications: * Stabilization is a priority for the resumption of growth, and this requires extensive liberalization. * Stabilization is made difficult by output contractions in the early stages of liberalization (they reduce tax revenues and raise claims on fiscal resources to cushion the effects), by limited external financing, and by very large depreciations of the real exchange rate. * Contrary to previous suggestions, there is no evidence that a slower pace of reform strengthens the fiscal position of slow reformers; their consolidated fiscal and quasi-fiscal deficits are quite high. This paper -- a product of the Transition Economics Division, Policy Research Department -- is part of a larger effort in the department to synthesize the adjustment experience of countries in transition from socialism to a market economy. The authors may be contacted at or
Developing commercial law in transition economies examples from Hungary and Russia by Cheryl Williamson Gray( file )
3 editions published in 1995 in English and held by 35 libraries worldwide
November 1995 Three things are essential to implement decentralized legal frameworks in any setting: reasonable laws, adequate institutions, and market-oriented incentives. The problem in transition economies is that all three must to a large extent be built from scratch. The question to ask at any point in time is not whether there is rule of law, but whether the country is moving in the right direction along all three dimensions. Implementing decentralized legal frameworks requires reasonable laws, adequate institutions, and market-oriented incentives. All three must exist together. Laws or institutions without each other or without a supportive framework of incentives are likely to lie dormant, while incentives by themselves will be frustrated without a reasonable legal framework and institutions to support and enforce them. Developing any of these elements is a major challenge, and progress along all three takes time. In transition economies, not only must new laws be drafted (a daunting task yet perhaps the easiest of the three) but they must be accompanied by the growth of supportive institutions (including formal judicial institutions and the watchdog institutions that we almost take for granted in advanced market economies). And they must be accompanied by economic reforms -- whether privatization (particularly with outside owners) or banking reforms -- that separate actors from the state and reinforce market-based incentives. Gray and Hendley use two case studies -- Hungarian bankruptcy law and Russian company law -- to illustrate the interaction of these three elements in practice. These cases illustrate their general view that Central Europe is somewhat further along on all three dimensions than Russia. Russia is not advanced in the development of either laws or institutions, among other reasons because it lacks Hungary's pre-war legacy of a legal tradition (Russia having never been a society or an economy ruled fundamentally by law) and because it launched economic reform much later. As for incentives, in both countries relevant actors exert weaker demand for proper implementation of the laws on the books -- weaker demand that there be stable rules of the game -- than one would expect in more mature market economies. The cases belie any simplistic notion that the rule of law can be mechanically dictated from above. Top-down reform of bankruptcy law in Hungary appears to have been at least marginally successful in changing expectations and behavior, partly because it stimulated the growth of new supporting institutions. It might have been more successful if other areas of government policy had created more complementary incentives, particularly in banks. Top-down reform of company law in Russia has had little impact to date on either institutional development or firm behavior. This paper -- a product of the Transition Economics Division, Policy Research Department -- was prepared for the John M. Olin Lecture Series at Harvard University
Different strategies of transition to a market economy : how do they work in practice? by Marek Dąbrowski( Book )
3 editions published in 1996 in English and held by 34 libraries worldwide
March 1996 The government's ability to act fast and with determination is more important to radical economic reform than technical perfection in designing new policy instruments. Political consent to reform measures lasts a short time, so it should be used in full. If the window of opportunity is ignored, the next one may be a long time coming. In 1989, the former communist countries embarked on a transition from centrally planned command economies to market economies (and from repressive dictatorships to Western-style democracies). In addressing the question, What is the optimal strategy for this transformation? Dabrowski revisits the controversy about how quickly and radically the new market rules and their components should be adopted in the former communist countries and discusses the economic and political problems associated with different strategies. Among his conclusions: * Generally, the faster and more comprehensive the economic reform, the more chance there is to minimize its economic, social, and political costs, and to avoid chronic macroeconomic mismanagement. A more radical and disciplined path of transition is all the more important when initial conditions are less favorable and negative external shocks are greater. Only countries such as Hungary -- which had made some progress in market-oriented reform before communism's collapse and which experienced less macroeconomic disequilibrium -- could go more slowly. * Political liberalization and democratization helps the economic transition succeed mainly because it helps weaken the political positions of the traditional communist oligarchy (nomenclatura), which is interested mainly in rent-seeking. * Unless stabilization and liberalization are achieved quickly, microeconomic restructuring cannot be expected to progress quickly, even if privatization does (as it has in Russia). Other aspects of the transition may take more time. For privatization to succeed, for example, a legal base and organizational infrastructure must be created. But even with privatization, a rapid transition is less risky for restructuring and for complex institutional reform than a slow transition. * There is no way to avoid a relatively large decline in output, especially of industrial production in the state sector. * Granting concessions to, and bargaining with, various pressure groups does not produce the expected political results or increase social acceptance of reform. * Governments should not be afraid of aiming too high in embarking on a stabilization program or any other component of transformation. Most post-communist governments do the opposite: dilute the program so much it becomes ineffective. This paper -- a product of the Transition Economics Division, Policy Research Department -- is part of a larger effort in the department to look at progress on macroeconomic reforms in former communist countries as they move to a market economy
