Reforms in the Transitional Economies of Asia

Abstract

Virtually all the world's formerly planned economies have recently undertaken systemic reforms with the ultimate objective of replacing central planning with reliance on market mechanisms. The proposed reforms have been fundamental and have had significant impact on all sectors of the economy. Implementing these reforms has proved difficult for a number of reasons, including the lack of historical precedents from which to derive lessons. To date, the results of the liberalization efforts in Eastern Europe and the former Soviet Union (FSU) have been disappointing. While some signs of economic recovery have started to emerge in Poland, the former Czechoslovakia and Hungary, output has generally fallen. The decline has been most rapid in the countries with the most ambitious liberalization programs. In contrast, output in the transitional economies of Asia (TEAs)—comprising the People's Republic of China (PRC), Lao People's Democratic Republic (Lao PDR), Mongolia, Myanmar and Viet Nam—has generally continued to grow after liberalization at more or less the same rate as during the pre-reform period. Price stability has also generally been maintained in the TEAs.