Economic Transition of Poland and Hungary: From Planned to Market System - Research Paper Example

The paper "Economic Transition of Poland and Hungary: From Planned to Market System" is a great example of a research paper on macro and microeconomics. In this paper, I will discuss the main transition theory and processes applied by Poland and Hungary to transform them from a planned economy to a functioning market system. These countries have adopted different transition theories and processes and phases of change. They were very successful in transforming their economic system to a market economy. They have improved their economic performance in terms of macroeconomic indicators of change. These are growth rates, inflation control, unemployment levels, per capita income, increase in trade, and other liberalization levels and intensity compared to other eastern European countries. Compare to Hungary and Poland, other eastern European countries have taken steps and adopted their own unique mixture of theories and phases of change from a planned economy to a market system. In this paper, I will discuss based on critical literature review the issues of applying these theories to Poland and Hungary and why they were successful and why they were not successful in other countries. As well, what are the reforms still pending to increase the way the market system work in these countries? As well, the importance of microeconomic reform and institutional formation to move towards a fully-fledged sustainable market system.. It would also discuss the effectiveness of shock therapy and gradualism theory.

Introduction

Given their unique situations of Poland and Hungary, this preliminary study of the transition economies and transition dynamics in an academic sense is vital to understand the factors, which affect the effectiveness of transition policies adopted and implemented. As well, to understand the complexity of the

process and its feasibility given the political, social, and economic distortions created in a structural sense by the planned system and the scale of private ownership in these countries. In addition, this paper will discuss the labor power and politics in these countries. It also will highlight the importance of institutional building and other microeconomic reform, macroeconomic stabilization policies in terms of fiscal and monetary and other microeconomic reforms.