Transition EconomiesTransition Economies

Asst.Prof. Betül YÜCE DURALAsst.Prof. Betül YÜCE DURALOctober 2009October 2009

1-1- Central and Eastern European Countries-CEECs

2-2- Commonwealth of Independent States-CIS

Transformation-TransitionTransformation-Transition

Transition from Plan to MarketTransition from Plan to Market

EconomicEconomic Social Social PoliticalPolitical

EU membershipEU membership

CEECCEEC 1991 Fall of socialism1991 Fall of socialism 1 May 2004 1 May 2004

Full membership Full membership

TÜRKİYETÜRKİYE

*1987 application*1987 application

• October 2009 October 2009

• Negotiations and Negotiations and hopes still go on, but hopes still go on, but full membership might full membership might be a dream.be a dream.

EnlargementEnlargement

1957 Treaty of Rome 1957 Treaty of Rome 6 founders: : Belgium, France, Belgium, France, West West Germany, Italy, Germany, Italy,

Luxemburg, Luxemburg, the the Netherlands.Netherlands. Four successful enlargementFour successful enlargement followedfollowed as as::

  1973  Denmark, Ireland, the United Kingdom1973  Denmark, Ireland, the United Kingdom1981  Greece1981  Greece1986  Portugal and Spain1986  Portugal and Spain1995  Austria, Finland, Sweden.1995  Austria, Finland, Sweden.

1993 Copenhagen European Council –1993 Copenhagen European Council –

Invitation if they wish…Invitation if they wish…

Application dates for EU membershipApplication dates for EU membership(In date order-(In date order-chronologychronology))

Türkiye            14 April 1987 Türkiye            14 April 1987  Cyprus               3 July 1990Cyprus               3 July 1990 Malta Malta 16 July 1990 16 July 1990 Hungary        31 March 1994Hungary        31 March 1994 Poland            5 April 1994Poland            5 April 1994 Romania           22 June 1995Romania           22 June 1995 Slovakia           27 June 1995Slovakia           27 June 1995 Latvia            13 October 1995Latvia            13 October 1995 Estonia   24 November 1995Estonia   24 November 1995 Lithuania            8 December 1995Lithuania            8 December 1995 Bulgaria        14 December 1995Bulgaria        14 December 1995 Czech Republic  17 January 1996Czech Republic  17 January 1996 Slovenia            10 June 1996Slovenia            10 June 1996

1st May 2004 enlargement:1st May 2004 enlargement:

Hungary, Poland, Czech Rep. Slovakia, Hungary, Poland, Czech Rep. Slovakia, Slovenia, Lithuania, Latvia, Estonia, Slovenia, Lithuania, Latvia, Estonia, Cyprus and Malta.Cyprus and Malta.

1st January 2007 enlargement:1st January 2007 enlargement:

Bulgaria and Romania.Bulgaria and Romania.

Capitals of CEECCapitals of CEEC

Romania- BucharestRomania- Bucharest Hungary- BudapestHungary- Budapest Poland-WarsawPoland-Warsaw Bulgaria-SofiaBulgaria-Sofia Estonia -TallinnEstonia -Tallinn Czech Republic - PragCzech Republic - Prag Slovakia - BratislavaSlovakia - Bratislava Slovenia - LjubljanaSlovenia - Ljubljana Albania -TiranaAlbania -Tirana Latvia - RigaLatvia - Riga Lithuania - VilniusLithuania - Vilnius Croatia -ZagrebCroatia -Zagreb Moldova - ChisinauMoldova - Chisinau FYROM(Former Yugoslav Republic of Macedonia) - SkopjeFYROM(Former Yugoslav Republic of Macedonia) - Skopje Republic of Kosovo- PristinaRepublic of Kosovo- Pristina Bosnia and Herzegovina- SarajevoBosnia and Herzegovina- Sarajevo Serbia- Belgrad Serbia- Belgrad Montenegro- PodgoricaMontenegro- Podgorica

Capitals of CISCapitals of CIS

Russia-MoskowRussia-Moskow Kazakstan -AstanaKazakstan -Astana Turkmenistan- AshgabatTurkmenistan- Ashgabat Azerbaijan -BaküAzerbaijan -Bakü Kyrgyzstan -BishkekKyrgyzstan -Bishkek Tajikstan -DushanbeTajikstan -Dushanbe Georgia -TbilisiGeorgia -Tbilisi Uzbekistan -TashkentUzbekistan -Tashkent Armenia -YerevanArmenia -Yerevan Ukraine - KievUkraine - Kiev

Belarus -MinskBelarus -Minsk

Official candidates:Official candidates:Croatia, Macedonia and TürkiyeCroatia, Macedonia and Türkiye..

Officially recognised as Potential Officially recognised as Potential Candidates:Candidates:

Albania, Bosnia and Herzegovina, Montenegro, Albania, Bosnia and Herzegovina, Montenegro, Serbia and Iceland.Serbia and Iceland.

KosovoKosovo is also listed as a potantial candidate but the EU is also listed as a potantial candidate but the EU commission does not list it as an independent country because commission does not list it as an independent country because not all member states recognise it as an independent country not all member states recognise it as an independent country from Serbia.from Serbia.

5th enlargement is the biggest one in 5th enlargement is the biggest one in terms of area, culture, history, terms of area, culture, history, population…etc.population…etc.

Benefits of enlargement to the EUBenefits of enlargement to the EU

Benefits are both political and economicBenefits are both political and economic::

win-win situation for both sides (CEECs and EUwin-win situation for both sides (CEECs and EU))

The increase in the area of peace, stability and welfare will The increase in the area of peace, stability and welfare will increase the safety of everyone in the continent.increase the safety of everyone in the continent.

