Blanchard, Olivier, Rudiger Dornbusch, Paul Krugman, Richard Layard, and Lawrence Summers (1991), Reform in Eastern Europe, MIT Press, Cambridge.
Borensztein, Eduardo and Manmohan S. Kumar (1991), “Proposals for Privatization in Eastern Europe,” IMF Staff Papers, 32(8), pp. 300–26.
Calvo, Guillermo A., and Jacob A. Frenkel (1991), “From Centrally-Planned to Market Economies: The Road from CPE to PCPE,” IMF Staff Papers, 38(2), pp. 268–;99.
Comisia Guvernamentală pentru Elaborarea Programului de Transiţie la Economia de Piaţa in Romania (1990), Schită privind Strategia Înfăptuirii Economiei de Plata in România, Bucureşti.
Government Commission (1990a), “Report No. 1: On the Strategy of the Transition to Market Economy in Romania,” mimeo., Government of Romania, Bucharest.
Government Commission (1990b), “Outline of Strategy for Transition to a Market Economy in Romania,” mimeo., Government of Romania, Bucharest.
Government Commission (1990c), “The Main Measures for the Implementation of the Market Economy Mechanism,” mimeo., Government of Romania, Bucharest.
Greene, Joshua and Peter Isard (1991), Currency Convertibility and the Transformation of Centrally Planned Economies, IMF Occasional paper No. 81.
Hinds, Manuel (1990), Issues in the Introduction of Market Forces in Eastern European Socialist Economies, World Bank Report No. IDP-0057.
Lipton, David, and Jeffrey Sachs, (1990a), “Privatization in Eastern Europe,” Brookings Papers on Economic Activity, No.2, pp. 293–341.
Lipton, David, (1990b), “Creating a Market Economy in Eastern Europe: The Case of Poland,” Brookings Papers on Economic Activity, No.l, pp. 75–147.
Rompres (1990), Prime Minister Petre Roman’s Report on the Stage of the Implementation of Economic Reform and the Demand to Step Up Its Pace, Bucharest.
Rompres (1991), The Report Read by the Prime Minister Mr. Petre Roman Before the 26 February 1991 Joint Sitting of the Parliament On the Progress of the Reform and the Government’s Program for 1991, Bucharest.
Ronnăs, P. (1991), “The Economic Legacy of Ceauşescu,” in: Sjöberg, Örjan, and Michael L. Wyzan (eds.), Economic Change in the Balkan States, St. Martin’s Press, New York.
Secţia Propagandă şi Presă al Partidului Comunist Roman (1987), Aplicarea Noului Mechanism Economic-Financiar in Unitätile Industriale, Caiet Documentar, Bucureşti.
Sundararajan, V. (1990), “Financial Sector Reform and Central Banking in Centrally Planned Economies”, IMF Working Paper WP/90/i20.
Teodorescu, A. (1991), “The Romanian Economy: The Future of a Failure”, in: Sjöberg, Örjan, and Michael L. Wyzan (eds.), Economic Change in the Balkan States, St. Martin’s Press, New York.
Tsantis, A.C. and Pepper, R. (1979), Romania: The Industrialization of an Agrarian Economy Under Socialist Planning, World Bank (1979).
Villanueva, Delano, and Abbas Mirakhor (1990), “Strategies for Financial Reforms: Interest Rate Policies, Stabilization, and Bank Supervision in Developing Countries,” IMF Staff Papers, 37(3), pp. 509–536.
The authors are grateful to Julian Berengaut, Eric Clifton, Patrick de Fontenay, Joshua Greene, Frank Lakwijk, Erik Offerdal, and Massimo Russo for many helpful comments and discussions. The views expressed are the sole responsibility of the authors and do not necessarily reflect those of the International Monetary Fund.
The discussion here focuses exclusively on the economic aspects of the Romanian system. Descriptions of the political developments during this period can be found in, among others, Behr (1991), Fischer (1989), and Shafir (1985).
Taken from Behr (1991).
A summary of the operation of the NEFM is presented in Secţia Propagandă şi Presă al Partidului Comunist Roman (1987).
However, it is estimated that some 1,000 villages were destroyed as part of this policy.
The causes and symptoms of the increasing disorganization of the economic system in the 1980s are discussed in Ronnăs (1991).
This amount of unserviceable bank loans had accumulated despite earlier loan write-off operations for agricultural cooperatives under Ceauşescu.
Anuarul Statistic, 1990. An account of the deterioration of the standards of living in Romania during the 1980s is also offered in Teodorescu (1991).
For a detailed discussion of the Romanian revolution of December 1989 see Behr (1991) and Codrescu (1991).
In early January, the Deputy Minister of the Interior of the provisional Government General J. Moldoveanu reported a “renewed outbreak of offenses accompanied by violence in the past few days”, including pilferage of the emergency aid received from abroad (Romania – News of the Day. No. 8/1990, January 11, 1990).
Romania – News of the Day. No. 35/1990, February 12, 1990.
These provisions, introduced in 1988 to boost tax revenues, had come to be known as the “Ceauşescu tax” (see Section IV for more details).
Legislative acts passed under the provisional Government were called decree-laws, as there was no elected Parliament to promulgate them. After the May 1990 elections, legislative acts of the new Parliament were called laws.
This crisis caused a jump in the cost of imported energy, a virtual cessation of exports to the region, and a freezing of Romanian assets, particularly in Iraq, which currently owes Romania about US$1.7 billion.
This practice was also enforced in the state enterprise sector as well. Although the eligibility for some bonuses (e.g., for work in hazardous or toxic conditions) had been established by law, the total number of recipients of these bonuses was arbitrarily limited in each enterprise in order to contain labor costs, regardless of the actual number of eligible workers.
Owing to political factors, Romania’s access to oil from the U.S.S.R. through the CMEA payments arrangements was very limited.
“Government Commission for the Elaboration of a Program of Transition to a Market Economy in Romania”, henceforth referred to as Government Commission or simply Commission.
Schită privind Strategia Înfăptuirii Economiei de Piata in Romănia. May 1990. Also appeared in Council for Reform (1990). Unless otherwise stated, all references are to the translated versions of the Commission’s reports.
Schitaă privind Strategia Înfăptuirii Economiei de Plata in Romănia.P. 11.
“Council for Reform, Public Relations, and Information”, henceforth referred to simply as Council for Reform.
Information on laws presented herein comes mainly from translated versions of the laws as published in the Monitorul Oficial al Romaniei (the official gazette). Several important laws have also appeared translated in Council for Reform (1991) and Ministry of Trade and Tourism (1991).
It should be noted that being profitable in an environment of widespread price distortions is not the same as being efficient in an opportunity cost sense.
This exemption naturally led to a sharp increase in joint venture firms formed with minimal foreign capital, allowing exporters to avoid easily the surrender requirements.
For a survey of interest rate policies in the context of financial sector reforms, see Villanueva and Mirakhor (1990).
For a survey of privatization schemes in Eastern Europe see Borensztein and Kumar (1991). Other studies highlighting the role of privatization include Fischer and Gelb (1990), Lipton and Sachs (1990a, 1990b), Hinds (1990), and Tirole (1991).
See Borensztein and Kumar (1991) for a discussion of the pros and cons of the “giveaway” element embodied in the voucher scheme.