These transitions sub dynamics; all have to be implemented successfully to transform a planned economy to a market system. However, the question arise, which is important whether institutional factors first and the other factors secondary or the liberalization and macroeconomic stabilization first and the institutional building secondary
Perhaps the success of these two different countries transition may not be solely attributed to the speed of change but the initial conditions and the extensive, orderly and aggressive changes made to the institutional factors, political factors conducive to private ownership, effective privatization and macroeconomic policy and microeconomic reform particularly labor market reform in these countries. However, institutional building given the nature of these transition economies they can be expected to be an evolutionary process than a radical process in nature to be successfully implementing these changes, which is acceptable to most stakeholders as well attitude change and acceptance take more time as traditions and customs lasts longer in ant society.
Brief Overview of Specific Transition Theories Applied by Poland and Hungary and the Discussion of Possible Factors Contributed to their Success to a Market System
In the context of Poland, Hungary applied a gradualism theory and Poland applied in most part shock therapy as a transition dynamics in its policy formulation. However, they became successful using these theoretical perspectives.
In the context of Hungary, it focused on institutional factors than Poland at least in the initial periods of reform. The institutional reform also is more extensive in Hungary than in Poland.
Literature Reviews
The Type of Secondary Literature Reviewed
In searching for secondary research material in transformational economics I used a variety of sources such as university material, books in this area of study, Internet material published by economists view points on this subject and Journal articles written in this subject. I used a variety of material so that I can form and synthesize the information in an objective manner and view the transitional issues using different models and perspectives. As this paper is of academic interest, I focus academic papers in this area of research conducted by the relevant academic faculties and reputable universities of different countries particularly in this economic topic...
Area of Literature Review
I wanted to investigate whether the shock therapy or gradualism, which focus on the speed of change as an important factor or whether the debate is a secondary issue given the complexity of transition mechanics of the diverse eastern European countries.
That is I wanted to investigate the shock therapy and gradualism theory in the context of different level of development, industrial structure, the size of private sector, political factors and the commitment to market system. In addition the role of social factors most critically labor issues. I will also discuss the financial system in these countries.
Most importantly I will discuss the importance of building market institutional factors and their change process than the shock therapy or gradualism theory even though it is a factor, which must be considered. As well, I wanted to investigate in this paper, the institutional change dynamics and law enactment, democracy to enable the market system to work effectively as a competitive system than a mere reform of the former socialist economy and not a transition to a fully fledged market system.
Literature Reviews on Shock Therapy, Gradualism, and the Influence of Other Factors Than the Speed of Change
In effort to investigate the above crucial transitional issues, I have used a paper by Popov.V of Carleton university's Institute of European and Russian Studies of Canada.
It studies extensively by analyzing the economic data and measuring the magnitude of transformational recession in most of the east European countries of implementing the transitional process into effect and the factors causing such recession.
As well, the above author also studies the role of institutional factors to enhance economic performance in a macroeconomic sense. In addition, it also examined the role of shock therapy and gradualism which focus on speed of change and the importance in institutions and other factors, which are vital in the transformational process.
The paper by Popov is an extensive paper, which is based on through economic analysis and considerable economic data and uses relevant measures to measure the outcome. It cans be argued, it is an objective paper and therefore it can be a relevant literature to review my investigation about the relevance of shock therapy and gradualism as a secondary factor or a prime factor in the transitional process to a market economy.
As discussed above based on Popov's research article, the importance of speed of transition as opposed to institutional transition component of the overall transition dynamics can be examined.
Basing on the literature review of Popov he has used an alternative explanation as opposed to traditional or conventional explanation, where he used liberalization index and rates of inflation as a measure for macroeconomic stabilization for the dynamics of output during the transition.
