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

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Ivo Bićanić 191 Certainly, the clear lack of convergence does not a priori support either the optimism or linearity on a general level, or transitioning economies specifically. The existence of clubs can even generate pessimism, if it is shown that transition economies are members of clubs not converging to levels of the currently most developed economies. Regarding empirical research into growth in transitioning economies, researchers (and policy makers, but they are not of direct concern here) face additional problems. The first concerns the lack of available results. While some partial country studies exist, reliable comparative ones are still absent. But even the limited scope of the former show that a decade of growth experience of transition does not provide clear support for the linear and optimistic approach either. While the left hand side of the transition ‘U’ is now more or less known, the length of the trough and the steepness of the right hand side, which stands for positive growth rates, is unknown. Even if transition related war-torn economies, that is the Wars of the Yugoslav succession and those in the former Soviet Union, are disregarded, the record is ambiguous. To date, not a single economy in transition has yet generated sustained high economic growth rates. Poland was closest, but in 1998 growth faltered and for 1999 low growth is predicted. Thus for the most successfully growing economy in transition, the average yearly growth rate since the economy started growing is 5.3 per cent 4 (for the period 1992–8). The other ‘flagship’ transitioning economies have done even worse. The average yearly growth rates after the turnaround for Hungary is 3.0 per cent (period 1994–8), Slovenia 3.8 per cent (period 1993–8) and Czechia 2.2 per cent (period 1993–8). Regarding Croatia, the other economy with consistently high growth rates and a post-turnaround yearly average of 4.8 per cent (for the period 1994–8), its growth is a result of post-war reconstruction and the statistics are unreliable. In all likelihood, the prospects of empirical research into transitioning growth and of reliable results will remain slender. There are at least two reasons for this. The first is data related, and the second methodological. Inadequate data is a feature of transition crises. The first part of the transitioning decade was a time of high inflation rates and falling production; neither provide a sound basis for empirical growth research. Thus, at best, there is in most cases less than five years of ‘usable’ data, which is not enough for reliable empirical work. The methodological problem is one which accompanies all broadly based comparative growth studies based on cross-section data. There is a great variety among the 27 transition economies, ranging from the poorest – Tajikistan and its 900 USD, to the richest – Slovenia and its
192 Growth Theory and Transition Economies 12 110 USD (both GNP per capita at ppp). The methodological problems of plugging data from such varied economies into the same regression analysis are well-known in growth theory. In the case of transitioning economies this is made even more serious by the complete economic collapse of some national economies. This collapse has not been restricted to war-torn economies (for example, Bosnia and Herzegovina, FR Yugoslavia, Georgia, Tajikistan, Azerbeijan and Armenia), but to others as well (Albania, Bulgaria for a short time). As a result, the scope for empirical results is small. Long-term trends cannot be derived and the most recent experience is not encouraging, especially since the empirical results derived under different circumstances, countries and periods do not clearly support optimism and linearity but, on the contrary, quite substantially question it. 11.4 Optimism, linearity and growth theory Because of the problems described above, the empirical study of growth in transitioning economies cannot have great ‘mileage’. As a result, the importance of and reliance on growth theory necessarily increases. The optimistic and linear approach to transition finds its strongest support in basic mainstream growth theory. The Neoclassical Solow-Swann model (with or without Ramsey optimizing households) is quite clear on both issues. The Solow-Swann model’s ‘world’ generates only one equilibrium steady state growth path. This equilibrium steady state growth path is generated by the assumptions of well-behaved production functions and preferences, perfect competition, profit maximizing firms and welfare maximizing households. Furthermore, this path is globally stable so that, regardless of the economy’s initial conditions, the economy converges over time to this one growth path which is common to all economies. Linearity is thus dealt with by the existence of a single steady state growth path, and optimism by the unavoidable convergence of economies to this path. The Neoclassical Solow-Swann model allows per capita GDP and per capita consumption to grow. Additional assumptions are required to enable per capita GDP and consumption to rise, while maintaining equilibrium steady state and stability. In particular, Harrod neutral labour augmenting technical progress is included, and this has the properties of undiscriminating manna from heaven. The model’s equilibrium steady state growth rate is determined by the exogenously given rate of growth of the population and exogenously given rate of growth of technical progress. While the exogenous fundamentals of the model remain unchanged, different values of
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Equality, Participation, Transition
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First published in Great Britain 20
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vi Contents 9 Self-Management, Empl
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List of Figures 02.1 First Law of O
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x Foreword institution most dear to
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Notes on the Contributors Ivo Bića
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xiv Notes on the Contributors membe
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xvi Notes on the Contributors done
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xviii Notes on the Contributors pri
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Introduction: Branko Horvat - Beyon
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xxii Introduction Dame (1978), Univ
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xxiv Introduction theory led him to
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xxvi Introduction though friendly,
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xxviii Introduction The second pape
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xxx Introduction disciplines such a
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Branko Horvat: Select Bibliography
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xxxiv Branko Horvat: Select Bibliog
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xxxvi Branko Horvat: Select Bibliog
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xxxviii Branko Horvat: Select Bibli
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2 Horvat’s Contributions to Econo
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10 Horvat’s Contributions to Econ
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2 Individual Initiative, Entry and
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28 Egalitarianism On Its Own Thomas
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30 Egalitarianism On Its Own projec
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32 Egalitarianism On Its Own absenc
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34 Egalitarianism On Its Own tithin
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36 Egalitarianism On Its Own what s
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38 Egalitarianism On Its Own 100% 9
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40 Egalitarianism On Its Own contri
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42 Egalitarianism On Its Own anothe
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44 Egalitarianism On Its Own politi
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46 Egalitarianism On Its Own Eckel,
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4 Determinants of Cross-Country Inc
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50 Determinants of Income Inequalit
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56 GINI GINI 65 60 55 50 45 40 35 3
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Table 4.2 The regressions: dependen
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5 Illyrian Theories of Cooperative
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92 Employee Participation in Enterp
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EMPLOYEE RETURN ONLY PROFIT PROFIT
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100 Employee Participation in Enter
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7 Employee Involvement and the Mode
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104 Employee Involvement and the Mo
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8 Uneasy Symbiosis of a Market Econ
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120 Market Socialism in Yugoslavia
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Page 179 and 180: 140 Market Socialism in Yugoslavia
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Page 189 and 190: Table 9.1 Methods of privatization
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Page 241 and 242: 202 Index economic growth - continu
Page 243 and 244: 204 Index Horvat, Branko - continue
Page 245 and 246: 206 Index neoclassical economics -
Page 247 and 248: 208 Index ‘third way’, 88, 104
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Equality, Participation, Transition: Essays in Honour of Branko Horvat

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