The course deals with main economic issues related to transition from central planning in Soviet bloc, former Yugoslavia, and China to a new economic system (market economy or state capitalism). Compared to other similar courses, this course attempts to be less descriptive and more analytical; we will use economic models and results of econometric studies where appropriate. We will also try to apply an experimental approach in order to provide the students with direct experience with asymmetric information markets and soft-budget constraints. The course is trying to focus on aspects of transition which can be used to shed light on more permanent (indeed even future) problems of economics systems and which can help reduce future exposure to similar errors.
The first part of the course deals with the theory of comparative economics systems reviewing the theory of capitalism, and analyzing the functioning of central planning. It also deals with the motivation, design and implementation of non-market systems (central planning and other arrangements such as Yugoslavian self-managed firms, or current Chinese economy). This includes the main theoretical concepts useful for understanding the problems of non-market economies (e.g. soft budget constraints).
The second part of the course explains the design, implementation and logic of reforms and of main transition-related changes. We will also deal with basic theoretical models that attempt to explain the nature of problems experienced by transition economies.
The final part will focus on selected issues related to institutional weaknesses of post-transition economies both at micro-level (corporate governance) and macro level (corruption and state capture).
- Instructor: Vilem Semerak
- Instructor: Krešimir Žigić