Economic transition in Hungary and East Germany : gradualism and shock therapy in catch-up development

What factors determine the success of economic transition, development and growth? Examining the contrast between East German shock-therapy and Hungary's gradualism, the book generates a set of generalisable conditions for economic development which imply some degree of state intervention and strategy. A stability-oriented incomes policy and a carefully managed integration strategy can enable sustainable export surpluses, a competitive currency and macroeconomic stability, whilst providing sufficient room for economic restructuring, structural transformation and technological catch-up. The dangers of premature integration are examined. What factors determine the success of economic transition, development and growth? This book examines the contrast between the two diametrically different cases of the East German shock therapy in the early 1990s and Hungary's gradualism that had begun in the 1960s prior to the collapse of the communist regime. Methodologically, the analysis uses the experience from the East German case of full and immediate integration to generate a set of generalisable necessary conditions of catch-up development which are subsequently reflected against the most recent developments in Hungary. The assumption that economic development in post-socialist economies could best be promoted by their full and immediate integration proved to be misconceived in the East German case, and thereby highlights the danger of premature integration for Hungary. This authoritative comparison between two paradigmatic experiences of transition and true policy recommendations offered make this book of interest to all scholars and policy-makers interested in the economics of transition Front Matter....Pages i-xv Front Matter....Pages 1-1 Introduction....Pages 3-19 Front Matter....Pages 21-21 East Germany’s Economic Integration and Socialist Legacies....Pages 27-50 German Monetary Union and Currency Reform....Pages 51-71 German Unification and the Prospects for Catch-up Development....Pages 72-95 Front Matter....Pages 97-97 The Development of a Financial Sector in Hungary....Pages 105-149 Monetary Stabilisation Policies in Hungary: Constraints and Opportunities....Pages 150-176 Hungarian Foreign Trade and Catch-up Development....Pages 177-222 The Austerity Programme: A Strategic Reorientation?....Pages 223-248 Front Matter....Pages 249-249 Conclusions....Pages 251-256 Back Matter....Pages 257-293 Johannes Stephan. Includes Bibliographical References (p. 257-281) And Indexes.