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PSC 254
Political Economy of Post-Communism (syllabus)
Globalization seems to be the most important feature of the contemporary economy. It changes the manner in which particular regions are participating in the world economic game. Information and technology, capital and money, goods and services, and still growing masses of people flow between the countries more freely and vigorously than ever. Actually, the significance of borders in the contemporary world is declining and the market for capital, as well as goods and certain services, are becoming strongly integrated into a single global market. However, globalization – including free trade and capital transfers – is causing several problems too. The issues of the growing inequality and the pace of growth of underdeveloped economies (lagging behind more advanced industrial countries recently even more than two or three decades ago) are of great importance. This is also a main factor contributing to growing anti-globalization sentiments and movements. What should be the response of the policies – and the way of their coordination on transnational scale – to the new challenges brought in by globalization? What is the role of international organizations with this regard? What can and should the NGOs do to this end? The new comers into this global game are the emerging markets of the postsocialist countries in East Central Europe, the former Soviet Union and Asia. They consist of a large region from Central Europe to Eastern Asia, which encompasses vast resources and altogether almost 500 million people. Additionally, in China the process of economic reforms has gained momentum and this large economy – with another 1.3 billion people – is more and more involved in the globalization endeavor, especially since China has joined the World Trade Organization. In the future, if transition is managed in a reasonable way, one can expect these regions to become the fastest growing parts of the world economy, as China has been already for last two and half decades. Such chance creates a set of specific challenges for the policymakers. The postsocialist transition is a historical event leading from a centrally planned system to an open market economy. Simultaneously the process of democratization takes place. The ongoing political, social, cultural and economic changes are of paramount importance not only for the countries directly engaged in these complex transformations, but for their partners worldwide as well. Economic transition is a gradual process, consisting of liberalization and stabilization, institution building and microeconomic restructuring. It takes time and is costly, both in financial and social terms. However, the time span necessary for successful market transformation can be limited and the costs can be mitigated, if only transition strategies are designed properly, as it has happened during certain periods of time in Poland, however not only. The post-communist countries are not yet on the path of durable growth, nor sustainable development. So far, only a few transitional countries have been able to overcome the pre-1989 level of production and consumption, while the majority has been involved, for several years, in the great transitional depression. What political and economic forces are behind severe contraction and failures in some countries and what are the political institutions, economic policies and business strategies behind the successful developments elsewhere? Why the Polish economy was growing so fast in 1994-97 and then was brought almost to stagnation in 2001 and the first half of 2002, being able to take off again only since the second half of 2002? The crucial question deals with the compatibility of democratization and marketization. Do they facilitate each other, or are these two processes involved in some contradictions? Is the emerging democracy enhancing the emerging market, or is it making this process even more difficult? Hence, does democratization help the shift towards recovery and growth? What is the political economy of this relationship and what have we learned already in the last 15 years since the Polish Round Table and the fall of the Berlin Wall? The fundamental questions that will be addressed during the course are: What works and why and what fails and why in transition and development policies (as these are two different policies that must be coordinated) in the postsocialist countries? What are the political implications of the economic results of transition thus far? And what are the prospects for the first decades of the 2000s? What policies are the means to the ends to move from stabilization to growth? How to sustain high rate of growth after transitional contraction? How to catch-up with advanced economies in the long run during 21st century? How to take advantage of the process of globalization to raise the rate of growth of transition economies? What are the implications of the integration with the European Union for the East Central European economies? II. Essential readings 1. Fan Gang (2003). „The Dual-Transformation of China: Past 20
Years and 50 Years Ahead”, in: Kolodko (2003a), “Emerging
Market Economies. Globalization and Development”, chapter 7, pp.
169-185. 3. Kolodko, Grzegorz W. (2000b). “Post-Communist Transition. The Thorny Road”, Rochester, NY, and Woodbridge, Suffolk, UK: University of Rochester Press. 4. Kolodko, Grzegorz W. (2002a). „Globalization and Catching-up in Transition Economies”, Rochester, NY, and Woodbridge, Suffolk, UK: University of Rochester Press. 5. Kolodko, Grzegorz W. (2003a). “Globalization and Catching-up in Emerging Market Economies”, chapter 1, pp. 3-46, in: Kolodko (2003a) (ed.), “Emerging Market Economies. Globalization and Development”, Aldershot, UK – Burlington, VT, Ashgate. 6. Kolodko, Grzegorz W. (2003b). “Structural Reform and Economic
Growth in 2002-03” 7. Kolodko, Grzegorz W. (2004), “Institutions, Policies and Growth”,
TIGER Working Paper Series, No. 56 (June), Transformation, Integration
and Globalization Economic Research at the Leon Kozminski Academy of Entrepreneurship
and Management (WSPiZ), Warsaw 8. Kornai, Janos (2002). “The Role of the State in a Post-Socialist
Economy”, Distinguished Lectures Series, No. 6, Leon Kozminski Academy
of Entrepreneurship and Management (WSPiZ), Warsaw 9. North, Douglass C. (2002). “Understanding Economic Change and
Economic Growth”, Distinguished Lectures Series, No. 7, Leon Kozminski
Academy of Entrepreneurship and Management, Warsaw 10. Nuti, D. Mario (2001). “Not ‘just another accession’”,
Distinguished Lectures Series, No. 3, Leon Kozminski Academy of Entrepreneurship
and Management (WSPiZ), Warsaw 11. Stiglitz, Joseph E. (1998). “More Instruments and Broader Goals:
Moving towards thePost-Washington Consensus”, WIDER Annual Lectures,
2, Helsinki: UNU/WIDER (January) 12. Stiglitz, Joseph E. (2002). “Globalization and Its Discontents”, New York and London: W. W. Norton & Company, chapter 5, “Who Lost Russia?”, pp. 133-65. 13. The Economist (2004), “Having it both ways. A survey of Russia”, May 22nd. III. Optional readings 1. Blanchard, Olivier (1997). “The Economics of Post-Communist Transition”, New York: Oxford University Press. 2. EBRD (2004). “Transition report update 2004”, London: European Bank for Reconstruction and Development. 3. Kornai, Janos (1998). “From Socialism to Capitalism: What is Meant by the “Change of System?”, Papers, No. 4, London: The Social Market Foundation Centre for Post-Collective Studies (June). 4. Lavigne, Marie (1999). “The Economics of Transition: From Socialist Economy to Market Economy”, Chatham, Kent: Macmillan. 5. World Bank (2002). „Globalization, Growth and Poverty: Building
an Inclusive World Economy”, the World Bank, Oxford University Press,
Washington DC Additional readings, materials, reports, data and handouts will be provided subsequently during the semester. IV. Requirements 1. Research paper of about 2,000 words due on December 2nd, 2004. V. Issues, schedule and readings 1. Overview of the course (September 7th) 2. The fall of socialist centrally planned economy and its implications
for the post-communist transformation (September 14th and 16th) 5. The Washington consensus and the role of international organizations
(October 5th and 7th) 6. The role of institution-building in post-communist change (October
12th and 14th) 7. The new role of state and the size of government (October 19th and
21st) 8. The dilemma of efficiency versus equity and the issue of social exclusion
in post- communist societies (October 26th and 28th) 9. Regionalism versus globalization and the European Union Enlargement
(November 2nd and 4th) 10. The political economy of China’s way to a market economy (November
9th and 11th) 11. The Russia’s market transition and its political implications
(November 16th and 18th) 12. Class discussion on the topics and methodology of drafting the research papers (November 23rd) 13. The Polish transformation to market and democracy (November 30th
and December 2nd) 14. Globalization and catching-up in transition economies (December 7th
and 9th)
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