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Making a Successful Transition from a Command to a Market Economy: the lessons from Estonia
Author(s) -
Gillies James,
Leimann Jaak,
Peterson Rein
Publication year - 2002
Publication title -
corporate governance: an international review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.866
H-Index - 85
eISSN - 1467-8683
pISSN - 0964-8410
DOI - 10.1111/1467-8683.00282
Subject(s) - planned economy , independence (probability theory) , realisation , principal (computer security) , transition economy , economy , economics , market economy , welfare , politics , economic system , political science , statistics , physics , mathematics , quantum mechanics , computer science , law , operating system
It is now more than ten years since the dismantling of the USSR began, not only in terms of the reasserted independence of the member states, but also in terms of the end of the centralised Soviet command economy. The experiences of a myriad of investors, public and private, who have lost funds they so hopefully made available to emerging enterprises in the Eastern European states, particularly in Russia, have clearly demonstrated to Western observers the difficulties associated with making a transition from a command to a market economy. And yet the transformation in different states has had different degrees of success. For example, in Estonia, the strategies to move from a command to a market economy, adopted by the political leadership throughout the 1990s, have been relatively successful. In this article, the policies that led to this success are identified. It is believed that tentative generalisations from the experiences of Estonia may be helpful in determining the necessary conditions for successful change from a command to a market economy in other countries. To the extent that such transitions contribute to real economic growth, empirical evidence about the conditions necessary for their realisation provides general understanding of the forces underlying economic development. Moreover, it may well be that these generalisations can be used by private and public organisations to obtain a first indication of the probabilities of success of investments that they are contemplating making in a transitional economy, whether measured by return on capital, and/or contribution to general welfare.