Microeconomic Issues in the Transition to a Market Economy

Svejnar, Jan

The socialist system introduced microeconomic distortions that probably transcend those observed in the third world. The recent developments in Poland, Yugoslavia, and the Soviet Union also support the hypothesis that macro stabilization will be difficult to achieve in the transforming socialist economies in the absence of adequate micro adjustments. In this paper, I address what I consider to be the most important micro issues related to the transition from socialist to market economies. First I summarize the initial microeconomic conditions, covering labor, capital, and energy markets; the product markets, industrial organization, and trade; and the market for land and housing. Then, I describe the main changes that have taken place in the early stages of the transition. Finally, I discuss the micro policy agenda that needs to be addressed if the transition is to be successful

Geographic Areas



  • thumnail for microeconomic_issues_in_the_transition_economy.pdf microeconomic_issues_in_the_transition_economy.pdf application/doc 270 KB Download File

Also Published In

Journal of Economic Perspectives

More About This Work

Academic Units
International and Public Affairs
American Economic Association
Published Here
January 31, 2014