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Incomplete Transition – Is there a “Mid-Transition Trap”?

Author

Listed:
  • Vujačić Ivan

    (Faculty of Economics, University of Beograd, Serbia)

  • Petrović-Vujačić Jelica

    (Faculty of Transport and Traffic Engineering, University of Beograd, Serbia)

Abstract

The subject of this paper is the analysis of the classification of economic systems. The traditional classifications of capitalist, socialist centrally planned, and socialist market systems, and the newer classification of variants of capitalism into the Anglo-Saxon, European continental, and Asian models, are inadequate to explain new phenomena in a globalized economy. After the collapse of central planning, countries in transition became a category describing processes of deep socio-economic transformation. These transition countries aspired to meet the standards of developed European market economies, as well as governance standards regarding democracy, human rights, and the rule of law. A new classification of economic systems by Balcerowicz (2014) combines the traditional classification of economic systems with the characteristics of well-governed democratic societies in order to come up with a matrix that shows the interaction of economic system characteristics and governance outcomes.This paper builds on Balcerowicz’s classification by introducing and delineating the categories of state capitalism, crony capitalism, and state capture in order to provide a new classification of economic systems. It uses these concepts to empirically analyze the transition countries, with special reference to states aspiring to EU membership and the new EU member states. The methodology used is analytical and empirical. The results find that the transition is incomplete, especially in terms of governance, leading to the hypothesis of a ‘mid-transition trap’, similar to the much discussed ‘middle-income trap’. The results should lead to further, more refined research.

Suggested Citation

  • Vujačić Ivan & Petrović-Vujačić Jelica, 2020. "Incomplete Transition – Is there a “Mid-Transition Trap”?," Zagreb International Review of Economics and Business, Sciendo, vol. 23(s1), pages 57-71.
    • Handle: RePEc:vrs:zirebs:v:23:y:2020:i:s1:p:57-71:n:1005
    DOI: 10.2478/zireb-2020-0023
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    References listed on IDEAS

    as
    1. Hellman, Joel S. & Jones, Geraint & Kaufmann, daniel, 2000. ""Seize the state, seize the day": state capture, corruption, and influence in transition," Policy Research Working Paper Series 2444, The World Bank.
    2. Josef C. Brada, 2009. "The New Comparative Economics versus the Old: Less Is More but Is It Enough?," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 6(1), pages 3-15, June.
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    More about this item

    Keywords

    economic systems; transition; new state capitalism; crony capitalism; state capture;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State
    • P50 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - General

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