POLITICS OF ECONOMIC STABILIZATION AND STRUCTURAL ADJUSTMENT II.
Lecturer: Bela Greskovits
Assistant: Attila Folsz
Spring 1995
Department of Political Science
CENTRAL EUROPEAN UNIVERSITY



Course Description

The course is designed to help to develop an understanding of the principles of the interaction between politics and economic policy making, focusing on specific problems, raised by the dual (political and economic) transformation of the 80s.

The second trimester is based on a careful explanation, and a critical understanding of some of the most relevant, current studies of economic and political transitions in the East. Additionally, attempts are requested to apply some of the analytical framework and concepts studied in the first semester, and distilled from recent Third World economic and political reforms, to a comparative interpretation of the experiences with the Post Communist transition.

Requirements

Completion of the first trimester course.
Students are required to attend regularly and to participate actively in the course.
Each student will be requested to pass a brief written test after every three or four lectures.
Those students who do not prepare their M:A. thesis under the supervision of Prof. Greskovits are also requested to prepare a final essay by the 1st of June, related to one or some of the topics of the course.

Grading

In class activity: 30%
Tests: 30%
Final essay: 40 %

Tentative Calendar

1st test (topic 1.,2.,3.) 7. February
2nd test (topic 4. ,5. ,6. ,7.) 7. March
3rd test (topic 8., 9.,10.,11.) 30. March
Final essay title and topic are to be chosen by 15 March.
Final essay draft is to be submitted by 31 March.

Week 1.

POLITICAL PARTIES - POLITICAL BUSINESS CYCLES - PARTY SYSTEMS
(How do political parties affect stabilization and structural adjustment?)

Obligatory Readings:
Alesina, Alberto (1991) "Political Models of Macroeconomic Policy and Fiscal Reforms" Prepared for the World Bank Project on the Political Economy of Structural Adjustment in New Democracies, organized by Stephan Haggard and Steven B. Webb. mimeo. (pp. l-15) (see Reader I.)
Haggard, Stephan and Robert, R. Kaufman (1992) "The Political Economy of Inflation and Stabilization in Middle-Income Countries" in The Politics of Economic Adjustment. International Constraints, Distributive Conflicts, and the State, Edited by Stephan Haggard and Robert, R. Kaufman, (Princeton University Press, Princeton, New Jersey, 1992).

Readings recommended:
Haggard, Stephan and Robert, R. Kaufman (1992) "Economic Adjustment and the Prospects for Democracy" in The Politics of Economic Adjustment. International Constraints, Distributive Conflicts, and the State, Edited by Stephan Haggard and Robert, R. Kaufman, (Princeton University Press, Princeton, New Jersey, 1992).

Week 2.
AUSTERITY-PROTESTS - SUBSTITUTION - COMPLEMENTARlTY
(The changing role of civil organizations in transforming LDCs)

Obligatory Readings:
Norman Uphoff (1993) " Grassroots Organizations and NGOs in Rural Development: Opportunities with Diminishing States and Expanding Markets." World Development Vol. 2 l . No 4. (see Reader I.)
Alain de Janvry and Elisabeth Sadoulet (1993) "Market, State, and Civil organizations in Latin America Beyond the Debt Crisis: The Context for Rural Development. World Development Vol. 21. No 4.

Readings recommended:
Susan Eckstein (1989) "Power and Popular Protest in Latin America" in Power and Popular Protest. Latin American Social Movements, Susan Eckstein ed. University of California Press. Berkeley 1989. (Reader I.)
John Walton (1989) "Debt, Protest, and the State in Latin America" in Power and Popular Protest. Latin American Social Movements, Susan Eckstein ed. University of California Press. Berkeley 1989.

Week 3.
HOW MUCH DOES COMPARATIVE ANALYSIS HELP?
(On the merits and limits of analogies, and of the comparative method in understanding systemic change in East-Europe)

Obligatory Readings:
Croan, Melvin - Skidmore, Thomas E. - Ost, David - Graham, Lawrence S. - Hershberg, Eric, (1992) "Is Latin America the Future of Eastern Europe?" Problems of Communism May-June 1992) 44-57 (Reader I.)
Nelson, Joan (1992) "The Politics of Economic Transformation: Is Third World Experience Relevant in Eastern Europe?" Overseas Development Council. Mimeo.

Readings recommended:
Valerie Bunce, (1993) "Leaving Socialism: A 'Transition to Democracy'?" Contention, Vol. 3, No. 1, Fall 1993
Albert Fishlow (1986) "The East European Debt Crisis in the Latin American Mirror" in Ellen Commisso and Laura D'Andrea Tyson eds. Power, Purpose, and Collective Choice. Economic Strategies in Socialist States. Cornell University Press. Ithaca and London.

Week 4.
HOW DID COMMUNISM WORK? (I)
(Planning, Bureaucratic Control, Money and Price)

Obligatory Readings:
Kornai, Janos (1992) "The Socialist System. The Political Economy of Communism." Clarendon Press, Oxford 1992. Chapters 6., 7., 8, 9.

Readings recommended:
Richard E Ericson (1991) "The Classical Soviet-Type Economy: Nature of the System and Implications for Reform" The Journal of Economic Perspectives. Vol. 5. Nr 4. Fall 1991
Csanadi, Maria (1991) "Structure, Cohesion and Disintegration of the Hungarian Party-State System". in Democracy and Political Transformation. Theories and East-Central European Realities ed. György Szoboszlai. Hungarian Political Science Association.

Week 5.
HOW DID COMMUNISM WORK? (II)
(The logic of the shortage economy)

Obligatory Readings:
Kornai, Janos "The Socialist System. The Political Economy of Communism." Clarendon Press, Oxford 1992. Chapters 11., 12.

