Economics and Emerging Markets.pptVIP

Copyright ? 2014 Pearson Education, Inc. 4 - * Economic Transition Reforms: Reduce budget deficits and expand credit Allow the “price mechanism” to determine prices and economic activity Legalize private firms and privatize state-owned assets within a property rights framework Remove barriers to trade and investment and eliminate currency controls Fundamental reorganization of an economy and the creation of new free-market institutions Copyright ? 2014 Pearson Education, Inc. 4 - * Obstacles to Transition Cultural changes Environmental degradation Capital shortage Lack of managerial expertise Copyright ? 2014 Pearson Education, Inc. 4 - * Operated under a staunchly communist system for about 75 years Underwent a rough transition of simultaneous economic and political reform But the economy is improving and foreign investment is returning Challenges include developing managerial talent and fostering political and social stability Focus on Russia Copyright ? 2014 Pearson Education, Inc. 4 - * Discussion Question What is economic transition and what are the remaining obstacles in post-communist countries? Copyright ? 2014 Pearson Education, Inc. 4 - * Answer to Discussion Question Economic transition: Changing a nation’s fundamental economic organization and creating new free-market institutions. A country must: Stabilize the economy, reduce budget deficits, and expand credit availability; Allow prices to reflect supply and demand; Legalize private business, sell state-owned companies, and support property rights; and Reduce barriers to trade and investment and allow currency convertibility. Remaining obstacles: Lack of managerial expertise, Shortage of capital, Cultural changes, and Environmental degradation. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of