40 web- 1 copyright mcgraw-hill/irwin, 2005 ideology and institutions planning goals and techniques...

40 Web- 1Copyright McGraw-Hill/Irwin, 2005

Ideology and Institutions

Planning Goals and Techniques

Collapse of the Soviet Economy

Russian Transition to a Market Economy

Centrally Planned Price Effects

Market Reforms in China

Outcomes and Prospects

Key Terms

PreviousSlide

NextSlide

EndEndShowShow

WEB

RUSSIA & CHINA

Transition Economies:Transition Economies:

40C H A P T E R

WEB

40 Web- 2Copyright McGraw-Hill/Irwin, 2005

Ideology and Institutions

Planning Goals and Techniques

Collapse of the Soviet Economy

Russian Transition to a Market Economy

Centrally Planned Price Effects

Market Reforms in China

Outcomes and Prospects

Key Terms

PreviousSlide

NextSlide

EndEndShowShow

WEBMarxian Ideology•Labor theory of value•Surplus Value

State OwnershipCentral Economic Planning

IDEOLOGY & INSTITUTIONS

40 Web- 3Copyright McGraw-Hill/Irwin, 2005

Ideology and Institutions

Planning Goals and Techniques

Collapse of the Soviet Economy

Russian Transition to a Market Economy

Centrally Planned Price Effects

Market Reforms in China

Outcomes and Prospects

Key Terms

PreviousSlide

NextSlide

EndEndShowShow

WEBPLANNING GOALS & TECHNIQUES

Industrialization

(Rural Development in China)

Overcommitment of Resources

Mobilization of Resources

Allocation by Directives

Government Price Setting

Self-Sufficiency

Passive Macroeconomic Policies

40 Web- 4Copyright McGraw-Hill/Irwin, 2005

Ideology and Institutions

Planning Goals and Techniques

Collapse of the Soviet Economy

Russian Transition to a Market Economy

Centrally Planned Price Effects

Market Reforms in China

Outcomes and Prospects

Key Terms

PreviousSlide

NextSlide

EndEndShowShow

WEB

Problems with Central

Planning•The Coordination Problem

•The Incentive Problem

PLANNING GOALS & TECHNIQUES

40 Web- 5Copyright McGraw-Hill/Irwin, 2005

Ideology and Institutions

Planning Goals and Techniques

Collapse of the Soviet Economy

Russian Transition to a Market Economy

Centrally Planned Price Effects

Market Reforms in China

Outcomes and Prospects

Key Terms

PreviousSlide

NextSlide

EndEndShowShow

WEBCOLLAPSE OF THESOVIET ECONOMY

Declining GrowthPoor Product QualityFew Consumer GoodsLarge Military BurdenAgricultural Drag

40 Web- 6Copyright McGraw-Hill/Irwin, 2005

Ideology and Institutions

Planning Goals and Techniques

Collapse of the Soviet Economy

Russian Transition to a Market Economy

Centrally Planned Price Effects

Market Reforms in China

Outcomes and Prospects

Key Terms

PreviousSlide

NextSlide

EndEndShowShow

WEBRUSSIAN TRANSITION

TO A MARKET SYSTEMPrivatizationPrice ReformPromotion of CompetitionMaking Ruble Fully

ConvertiblePrice-Level StabilizationOther Major ProblemsRecent Revival

40 Web- 7Copyright McGraw-Hill/Irwin, 2005

Ideology and Institutions

Planning Goals and Techniques

Collapse of the Soviet Economy

Russian Transition to a Market Economy

Centrally Planned Price Effects

Market Reforms in China

Outcomes and Prospects

Key Terms

PreviousSlide

NextSlide

EndEndShowShow

WEBCENTRALLY PLANNED

PRICE EFFECTS

D

S’S

Pri

ce p

er u

nit

Quantity demanded and supplied0

Pf

FIXED LOW PRICECEILING BY

GOVERNMENTLEADS TO…

SHORTAGE

40 Web- 8Copyright McGraw-Hill/Irwin, 2005

Ideology and Institutions

Planning Goals and Techniques

Collapse of the Soviet Economy

Russian Transition to a Market Economy

Centrally Planned Price Effects

Market Reforms in China

Outcomes and Prospects

Key Terms

PreviousSlide

NextSlide

EndEndShowShow

WEB

D

S’S

Pri

ce p

er u

nit

Quantity demanded and supplied0

Pa

Pf

SHORTAGE

Withoutprivatizationprices rise to

Pa

CENTRALLY PLANNEDPRICE EFFECTS

40 Web- 9Copyright McGraw-Hill/Irwin, 2005

Ideology and Institutions

Planning Goals and Techniques

Collapse of the Soviet Economy

Russian Transition to a Market Economy

Centrally Planned Price Effects

Market Reforms in China

Outcomes and Prospects

Key Terms

PreviousSlide

NextSlide

EndEndShowShow

WEB

D

S’S

Pri

ce p

er u

nit

Quantity demanded and supplied0

Pa

Pe

Pf

SHORTAGE

Withprivatizationprices rise to

Pe

CENTRALLY PLANNEDPRICE EFFECTS

40 Web- 10Copyright McGraw-Hill/Irwin, 2005

Ideology and Institutions

Planning Goals and Techniques

Collapse of the Soviet Economy

Russian Transition to a Market Economy

Centrally Planned Price Effects

Market Reforms in China

Outcomes and Prospects

Key Terms

PreviousSlide

NextSlide

EndEndShowShow

WEBMARKET REFORMS IN CHINAAgricultural & Rural ReformTownship & Village EnterprisesReform of Urban IndustriesState Owned Enterprises (SOE)Urban CollectivesSpecial Economic Zones (SEZs)Development of Supporting

InstitutionsTransformation of the SOEs

40 Web- 11Copyright McGraw-Hill/Irwin, 2005

Ideology and Institutions

Planning Goals and Techniques

Collapse of the Soviet Economy

Russian Transition to a Market Economy

Centrally Planned Price Effects

Market Reforms in China

Outcomes and Prospects

Key Terms

PreviousSlide

NextSlide

EndEndShowShow

WEBOUTCOMES & PROSPECTSPositive Outcomes of Reform

Problems• Incomplete Property Rights• Macroeconomic Difficulties• Integration into the Global

Economy• Geographically Uneven

Development

labor theory of valuesurplus valuestate ownershipcentral economic planningcoordination problemincentive problemtownship & village enterprisesstate-owned enterprises (SOEs)urban collectivesspecial economic zones (SEZs)

ENDBACKCopyright McGraw-Hill/Irwin, 2005