Transition to a market economy is a lengthy process comprised of various spheres of economic activities. The belief that a market economy can be introduced by “shock therapy” is wrong, and in several cases has caused more problems than it has solved. Since a market economy requires adequate institutional structures, transition can be executed only in a gradual manner. Despite the fact that so-called Washington consensus, i.e. a set of policies aiming to shift from stabilization to growth, was developed without concern for post-socialist transformation, these ideas have significantly influenced the path of thought and action in Eastern Europe and the former Soviet Union. After a decade of transition and lasting depression, a new, post-Washington consensus is developing. Major policy conclusions suggest that the core of emerging consensus, also based on the lessons from transitions, is institutional building. Only with strong institutions can liberalization and privatization put emerging post-socialist markets on the path of sustainable growth. Yet, to accomplish such a task the policy reforms must also take into consideration the need for equitable growth and the new role of the state. The latter must not retire from economic activities, but ought to change its role to support the reforms and integration of the post-socialist countries into the world economy in the era of globalization, of which the post-communist transition is an important part.
Transition to a market economy and sustained growth. Implications for the post-Washington consensus
The author was Poland’s First Deputy Premier and Minister of Finance from 1994 to 1997. This article was prepared while the author was Visiting Fellow at the Development Economics Research Group in the Policy Research Department at the World Bank, in 1998. The views presented in this paper are exclusively those of the author and do not reflect the opinion of the World Bank, or any other organization or person the author may be associated with.
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Grzegorz W. Kolodko; Transition to a market economy and sustained growth. Implications for the post-Washington consensus. Communist and Post-Communist Studies 1 September 1999; 32 (3): 233–261. doi: https://doi.org/10.1016/S0967-067X(99)00011-2
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