The Successes and Failures of Economic Transition: The European Experience
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Book Review The Successes and Failures of Economic Transition: The European Experience Hubert Gabrisch and Jens Ho¨lscher Palgrave Macmillan: New York, 2006, xiv+187pp, d55 Comparative Economic Studies (2007) 49, 709–711. doi:10.1057/palgrave.ces.8100229
This concise volume examines the processes of transformation from a socialist economic system to a market economy in Eastern Europe, Russia, and China. After exploring the meaning of transition and the fundamental difference between the ‘Washington Consensus’ and ‘evolutionary institutionalist’ approaches to transition, the next six chapters examine issues confronted by countries undergoing the transition process such as financial stability, privatisation and competition, labour markets, opening of the economy, income inequality, and European Union (EU) membership. In addition to examples throughout of challenges, strategies, and policies followed in several countries, the concluding chapter provides an in-depth discussion of transition in East Germany, Hungary, Russia, and China. Gabrisch and Ho¨lscher have done an outstanding job in describing the nature of transition. Their attention to the country-specific institutional arrangements that influence the differing transition experiences among Russia, China, and Central and Eastern European countries is a major strength of the book. Despite an apparent preference for the evolutionary– institutionalist approach to transition, they do not in any way neglect the contributions of the Washington Consensus. The Lipton–Sachs model of combining liberalisation and stabilisation, for example, is given due attention. Having thoroughly explained and compared the Washington Consensus and evolutionary–institutionalist approaches, readers are left to reach their own conclusions about the efficacy of policy. Professionals in the field of comparative economic studies will be familiar with many of the facts covered in this book. That said, the careful and concise discussions of such topics as privatisation and competition, financial institutions, and the role of transition states in the international economy will be of interest to most readers. For example, the authors emphasise why privatisation alone is not sufficient to engender competition, a legal system with workable antitrust polices also is needed for a competitive environment. The authors extend that discussion with a comparison of the effects of the various forms of buyouts including voucher schemes, management–employee
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buyouts, and direct sales to foreign entities. For example, voucher systems can cause banks to inherit debt that affects the stability of the financial system. In spite of progress made in establishing legal institutions, most CEE countries still do not have legal institutions which come up to EU benchmarks. The integration of the various dimensions of transition is a strength of Gabrisch and Ho¨lscher’s approach. The pattern of transition and its effect on the macro economy of the countries studied is given
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