Remove the fear of Socialism in that area.Remove the fear of Socialism in that area.

EU market with 370 million people EU market with 370 million people ++ over 100 million over 100 million CEECs people CEECs people == positive effects for both sides, will create positive effects for both sides, will create new jobs.new jobs.

New members increase the quality of life New members increase the quality of life standards of all Europeans;standards of all Europeans;

common standards and cooperation in environmental common standards and cooperation in environmental protection, crime, drugs policies and combating with protection, crime, drugs policies and combating with illegal migrants.illegal migrants.

New members will increase the effectiveness of New members will increase the effectiveness of EU in the world economy with EU in the world economy with Common Foreign Common Foreign and Security Policyand Security Policy, Trade Policy and Global , Trade Policy and Global governance.governance.

Benefits of being a member of EU Benefits of being a member of EU to the CEECsto the CEECs

Respectability in world politicsRespectability in world politics Credibility of attraction of FDICredibility of attraction of FDI To sTo settleettle and s and stabletable the new democratic regime the new democratic regime

and to establish confidenceand to establish confidence To settle the stabilityTo settle the stability Entrance into the world’s biggest marketEntrance into the world’s biggest market Easy reach to the regional and structural fundsEasy reach to the regional and structural funds

Costs of CEECs membership to the EU-Costs of CEECs membership to the EU-ProblemsProblems

Diversity of opinions in the parliament and Diversity of opinions in the parliament and commissioncommission

Differences in national interestsDifferences in national interests Economic and politic backgrounds of new Economic and politic backgrounds of new

members-initial conditionsmembers-initial conditions Insufficient infrastructure and developmentInsufficient infrastructure and development Common agriculture policy (CAP)Common agriculture policy (CAP)

Economic SystemsEconomic Systems

An economic system is the An economic system is the system of production, system of production, distribution and consumption of goods and servicesdistribution and consumption of goods and services of an of an economy. economy.

Alternatively, it is the set of Alternatively, it is the set of principles and techniquesprinciples and techniques by by which problems of economics are addressed, such as which problems of economics are addressed, such as the economic problem of scarcity through allocation of the economic problem of scarcity through allocation of finite productive resources. finite productive resources.

The economic system is composed of The economic system is composed of people and people and institutions, including their relationships to productive institutions, including their relationships to productive resourcesresources..

Examples of contemporary economic systems Examples of contemporary economic systems include include capitalist systems, socialist systems, and capitalist systems, socialist systems, and mixed economiesmixed economies. .

An economic system is a set of methods and standards An economic system is a set of methods and standards brought by which a society decides and organizes the brought by which a society decides and organizes the allocation of limited economic resources to satisfy allocation of limited economic resources to satisfy unlimited human wants. unlimited human wants.

At one extreme, production is carried in a private-At one extreme, production is carried in a private-enterprise system such that all resources are privately enterprise system such that all resources are privately owned.owned.

It was described by Adam Smith as frequently It was described by Adam Smith as frequently promoting a social interest, although only a private promoting a social interest, although only a private interest was intended.interest was intended.

At the other extreme, following At the other extreme, following Karl Marx and Vladimir Karl Marx and Vladimir LeninLenin is what is commonly called, such that all is what is commonly called, such that all resources are publicly owned with intent of minimizing resources are publicly owned with intent of minimizing inequalities of wealth among other social objectivesinequalities of wealth among other social objectives..

Alternatively, 'economic system' refers to the Alternatively, 'economic system' refers to the organizational arrangements and process through organizational arrangements and process through which a society makes its production and consumption which a society makes its production and consumption decisions.decisions.

In creating and modifying its economic system, each In creating and modifying its economic system, each

society chooses among alternative objectives and society chooses among alternative objectives and alternative decision modes. alternative decision modes.

Many objectives may be seen as desirable, like Many objectives may be seen as desirable, like efficiency, growth, liberty, and equalityefficiency, growth, liberty, and equality..

Basic types Economic systems Basic types Economic systems The basic and general economic systems are:The basic and general economic systems are:

Market economyMarket economy (the basis for several "hands off" systems, such as capitalism). (the basis for several "hands off" systems, such as capitalism). Mixed economyMixed economy (a compromise economic system that incorporates some (a compromise economic system that incorporates some

aspects of the market approach as well as some aspects of the planned aspects of the market approach as well as some aspects of the planned approach). approach).

Planned economyPlanned economy (the basis for several "hands on" systems, such as socialism, (the basis for several "hands on" systems, such as socialism, or a command economy). or a command economy).

Traditional economyTraditional economy (a generic term for the oldest and traditional economic (a generic term for the oldest and traditional economic systems) systems)

Participatory economicsParticipatory economics (a recent proposal for a new economic system) (a recent proposal for a new economic system) Inclusive DemocracyInclusive Democracy (a project for a new political and economic system) (a project for a new political and economic system)

There are several basic and unfinished questions that must be answered in There are several basic and unfinished questions that must be answered in order to resolve the problems of economics satisfactorily. order to resolve the problems of economics satisfactorily.

The scarcity problem, for example, requires answers to basic questions, The scarcity problem, for example, requires answers to basic questions, such as: such as: what to produce, how to produce it, and who gets what is what to produce, how to produce it, and who gets what is produced.produced.

An economic system is a way of answering these basic questions, and An economic system is a way of answering these basic questions, and different economic systems answer them differently.different economic systems answer them differently.

Totally new system, hundred years later will be called as “……..”.Totally new system, hundred years later will be called as “……..”.