The market economy and its formation in the modern world is a very complex issue, since it is necessary to completely transform and change the system that has developed over many decades. But you can’t quickly change all this, create an updated worldview of business entities, and create a regulatory and legal framework. The transition economy is a stage of development, reform and transformation. It always takes a long time, during which the economic system will be a mixture of elements of the modern market and administrative command. These are changes in development, not established functioning.
Main features
A transition economy is always volatility and instability that are “irrevocable” in nature. This not only violates the stability of the system so that then it can return to equilibrium, but significantly weakens it. The economy in transition must irreversibly lead to some other, more stable, economic system. This instability causes irreversibility and special dynamism of development. However, the growth of uncertainty, a mixture of the new and the old is always a contradiction. In the socio-political sphere, this leads to exacerbation of contradictions and social upheaval.
Historicity as a feature
It is a historical pattern that is an important feature of any country with a transition economy, a list of which can be found at the end of the article. The Eastern European states that were formerly members of the Soviet Union were now faced with problems that were an order of magnitude more complicated than those of Latin American countries, since in Latin America there were quite developed market institutions. Accordingly, the number of privatized enterprises was estimated not in the thousands, but in the hundreds. Features of the transition economy - different forms of its manifestation in different conditions. All this must be taken into account by governments when developing plans for reforming economic systems.
Features of functioning: inertia
Countries with economies in transition have many features. The first and most important is the continuity (inertia) of reproduction processes, which exclude the possibility of quickly replacing existing economic forms with other, more desirable ones. It is thanks to the inertia of reproduction that the old economic relations and forms are preserved for a long time.
Increased intensity
A transition economy is always a very stressful period. Another key feature is the very fast and intensive development of new relationships between market entities. The irreversibility of evolution accelerates the implementation of many reforms. The economy of the transitional period is doomed to success and acceleration of its transitional processes, if the reforms are not arbitrary, but are based on regular evolution and a verified system of actions.
Local type
There are different types of transition economies that differ in the nature of the processes and their scale. Local is characterized by the fact that the transition state is visible on the scale of a single region. It is based on the features and uneven development of different regions. The local transition economy is the embodiment of the unity of the general, the special. In a different form, this form has developed in the UK, Germany and France.
Global type
This is a single process of many changes within the whole civilization (western and eastern), the world economy. Initially, such movements provoke developed countries with economies in transition. The trends that arise in this way affect the development of megaeconomic processes.
Evolutionarily natural type
This type is distinguished by its nature of the occurrence of transient processes globally. However, local transition economies can also form under the influence of regular evolution. In general, all types of transition economies obey the law of natural evolution.
Evolutionary Reformation Type
This kind of transitional market economy is the connection of various transformation processes with social reform programs. However, the laws of evolution are fully preserved. This type is trying to involuntarily accelerate it by introducing reforms and transformations. An example is the reform of Stolypin in tsarist Russia.
Basic patterns vectors
The gradual withering away of socialist rudiments - a command economy, totalitarianism, egalitarianism, the underground market, shadow capitalism. Another important vector is the genesis of the relations of the capitalist economy (a modern economy based on the market and private property). The trend of socialization (the return of national, group and international values of economic behavior) and general humanization are the foundation of virtually any transformational process.
Inevitable changes
There are three main changes that are irreversible and occur during the transition period: the loss of the function of the sole management of all economic resources by state authorities, the decline in transformation and the budget crisis. These patterns are generally quite negative and are expressed in crises. Since a huge part of the property becomes private, the state loses power on the monopoly of economic decision-making.
The main challenges to becoming
The transition economy is a complex process of creating a new type of system, overcoming the shortcomings of the former and ensuring efficient economic growth. Crisis phenomena such as declining production, rising inflation and unemployment are due to changes in the economic system. Therefore, it is necessary to look for ways to solve the following problems:
1. Financial and credit stabilization of the economy by conducting monetary policy.
2. Privatization and privatization of enterprises in various sectors of production and the development of competition and entrepreneurship.
3 Demonopolization is the most important prerequisite for the formation of market competition. Development of a system of restrictions on the merger, disaggregation of existing monopolies.
Liberalization
Developed countries with economies in transition should pay special attention to price liberalization, which would balance supply and demand, eliminate the deficit, and create conditions for competition. There are two possible ways of such reforms:
1. Gradual, that is, long-term liberalization.
2. Radical, that is, large-scale and rapid implementation of new reforms, which is called "shock therapy".
It is also necessary to take care of the market infrastructure as a system of economic institutions, and create strong social protection for the population.
Features of the structure of the transition economy
Property rights are decisive in the development of the free market economy, these are the features of the transition economy. Only the owner is able to independently make the necessary decisions and monitor the result. Entrepreneurs are trying to increase property, as it provides a wider range of choice of business and pricing, which affects income. Transition economy is a certain structure of relations:
- The main levers of influence are in the hands of large shareholders with a high concentration of invested capital;
- Next are many small and medium-sized enterprises with private or joint-stock ownership;
- An important role is played by municipal and state property.
