Equality, Participation, Transition: Essays in Honour of Branko Horvat

11
Growth Theory and
Transition Economies
Ivo Bićanić
11.1 Introduction
After almost a decade of ‘transitioning’ and ‘transforming’, it seems
that for all the 27 transition economies, the first phase of economic
transition is over. Decline in production has stopped for all of them
and some have already experienced several years of economic growth.
All have introduced markets and chosen a wide range of market structures
and institutions to underpin them. Similarly, all have liberalized
foreign trade but many have kept some form of restrictions on the capital
account. Without exception, all have experienced major restructuring
which has increased the share of services and small firms. Finally,
all have experienced some degree of privatization, and through implementing
very different mechanisms (which probably include all the
possibilities available), have gained varied privatization experience.
Thus the same basic common experience of the first phase has generated
many different paths.
The variety and variations of transition paths generated by the first
phase is very wide and includes a whole range of possibilities. Various
circumstances, as well as the time span which has generated limited data
set for a ten-year period, have already led to first attempts to identify
transition path regularities, patterns, similarities and country-specific differences.
Two approaches seem to dominate these attempts. The first
concentrates on trying to recognize factors influencing the course and
extent of economic transition, namely its determinants; the second takes
a broader view by offering a theoretical explanation of the changes.
As a result, the range of interpretations on offer is already wide
and with the blossoming of literature in both traditions this will
likely increase. At one extreme are studies which concentrate on the
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