Replicació, transcripció i traducció de l’ADNmt

In this section we present a model of the transition process and examine the actual progress that TE have made during the past decade.

3.1. A model of transition

The transition process, involving as it does the restructuring of the economy, the inflow of FDI, international trade, and migration, can be visualized with the aid of figure 1. The lower factor-price frontier (curve) in figure 1 shows the trade-off between the real rate of return on capital and the real wage rate in TE as compared with the higher factor-price frontier or trade-off curve for the West because of the lower level of economic efficiency in TE after decades of communism and non-market allocations. For example, in the Czech Republic, Hungary, and Poland, productivity is estimated to be from 20 to 40 percent below that of Greece, Portugal and Spain. It is much lower for the Baltic States and the transition economies of South-Eastern Europe. With a lower capital-labour ratio (K/L), TE might be initially at point E, showing a higher rate of return of capital but a much lower real wage than Western Europe (point W). The higher rate of return on capital in Central Europe will attract capital from the West. This not only lowers the rate of return on capital and increases the real wages of labour in TE (i.e., point E moves down the trade-off curve) but it also shifts the entire TE factor-price frontier or trade-off curve upward because foreign capital (which embodies new and more efficient technologies) increases economic efficiency in TE.

On the other hand, the West moves up its unchanged trade-off curve (but by very little, since the economy of the West is so much larger than that TE). The process will continue until the rate of return to capital is the same in TE and in the West (point E' and W', respectively, in the figure). The problem, however, is that at E' and W', real wages in the West are still much higher than in TE, thus leaving a strong stimulus for labor migrations to the West. The only way for real wages in TE to become equal to those in the West is if all the less productive capital in TE is scrapped and replaced with capital as productive as in the West and all other economic inefficiencies in TE are removed. Such convergence of wages may take several decades to occur. Migratory pressures, however, would be significantly reduced if sufficient employment opportunities were created in the meantime in TE, even if wide differences in real wage between TE and Western Europe remain. International trade operates in the same way as FDI in reducing real Western-TE wage differentials and stimulating efficiency improvements (i.e., causing upward shifts in the trade-off curve) in TE. That is, according to the Heckscher-Ohlin theory, the export of labor-intensive commodities (in which TE seem to have a comparative advantage) increases the relative demand for labor in TE (just like an inflow of capital from the West) and Figure 1: Restructuring in transition economies:

thus reduces real wage differences and the pressure of TE labor to migrate to the West. Thus, large scale capital inflows from the West and free access of TE products in Western markets are complementary and reinforce each other in reducing Western-TE wage differentials and the pressure for migration to Western Europe.

To be noted is that even though capital is relatively scarce in TE, inefficiencies could be so pervasive (as for example, in Bulgaria or Rumania) as to result in a lower rate of return on capital in these countries than in the West. A perverse capital movement from TE could then occur, which would increase rather than reduce real wage differentials. On the other hand, in those transition economies such as the Czech Republic, Hungary and Poland where the process of restructuring is further along but returns on capital are not much higher than in the West, only a very small amount of capital inflow would take place and this would have negligible effects on reducing TE-Western European real wage differentials and migratory pressures.

Even if the rate of return on capital were much larger in TE than in Western Europe, this could still fail to attract large capital inflows to TE if Western investors are not convinced that economic restructuring will be aggressively pursued in the future or if they are unsure of political stability in TE. This may be one explanation for the relatively small flow of capital from the West in the transition economies of South-Eastern Europe since the collapse of communism (see the last column of table 4.) Potential investors could be adopting a low-risk, wait-and-see attitude and postpone investing until many others do. This slows down the process of wage convergence with Western Europe and keep migration pressure strong. Even with large scale Western investments in transition economies and free access to Western markets, it will take many more years for real wage differentials to be significantly reduced. In 1993, the European Bank for Reconstruction and Development (EBRD) estimated that it would take 35 years for living standards in most TE to reach half those of developed countries, and so pressure to migrate to the West is likely to persist for a long time to come. Some labor migration from TE may in fact be beneficial to Western Europe in view of the zero or even negative growth rates and aging of their native labor forces. The problem is that under present conditions of high structural unemployment it is economically difficult and politically dangerous for Western Europe to absorb a large influx of labor from TE. But by avoiding short-term absorption costs by strictly limiting

labor migration from TE, Western European countries may be foregoing the long-term benefits that labor migration from the TE would provide (and at the same time slow down the restructuring process in TE).

3.2. Transition progress

With the above theoretical background in mind, we can now examine the progress that TE have made in restructuring their economies during the past decade. The first column of table 5 shows that from 55 percent to 80 percent of the economy has been privatized in TE. This percentage is highest for the Czech Republic and Hungary and smallest for Slovenia and the FYR of Macedonia. Large-scale privatization is highest in the Czech Republic, Hungary, the Slovak Republic and Estonia, but it is smaller than small-scale privatization, which has reached standards of performance similar to those in advanced industrial nations. On the other hand, governance and enterprise restructuring has not proceeded as much. Table 5B shows that the foreign trade and the foreign exchange systems have been fully restructured and now have standards of performance of the advanced industrial nations. On the other hand, progress in price liberalization, competition policy, banking and interest liberalization, and securities markets and non-bank financial institutions have not proceeded as far. On a scale from zero to 100, they are at between 50% and 75% of the level in the advanced industrial nations (closer to 75% in the TE of Central Europe and the Baltic States and closer to the 50% mark in the TE of South-Eastern Europe). Thus, except for small-scale privatization and foreign trade and exchange systems, TE (including the more advanced ones in Central Europe) still have a great deal of restructuring to undertake before they are ready for admission into the European Union.

Table 5: Transition progress in Central Europe, Baltic States and South- Eastern Europe transition economies, 1999

Enterprises private sector % of GDP large-scale privatization small-scale privatization governance & enterprise restructuring Central Europe: Czech Republic 80 4 4+ 3 Hungary 80 4 4+ 3+ Poland 65 3+ 4+ 3 Croatia 60 3 4+ 3- Slovak Republic 75 4 4+ 3 Slovenia 55 3+ 4+ 3- Baltic States: Estonia 75 4 4+ 3 Latvia 65 3 4 3- Lithuania 70 3 4+ 3- South-Eastern Europe: Albania 75 2 4 2 Bulgaria 60 3 3+ 2+ FYR Macedonia 55 3 4 2 Romania 60 3- 4- 2

Legend: 1 = Little progress (i.e., less than 25 percent, except for large-scale privatization, where percent is close to zero);

2 = Good progress (i.e., about 50 percent, less than 25 percent for large scale); 3 = Substantial progress (i.e., about 75 percent; more than 25 percent for large

scale);

4 = Standards of performance almost equal to that in industrial nations; 4+=Standards of performance of advanced industrial nations.

Source: EBRD, Transition Report 1999.

4. Relative structure and international competitiveness of