9 - Passive Scenarios and Active Policies for the Twenty-First Century

Summary

Against such a background it seems possible to outline some passive scenarios of catching-up in transition economies as well as to provide some policy recommendations for the actions that ought to help realize more positive results among those scenarios.

In a certain sense the transition ought to be seen as a specific historical endeavor shifting part of global economy from one model of growth and development to another. Although their expansion was following the pattern of cycles typical of a centrally planned system, already in the past all these countries were the growing economies. Hence, there was also catching-up with the more developed regions—at least at the earlier stages of a centrally planned episode, before momentum was lost.

From now on—assuming that the Great Transitional Depression is coming to an end in all countries, including those which did not return to the path of growth prior to 2000—there will be growth following the pattern of business cycles typical of a market system. Therefore, under further consideration there is an implicit assumption that long-term growth will evolve around the trend derived from business cycle fluctuations, yet of unknown characteristics.

From such an angle, the postsocialist economies in transition to a market order are going through the long process of changing the substance of their cyclical growth. They do not move from a system where there was no growth to a new system, where the growth will resume and is supposed to be of a ‘better character.’ The latter must still happen.

For the time being, there are various forecasts for upcoming years. Actually, in the medium term, nobody foresees for any of the transition economies a further decline of output. There are only a couple of cases where a decline in output is expected, and that is only for a single year. Of course, this outlook presumes that developments go peacefully and that there will not be any severe, unpredictable external shocks. Both misfortunes cannot be ruled out a priori, because the things do happen. However, such assumptions seem to be rational at this point. Therefore, in 2003 or 2004, the GDP index, comparing national income in those years with the level of GDP in 1989 and 1999, will look less depressing than it does now, although still more than one would like to see.