Different strategies of transition to a market economy how do they work in practice? by Marek Dąbrowski( file )
1 edition published in 1996 in English and held by 33 libraries worldwide
Hungary's bankruptcy experience, 1992-1993 by Cheryl Williamson Gray( file )
2 editions published in 1995 in English and held by 33 libraries worldwide
From plan to market patterns of transition by Martha De Melo( file )
1 edition published in 1996 in English and held by 33 libraries worldwide
Industrial productivity in socialist economies : an integration of some macro and micro estimates by I. J Bahadur Singh( Book )
1 edition published in 1993 in English and held by 3 libraries worldwide
Hungary's bankruptcy experience, 1992-93 by Cheryl Williamson Gray( Book )
1 edition published in 1995 in English and held by 3 libraries worldwide
Research paper series ( serial )
in English and held by 2 libraries worldwide
Corporate control in Central Europe and Russia : should banks own shares? by Peter Dittus( Book )
1 edition published in 1995 in English and held by 2 libraries worldwide
June 1995 A governance system based on bank ownership and control of firms is not yet feasible, but a good case can be made for allowing banks to gradually gain experience through limited equity ownership--especially for allowing the swapping of bad debt for equity. Dittus and Prowse review corporate governance arrangements in the West and conclude that for a system based on bank ownership and control of firms to succeed, the banking system must be free of perverse incentives and state interference, as well as subject to adequate supervision by banking authorities and competition from market forces. Admirable progress over the past few years notwithstanding, these conditions do not now exist in the countries of Central Europe and Russia, so a corporate governance system based on bank ownership is not appropriate. That is not to say that such a system would not eventually be appropriate--but not before much more effort is made to create a competitive, private, well-supervised banking system (which is needed in any case). Changes in the banking system that are prerequisites for any large-scale bank involvement in the ownership and governance of firms are simple to enunciate but less easy to implement: * Sever existing relationships between the state and banks. Privatization is the strongest guarantee that bank investment decisions will not be subject to state influence, but bank privatization has been slow in most countries. This reflects limited understanding of the financial sector's poor condition, the many institutional and political obstacles to bank reform, and the initial decision in many countries to focus first on the real economy (a decision that in hindsight seems unfortunate). * Dispel the belief (which still exists in some countries) that poor lending and investments will eventually be underwritten by the government, with few consequences for managers. * Greatly strengthen competition in the banking system, in part by encouraging new private banks and the entry of foreign banks. (Some countries, such as Poland, have taken the opposite tack, refusing to issue new licenses.) * Provide effective bank supervision and an effective prudential and regulatory framework. This requires investing substantially in setting up institutions, accounting systems, and information networks, in hiring and training qualified personnel, and in ensuring that the system is immune from political intervention. Developing such a system will surely be long and drawn out, and may require foreign assistance. This paper--a product of the Transition Economics Division, Policy Research Department--is part of a larger effort in the department to explore issues of corporate governance in transition economies. The study was funded by the Bank's Research Support Budget under the research project Corporate Governance in Central Europe and Russia (RPO 678-42)
Worker displacement during the transition : experience from Slovenia by Peter F Orazem( Book )
3 editions published in 1995 in English and held by 2 libraries worldwide
The transition to market in Slovenia created labor displacements that were on par or greater than that experienced in North America in the 1980s. A simple theoretical model suggests that factors which raise the probability of layoff should also increase the probability of a quit, predictions that are borne out in data. Probability of both layoffs and quits fell with worker tenure, firm profitability and expected severance costs. Individuals facing a higher probability of displacement accepted slower wage growth than otherwise comparable workers. The incentives to avoid displacement were strong workers that actually were displaced faced a slow process of transiting out of unemployment with only one-third finding reemployment. Correcting for selection, real wage losses for displaced workers are comparable to those reported for displaced workers in North America
Institutional change and industrial innovation in transitional economies by Gary H Jefferson( Book )
1 edition published in 1994 in English and held by 2 libraries worldwide
Policy directed lending and economic transition in China by Geng Xiao( Book )
1 edition published in 1993 in English and held by 1 library worldwide
Enterprise reform in Chinese industry by Gary H Jefferson( Book )
1 edition published in 1994 in English and held by 1 library worldwide
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controlled identity World Bank. Policy Research Department

controlled identity World Bank. Transition and Macro-Adjustment Division

Transition Economics Division of Policy Research Dept of the World Bank
World Bank. Policy Research Department. Transition Division
World Bank. Policy Research Dept. Transition Economics Division
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