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Developing and comparing of two economic profiles: Poland/Hungary (for the 1990s)

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Introduction

Fachhochschule Furtwangen The University of Applied Sciences TERM - PAPER Theme: "Economies in transition " Developing and comparing of two economic profiles: Poland/Hungary (for the 1990s) Prepared by the students of BBA1: Aurel Jamilov Arthur Krivosheev Received: Prof. Dr. Gerd Addicks VS- Schweninngen -2004 Contents: Introduction 1. Meaning of Marked Economy 2. The Tasks of the Transitions 3. Poland: Transition via "Shock Therapy" 3.1. The Setting 3.2. Command Economy 3.3. The Polish "Big Bang" in Practice 3.4. Polish Economy in the 1990s 4. Hungary: The New Economic Mechanism and Privatization 4.1. The Setting 4.2. Hungary Economy: Prereform 4.3. Intent of the New Economic Mechanism 4.4. Hungarian Economy in the 1990s Conclusion Introduction This paper will describe and evaluate the problems of economy in transition in countries of Eastern Europe, namely Poland, Hungary, all of which are attempting to make the transition under a democratic form of government. The last 15-20 years have witnessed very unusual events in the former communist societies. After USSR went to pieces, communist's principles of planned economy have been widely rejected and replaced by willingness to admit democratic principles and market economy. There are several reasons why the task of designing this transition is interesting, especially to economists. First, the problem is new: no country prior to 1989 had ever rejected the communist political and economic system. Second, the experience until now indicates that countries attempting transition face a number of common problems and difficulties. While there are important differences in the inherited situations and the choices made by governments of these countries, the common things in the problems they face and the difficulties they are encountering suggest that it could be a good way to learn about the transition process and development of future transition scenarios. Finally, the problems these countries face are not waiting for analyst`s solutions, decisions currently being made may lead to an evolution with unchangeable results. ...read more.

Middle

Privatization has proceeded fast, though it has been achieved mainly for small enterprises in the trade and service sectors. Industrial output in the private sector grew by 8 percent in 1990 and is reported to represent roughly 17 percent of total Polish industrial output.6 Though privatization has been very successful for small-scale enterprises, the picture for large state enterprises is quite different; privatization of these enterprises has proceeded very slowly. Some of the problems they faced were: price changes, wage limitations, subsidies that have been ended and protection from foreign competition that has been sharply reduced. This has encouraged enterprise managers to reduce costs by restricting unnecessary output and reducing the labor force. However, the strong commitment to rapid privatization was reinforced in June of 1991, when it was announced that a major portion of state industry would be privatized through creation of stock funds, with the population receiving vouchers.7 Beyond these changes in the state sector, new guidelines have been introduced to monitor enterprise performance. Furthermore, a new Industrial Restructuring Agency will consider how remaining state enterprises should be handled, to what extent privatization is possible, and what restructuring should take place for those enterprises that are not having the ability to survive in the new setting. These new arrangements are designed to ensure a rapid transformation of the Polish industrial structure, to make it similar to and competitive with market economic systems, and to achieve this result as quickly as possible. 3. 4) The Polish Economy in the 1990s It is clear that economic reform in Poland has been radical and has moved sharply and quickly away from the plan toward the market. In addition to the expanded influence of market mechanisms, decision making has been decentralized and private property introduced. The initial results have been definitely encouraging. First, stabilization measures cut the rate of inflation sharply from a reported 40-50 percent per month at the end of 1989 to roughly 4-5 percent per month in 1990.8 At the same time output fell, though supplies of consumer goods in stores increased. ...read more.

Conclusion

States must themselves model their transitional process as soon as the cultural diversities still play a great role in creating Max Weber's "spirit of capitalism". BIBLIOGRAPHY * Danks, Stephen (ed) : "Business studies". 3rd ed. London 1996 BA 7738 * http://www.cipe.org/publications/fs/ert/e01/4poland.htm * http://countrystudies.us/hungary * http://countrystudies.us/poland * http://www.encyclopedia.com/html/section/Hungary_Bibliography.asp * http://www.encyclopedia.com/html/section/Poland_Economy.asp * http://en.wikipedia.org/wiki/hungary * http://en.wikipedia.org/wiki/Poland * Jeffery Sachs : "Shock Therapy in Poland: Perspectives of Five Years" (THE TANNER LECTURES ON HUMAN VALUES) Delivered at University of Utah April 6 and 7, 1994 * Mankiw. G. N. :"Principles of economics" 3rd ed. * Peter Calvocoressi: "World Politics since 1945" Addison Wesley Longman; 7th edition (October 1, 1996) * ??????? ?. ,???? ?. "???????? ??????? ? ?????? ? ? ??????? ?? ???" ?? ? ?? // 1992 (Samonis V., Sani G., : "Market reforms in Poland and to the east of it ") 1Joseph Alois Schumpeter (February 8, 1883 - January 8, 1950) was one of the greatest 20th century economists . 2 According to : ??????? ?., ???? ?. ???????? ??????? ? ?????? ? ? ??????? ?? ???. // ?? ? ??, 1992, ? 6 (Samonis. V, Sani. G Market reforms in Poland and to the east from it) 3 According to: http://unstats.un.org/unsd/cdbdemo/cdb_years_on_top.asp?srID=29922&crID=616&yrID=1989 4 Polish independent trade union federation established in 1980 and led by Lech Walesa (www.encyclopedia.com/html/section/Poland_Economy.asp) 5 Based on facts listed below : http://www.cipe.org/publications/fs/ert/e01/4poland.htm 6 Based on facts listed below: http://countrystudies.us/poland/54.htm 7 Government of Prime Minister Jan Bielecki, which came to power in early 1990, had made capital vouchers available without charge to all adult citizens. 8 According to JEFFREY SACHS in his work "Shock Therapy in Poland: Perspectives of Five Years" 9 According to European industrial relations observatory 10 Comecon Economic organization from 1949 to 1991, linking the USSR with Bulgaria, Czechoslovakia, Hungary, Poland, Romania, East Germany (1950-90), Mongolia (from 1962), Cuba (from 1972), and Vietnam (from 1978), with Yugoslavia as an associated member. Albania also belonged between 1949 and 1961. Its establishment was prompted by the Marshall Plan. Comecon was formally disbanded in June 1991. 11According to : http://www.encyclopedia. ...read more.

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