Readings recommended:
Kornai, Janos "The Socialist System. The Political Economy of Communism." Clarendon Press, Oxford 1992. Chapter 15

Week 6.
WHY DID COMMUNISM COLLAPSE?
(Various explanations for the decline of a World System)

Obligatory Readings:
Maier, Charles S. (1991) "Why did Communism Collapse in 1989?" Harvard University, Program on Central and Eastern Europe Working Paper Series No. 7. 1-48)
Bunce, Valerie (1991) "Democracy, Stalinism and the Management of Uncertainty" Gyorgy Szoboszlai ed., Democracy and Political Transformation) Hungarian Political Science Association, Budapest.

Readings recommended:
Olson, Mancur (1992) "The Hidden Path to a Successful Economy" in Cristopher Clague and Gordon C. Rausser, eds. The Emergence of Market Economies in Eastern Europe. Blackwell Publishers 1992.

Week 7.
THE ECONOMIC LEGACY OF COMMUNISM - AND THE LOGIC AND PERFORMANCE OF POST- COMMUNIST ECONOMIC REFORMS
(Macro tensions caused by reforms - in the reform-socialist, and the transition economies)

Obligatory Readings:
Leszek Balcerowicz (1993) "Economic Transition in Central and Eastern Europe. Second Annual Lecture Presented by the International Finance Corporation.
Islam, Shafiqul (1993) "Conclusion: Problems of Planning a Market Economy" in Islam, Shafiqul and Michael Mandelbaum eds. Making Markets. Economic Transformation in Eastern Europe and the Post-Soviet States. Council on Foreign Relations Press. New York.

Readings recommended:
Kornai, Janos (1992) "The Socialist System. The Political Economy of Communism." Clarendon Press, Oxford 1992. Chapter 23
Week 8.
"PUSHY BEGGARS ANTE PORTAS"?
(Economics and Politics of Eastern Trade Reforms, and of the East's Reintegration into the World Economy)

Obligatory Readings:
Dani Rodrik (1992) "Foreign Trade in Eastern Europe's Transition. Early Results" NBER Working Paper Series. Nr 4064
CEPR (1993) "Is bigger better? The Economics of EC Enlargement" CEPR Annual Report 1992 Chapter on East Europe pp. 57-93

Readings recommended:
Nagy, Andras (1993) "Import Liberalization in Hungary" Institute of Economics, Hungarian Academy of Sciences. Discussion Papers No. 17.

Week 9.
DID ANYTHING "GO WRONG" ALREADY?
(Critical views on the ideology, the political style, the pace, and the implemented policy-mix in the East European transition process)

Obligatory Readings:
Murrell, Peter (1993) "Conservative Political Philosophy and the Strategy of Economic Transition" East European Politics and Societies vol. 6, no. 1, 1992
Etzioni, Amitai (1992) "A Socio-Economic Perspective on Friction" Paper delivered at the Fourth Annual International Conference of the Society for the Advancement of Socio-Economics, March 28, 1992, Irvine, California (mimeo)

Readings Recommended:
Murrell, Peter (1990) " 'Big Bang' versus Evolution: East European Economic Reforms in the Light of Recent Economic History" Plan Econ Report Nr 26.
Murrell, Peter (1992) "Evolution in Economics and in the Economic Reform of the Centrally Planned Economies" in Cristopher Clague and Gordon C. Rausser, eds. The Emergence of Market Economies in Eastern Europe. Blackwell Publishers

Week 10
FROM THE CRISIS OF THE POST-TOTALITARIAN STATE - TO STATE REFORM
(Can Post-Communist States be made capable of effective pro-reform intervention?)

Obligatory Readings:
L. C. Bresser Pereira (1993) "Economic Reforms and Cycles of State Intervention "World Development Vol. 21. Nr. 8. August 1993
O'Donnell, Guillermo, (1993) "On the State, Democratization and some Conceptual Problems (A Latin American View with Glances at some Post-Communist Countries) World Development Vol. 21. Nr. 8. August 1993

Readings recommended:
Laurence Whitehead (1993) "On 'Reform of the State' and 'Regulation of the Market"' World Development Vol. 21. Nr. 8. August 1993
Andrzej Wojtyna (1992) "In Search of a New Economic Role for the State in the Post-Socialist Countries. in Wolfgang Blaas and John Foster ed. Mixed Economies in Europe. An Evolutionary Perspective on their Emergence, Transition and Regulation. Edward Elgar Publishing Ltd.

Week 11.
TRANSITION TO WHAT?
(Third Way, chaos, poor capitalism, delegative democracy: on the risks, the time span, and the outcome of socioeconomic transformation and systemic change)

Obligatory Readings:
Przeworski, Adam (1991) "Democracy and the Market. Political and Economic Reforms in Eastern Europe and Latin America." Cambridge University Press 199l pp. 180-193

Readings recommended:
Bunce, Valerie - Maria Csanadi (1992) "A Systematic Analysis of a Non-System: Post-Communism in Eastern Europe" György Szoboszlai, ed. Flying Blind. Emerging Democracies in East-Central Europe. Yearbook 1992, Hungarian Political Science Association.) (Reader I.)
Stark, David (1993) "Recombinant Property in East European Capitalism" Collegium Budapest, Institute for Advanced Study, and Department of Sociology, Cornell University, Ithaca, NY. mimeo
O'Donnell, Guillermo, (1992) "Delegative Democracy? The Helen Kellogg Institute for International St dies, Working Paper 172., March 1993. (Reader 1.)



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Modified: July, 1996

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