FROM CENTRAL PLANNING TO MARKET-ECONOMY - SOME MICROECONOMIC ISSUES

The economies that we are concerned with fall somewhere between the two extremes of a very traditional centrally planned economy and a well-established market-type economy. Recent and on-going reforms are moving Hungary and Poland to a position somewhat closer to the market economy end of the spectrum. It is important not only to consider the particular measures that have been taken or are envisaged, but to examine them within a framework that helps to throw some light on the most effective sequencing/priority for economic reform. Since some reforms will, in the short term, be accompanied by highly unpopular outcomes for certain groups of the population, it is clearly also important to examine future reforms in the context of the political/social environment within which they must take place. In this paper, much of the more detailed discussion concerns Hungary, largely because it is the economy which has already moved furthest towards a market-type economy. Section 2 outlines some general issues of microeconomic reform, while Section 3 and 4 then deal with some specific topics in the Hungarian context. On this basis, Section 5 widens the discussion again to consider the question of transition to a market economy. Section 6 provides some concluding observations. -from Author