Economic Transition

Question 1

What is economic transition

Answer 1

the process by which a nation changes its fundamental economic organization and creates new-free market institutions

Question 2

what are the key reform measures

Answer 2

1. stabilizing the economy, reducing budget deficit, expanding credit availability
2. allowing prices to reflect supply and demand
3. legalizing private business, selling state-owned companies, supporting property rights
4. reducing barriers to trade and investment and allowing currency convertibility
5. encouraging innovation through investment and entrepreneurship

Question 3

What are the transition obstacles

Answer 3

1. managerial expertise (higher-quality management practices have taken root in transition countries)
2. shortage of capital (outside sources of capital)
3. cultural differences (certain cultures welcome change more easily than other)