Transcript ECONOMICS OF TRANSITION - University of Ljubljana

ECONOMICS OF
TRANSITION
Pravna fakulteta Univerze v
Ljubljani
Erasmus 2013
Jože Mencinger, Franjo Štiblar
CONTENTS
Part 1 (Mencinger) ECONOMIC CONCEPTS AND THEORY
- ECONOMIC CONCEPTS AND SOME CONTEMPORARY ISSUES
- GDP STRUCTURES AND MEASURES OF ECONOMIC ACTIVITY
- AGGREGATE EXPENDITURE AND GDP DETERMINATION
- AGGREGATE SUPPLY, ECONOMIC GROWTH, INFLATION, AND
UNEMPLOYMENT
- BASICS OF MONETARY ECONOMICS
- ECONOMIC POLICIES
- TRANSITION IN THEORY
Part 2 (Štiblar) TRANSITION IN SEE
EXAM: written exam: 4 questions
If somebody wants. a paper can be added . A short description of the major
characteristics of one of the main transition features (privatization.
macroeconomic stabilization. institutional changes) in a country of SEE - up to
10 pages It should include basic tools and outcomes
LITERATURE
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Bohle, D. , Greskovits, B. Neoliberalism, embedded neoliberalism, and neocorporativism
West European Politics, 2007; (provided on home pages)
-
Štiblar. F: The Impact of the Global Crisis on Montenegro and the Western Balkans.
Central Bank of Montenegro. 2009; (provided )
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Mencinger. J: Privatization in Slovenia , Slovenian LawReview. 2006. vol 3. no 1/2. pp 6581; (provided on home pages)
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Mencinger. J :Transition to a national and a market economy : a gradualist approach in Mrak.
M Rojec. M Silva-Jáuregui. C Slovenia : from Yugoslavia to the European Union
Washington: The World Bank. 2004. 67-82 (provided on home pages)
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Lectures: PP presentations (provided on home page)
SLOVENIA
• Surface: 20.273 sqkm, 66% forests, Population: 2,02 millions,
• Language: Slovenian; (Italian, Hungarian minorities)
• Political Arrangement: parliamentary democracy, coalition governments;
“left” or “right”
• History: until 1918 part of Austro-Hungarian empire;
• 1919-1941 part of Kingdom of Yugoslavia;
• 1941-1945 occupied by Germany, Italy and Hungary;
• 1945-1991 Yugoslav republic;
• 1990 - political transition:
• 1991 independence, May 2004: EU member state, January 1, 2007 EMU
member;
• Economy: GDP 34 billions €, GDP/capita 17.000 €, 88% of EU27 average,
• - GDP growth: 4%(2008) -7.6%(2009), 1.5%(2011), -1.0 (2012)
• - unemployment rate: 4.4%, 60000 (2008), 6.9% 116000 8.3% (March 2011);
• - inflation 5.7 %(2008) 1%(2009), 2.3%(Feb.2012)
• - public balance/GDP: 0.4%(2008), -5,5%(2011)
• - CA/GDP: -4.5%(2008) -0.6%(2011)
ECONOMIC DEVELOPMENT OF SLOVENIA
180
GDP index
160
gambling
gradualism
transition
140
crisis
120
100
8
%
80
4
rate of change
0
-4
-8
-12
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
GAMBLING AND THE END OF THE SLOVENIAN
“SUCCESS STORY”
CREDITS AND DEPOSITS
32,000
CREDIT/DEPOSIT RATIO
1.8
m il. €
credits
credit/deposit ratio
28,000
1.6
24,000
1.4
20,000
1.2
deposits
16,000
1.0
12,000
0.8
"gambling period"
8,000
"gambling period"
0.6
2002
2003
2004
2005
2006
2007
2008
2009
2010
2002
2003
2004
2005
VIRTUAL WEALTH CREATION
2006
2007
2008
2009
2010
NET FOREIGN DEBT
14,000
12,000
SBI index
mil.€
10,000
12,000
8,000
10,000
?????
6,000
8,000
4,000
2,000
6,000
0
4,000
"gambling" period
"G AMBLING " PERIOD
-2,000
2,000
-4,000
2002
2003
2004
2005
2006
2007
2008
2009
2010
2002
2003
2004
2005
2006
2007
2008
2009
2010
PERFORMANCE INDICATORS
-
ECONOMIC WELFARE AND ECONOMIC GROWTH
-
CAPACITY UTILIZATION AND UNEMPLOYMENT
-
STABILITY AND INFLATION
-
EQUILIBRIUM: EXTERNAL AND INTERNAL
-
INCOME AND WEALTH DISTRIBUTION
-
OTHER CRITERIA
-
VALUE JUDGEMENTS
FINAFINANCIAL CAPITALISM
NCIAL CAPITALISM
Financial products
investiments
Savers
acquisitions
speculations
Financial investors
privatizations
THE ROOTS OF THE CRISIS 1 (JHuffschmid)
Wage share in the USA, Japan and the EU-15, 1975-2005
81
wage share in % of GDP*
79
77
75
73
71
69
67
99
20
00
20
01
20
02
20
03
20
04
20
05
98
97
96
94
19
95
93
92
91
89
19
90
88
87
86
84
19
85
83
82
81
79
19
80
78
77
76
19
75
65
* bereinigt um Veränderungen der Beschäftigtenanteile
Quellen: European Economy, 6/2002 und 6/2004, Statistical Annex, jedw eils Table 32
EU-15
USA
Japan
THE ROOTS OF THE CRISIS 2 (J Huffschmid)
Shares of profit and investment in the EU-15, 1975-2005
34
32
28
share of investment
share of profits
26
Linear (share of
profits)
Linear (share of
investment)
24
22
20
4
20
05
3
2
1
99
20
00
98
97
96
94
19
95
93
92
91
89
19
90
88
87
86
84
19
85
83
82
81
79
19
80
78
77
76
18
19
75
in % of GDP
30
THE ROOTS OF THE CRISIS 3
-AGGREGATE DEMAND
FINANCE DRIVEN CAPITALISM (JHuffschmid)
CRISIS AND EU COMMISSION
Documents on the failure of strategies by EU Commission:
- evaluation of Lisbon strategies: structural reforms increasing robustness of EU;
- evaluation of the crisis: drop of industrial production. unemployment: 23 millions or 10%
of active population; budget deficit 7%; public debt 80% GDP. 20 lost years in fiscal
consolidation;
- causes: low investments in R&D. structural problems. population ageing. business climate;
Reality:
- failed ilussions: of creation of knowledge based society and of ability to compete in a
globalized world with ruthless societies. economic cannibalism.
- destruction of European industry: growth of financial sector 6 times faster than growth of
the “real” economy;
- economy dominated by finance – finance dominated by speculations; profit making
without value and job creation;
-ideology: dogmatic liberalism. accent on the supply side. neglect of the demand side;
THE CAUSES OF PROBLEMS IN NMS AND FMS
External vulnerability of NMS and FMS has been enhanced
(1) by small size of the countries.
(2) transition based on Washington consensus.
(3) FDI addiction. and
(4) too rapid convergence of standard of living enabled by foreign savings;
The global credit reduction is hitting NMS and FMS with large external
financing needs particularly hard;
Continued exposure of parent banks is critical for NMS and FMS
development to weather the storm;
The recession in EU hitS NMS and FMS most through increased competition
and resulting decrease of export demand