Abstract
The desirability of massive financial aid to support the transition of East European countries to market economies is considered in the light of structural adjustment experience of Latin American countries. It is argued that, politically, an autonomous state is necessary to guide the restructuring. The democratization of Eastern Europe decreases the autonomy of the state. Economically, recent experience in Latin America and Eastern Europe has demonstrated that reforms take place during periods of stringency rather than affluence. It is therefore argued that trade and foreign investment are preferable to generous aid.
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Notes
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Ibid.
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Excludes Romania.
Romania is an exception.
Bulgaria is an exception.
In some East European countries the inflation is suppressed.
Excess liquidity is defined as the ratio of nominal financial assets held by households to GDP at current prices.
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Adelman, I. W. Arthur Lewis lecture: Should there be a marshall plan for eastern europe?. Rev Black Polit Econ 19, 17–42 (1990). https://doi.org/10.1007/BF02903822
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DOI: https://doi.org/10.1007/BF02903822