The capital needs that will enable Eastern Europe to catch up to EC standards of living are assessed within the framework of a constant elasticity of substitution production function. This function, parameterized on the EC, is assumed to apply, with certain inefficiency factors, to Eastern Europe in 1992. Quantitative results, given the heroic assumptions required, are bounded by large ranges. The approach provides a framework for assessing the factors that will determine future capital needs in Eastern Europe and underscores the crucial role of efficiency gains in this process.
The IMF Working Papers series is designed to make IMF staff research available to a wide audience. Almost 300 Working Papers are released each year, covering a wide range of theoretical and analytical topics, including balance of payments, monetary and fiscal issues, global liquidity, and national and international economic developments.
The paper assesses key aspects of Bulgaria's competitiveness. The challenge is to stay on course and persist with policies that will maintain and strengthen competitiveness. Implementation of the ambitious reform policy with respect to the pension and health care systems is required. The reasons for and implications of low bank credit to the private sector in Bulgaria, and measures to facilitate prudent credit growth are discussed. The statistical data on the economic indices of Bulgaria are also presented in the paper.
This paper assesses key aspects of Bulgaria’s competitiveness. The behavior of a variety of a real exchange rate indicators and export performance is also examined in this study. The Balassa–Samuelson effect refers to the impact of differential productivity growth rates in the tradables and nontradables sectors on the real exchange rate. The following statistical data are also included in detail: total and private agricultural production, income accounts, labor force, employment and unemployment, monetary survey, foreign assets of the banking system, and so on.
It is important not only to recognize that there are no clear-cut, systematic results from the current research on the effects of expanded trade but also to follow through the close reasoning as to why it is so difficult to isolate effects in this area. The lack of a clear “message” from these estimates is probably a reflection of the situation in the real economy—namely that there are no clear-cut, systematic effects from trade. Rather than getting involved in the technicalities (which are already very complicated), what I will do in the short time I have is to make a few comments on each of the preceding presentations.
The European Agreement of the European Union and the agreements of the European Free Trade Association (EFTA) with many East European countries are similar to free trade agreements, but they differ in some important ways from agreements such as the North American Free Trade Agreement (NAFTA). First, agriculture is essentially left out, so that in Austria it is possible to buy Dutch greenhouse tomatoes but not fresh Hungarian tomatoes. Second, “sensitive sectors” such as steel, coal, and textiles are included, but with many safeguard clauses in case these are country-specific disturbances.
The paper by Guillermo Calvo, Ratna Sahay, and Carlos Végh addresses an issue of keen policy relevance whose ramifications go well beyond the geographic boundaries of the region on which this seminar is focusing its attention. The analytics of the paper and the policy prescriptions the authors offer to the discussion can be applied to other areas of the world that have experienced large inflows of foreign capital. The topic, though seemingly peripheral to the main theme of the conference (since it does not explore the implications for the West of economic events unfolding in Europe), is not at all irrelevant. It serves as an appropriate complement to the analysis provided by the IMF researchers in an earlier session of this conference in which the effects on capital markets, the savings-investment balance, and interest rates in the West of capital transfers to the East were examined.
This paper is based on an internal report prepared by the IMF staff in connection with the application of the Czech and Slovak Federal Republic (Czechoslovakia) for membership in the IMF. The paper surveys the economic system that had developed up to the time of the reforms begun in 1987 and outlines the economy's performance during 1945–1985. It then discusses the economic developments of 1985–1990, with separate sections on output, prices, public finance, money, and the balance of payments. Prices served mainly as an instrument of central planning: each price was set independently and a change in one price had no influence on other prices. The annual foreign exchange plan, derived from the state plan, strictly controlled foreign exchange transactions. It specified imports and exports of goods and services by enterprises for the convertible and nonconvertible area. The exact modalities of the denationalization scheme have not yet been determined. However, consideration is being given to a scheme whereby state enterprises would be transformed into joint stock companies, and “ownership vouchers” would be distributed to the population which would entitle their holders to purchase stock in these companies.