Gács, János --- "Structural change and catching up: the experience of the ten candidate countries" [2003] ELECD 14; in Tumpel-Gugerell, Gertrude; Mooslechner, Peter (eds), "Economic Convergence and Divergence in Europe" (Edward Elgar Publishing, 2003)

Book Title: Economic Convergence and Divergence in Europe

Editor(s): Tumpel-Gugerell, Gertrude; Mooslechner, Peter

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781843762416

Section: Chapter 8

Section Title: Structural change and catching up: the experience of the ten candidate countries

Author(s): Gács, János

Number of pages: 37

Extract:

8. Structural change and catching up:
the experience of the ten candidate
countries
János Gács

8.1. INTRODUCTION1

The transformation of former centrally planned economies since the late
1980s was tantamount to perpetual and simultaneous structural shifts in
these economies. If one were to classify these structural changes based on
the factors that triggered them the following three main classes could be
distinguished:

First we should refer to the systemic changes that opened new oppor-
tunities for the actors in the economy, particularly through liberaliza-
tion (of economic activities in general, including entry to markets,
engaging in foreign trading, price formation) and the establishment of
basic institutions of the market, or marketization (including privatiza-
tion of state-owned enterprises). The structural changes then were the
outcome of the ensuing adjustments to the new opportunities and con-
straints, an endogenous process steered by the emerging incentives in
the new environment. These incentive structures were assumed to be
similar to those prevailing in developed market economies; however,
by now we know that in addition to the traditional market incentives,
the transition period also offered unique, peculiar incentives.
The evolution of the growth process has also left its trace on the
structure of the economy through the pattern of uneven growth and
decline of sectors. The first phase of this process was the painful
shock of the transformational recession; this was followed by the
recovery, which gradually transforms to the process of real conver-
gence toward the level of developed market ...