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Charles R. Hale, Director SRH 1.310, 2300 Red River Street D0800, Austin, TX 78712 • 512.471.5551

Fall 2003


Unique Days Time Location Instructor
37627 TTh
3:30 PM-5:00 PM
BRB 1.120

Course Description

Focus: Restructuring,Transitions, and Beyond: Contemporary Alterations in Economic Systems Seminar director: W Glade, Office: BRB 2.102B Provisional focus for the seminar project: The last two decades ushered in such a widespread rethinking of the architecture of economic systems and associated changes in policy design that it could accurately be considered a major policy inflection. Thus was, at least seemingly, reversed the century-long trend of an expanding public sector and state intervention, a structural trend that sprang, where not ideologically, motivated, from efforts to address various types of market failure. Anticipated, slightly, by substantial policy changes in Chile and the UK, where significant alterations began in the latter half of the 1970s, the new perspective on systems and policy eventually had repercussions throughout the OECD group of countries and the developing world, particularly the newly industrialized economies. Very broadly, the changes in question derived from a growing awareness of government or public-sector failure and involved renewed efforts to achieve macroeconomic stability with less activist monetary policy, privatization, a calibrated deregulation of economic processes, and generally a greater reliance on market forces in determining resource allocation at micro and macro levels. At the international level, the new policy orientation was anticipated by the eight rounds of GATT negotiations that culminated in the establishment of the WTO, by IMF efforts to produce greater stability in exchange rates and international financial integration, by creation of the WIPO, and by the work of the World Bank and the unsuccessful multilateral agreement on investment that aimed at freeing up cross-border capital movements. In Western Europe, the new policy course had been in important respects reinforced by the regional economic integration that began in the early 1950s, but in Central and Eastern Europe the sweeping systemic changes the new policies implied came after 1990 when economy after economy abandoned the regime of central economic planning and embarked on a path of transition to market- based economic organization. Even in China, which did not formally jettison communism, the rapid spread of market-based decision making clearly pushed the operations of the system in the direction of "market socialism," a system type that had actually begun in the West to emerge from central planning with the post-war withdrawal of Yugoslavia from the Soviet bloc and in the aftermath of the Hungarian uprising of the 1950s (and the subsequent introduction of the New Economic Mechanism). In Poland, too, the influence of the market-socialist system developed analytically by Oskar Lange was visible in the way the economy departed from the Soviet central-planning prototype. Hence, the transition that began in earnest after 1990 actually had roots in earlier changes. In many of these new systems, yet another structural alteration is observable: the spread of a type of economic organization that is, we may hypothesize, offered as an institutional response to the intersection of both private-sector or market failure and public-sector or government failure. Thus, in a more-or-less steady expansion of the third or independent sector, not-for-profit and nongovernmental organnizations, accompanied by what are sometimes called private voluntary organizations, become important producers of services--sometimes on a freestanding basis but sometimes on the basis of significant links with either the corporate or government sector. While many of the foregoing structural alterations in the economy are of fairly recent vintage, there is a growing body of empirical studies and data bases and an analytical and theoretical literature that should assist in getting a greater intellectual purchase on these developments to explore what they imply for a number of conventional economi

As we read and discuss the foregoing, we shall be highlighting the most promising research possibilities for the papers the seminar will prepare, privileging topics that relate to the role of the independent sector, and its relations to the public and private sectors, in transition and restructuring. Those who have a compelling interest in another aspect of systemic change will, however, certainly be encouraged to pursue that research interest.


We shall begin the semester with sets of readings, a kind of tour de l’horizon, as it were, to build a shared frame of reference and basis for dialogue during the semester. To this end, our first readings for discussion will cover selected portions of the following: Claude Auroi, ed., Latin American and East European Economies in Transition: a Comparative View (1997); Andres Solimano, Osvaldo Sunkel, Mario Blejer, eds., Rebuilding Capitalism: Alternative Roads after Socialism and Dirigisme ( 1994); Werner Baer and Joseph Love, eds., Liberalization and its Consequences: a Comparative Perspective on Latin America and Eastern Europe(2000), Barry Bosworth and Gur Ofer, Reforming Planned Economies in an Integrating World Economy (1995); O. Bouin and Ch.-A. Michalet, Rebalancing the Public and Private Sectors: Developing Country Experience (1991);Ronald I McKinnon, The Order of Economic Liberalization: Financial Control in the Transition to a Market Economy (1993); World Bank, From Plan to Market, World Development Report (1996); Ibid., Bureaucrats in Business: The Economics and Politics of Government Ownership (1995); Ibid., Transition: the First Ten Years (2002); Annette N. Brown, ed., When is Transition Over?( 1999); Robert Wade, Governing the Market: Economic Theory and the Role of Government in Southeast Asian Industrialization (1990); Seiji Naya, Private Sector Development and Enterprise Reforms in Growing Asian Economies (1990);Nancy Birdsall, Carol Graham, and Richard H.Sabot, editors, Beyond Tradeoffs: Market Reforms and Equitable Growth in Latin America (1998); Nikolaos Zahariadis, Markets, States, and Public Policy (1995); Dennis Swann, The Retreat of the State; Deregulation and Privatization in the UK and US (1991); Burton Weisbrod, The Nonprofit Economy (1988); Avner Ben-Ner and Benedetto Gui, The Nonprofit Sector in the Mixed Economy (1993); Lester M Salamon, ed., Beyond Privatization: The Tools of Government Action (1989); Ibid., The State of Nonprofit America (2003);Estelle James, ed., The Nonprofit Sector in International Perspective (1989); and Lester M Salamon and Helmut K Anheier, Defining the Nonprofit Sector: a Cross-National Analysis (1997). (If you are not already familiar with Douglass North’s Institutions, Institutional Change, and Economic Performance (1990), you may want to have a look at it for fundamental insights into the importance of key institutional factors.


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