Prague, Czech Republic - Course Descriptions - Theory and Practice of Economic Transition

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COURSE DESCRIPTION: The course consists of analyzing the processes of economic transition in general, as well as in particular historical instances. The emphasis is laid-but not exclusively-on the central European experience. As a prerequisite for analyzing the dynamics of transition it deals with the workings of non-market economic systems, especially the centrally planned state-managed economies. Topics also include each system's ideological foundations, institutional structure and economic decision-making mechanisms. Each of the competing approaches to transitions is dealt with separately. Theoretical conclusions are supplemented by empirical evidence in the form of case studies.

LEARNING OBJECTIVES
The main objective of the course is to provide students with understanding of the working of nonmarket systems and explain the challenges that the economic transition to market capitalism necessarily entails.

COURSE MATERIAL
Alchian, Armen, Property Rights, The Concise Encyclopedia of Economics, http://www.econlib.org/library/Enc/PropertyRights.html
Alesina, Alberto and Drazen, Allan, 1991. “Why are Stabilizations Delayed?” American Economic Review, 81, 1170-1188.
Bastiat, Fréderic, What is seen and what is not seen, http://www.econlib.org/library/Bastiat/basEss1.html
Boettke, Peter J. Calculation and Coordination: Essays on socialism and transitional political economy. New York: Routledge, 2001. http://economics.gmu.edu/pboettke/pubs/CC_REVISES.PDF
Boycko, Maxim; Andrei Shleifer, and Robert Vishny, “A Theory of Privatization”, Economic Journal, 106. 309-319.
Caplan, Bryan, The Museum of Communism. http://www.gmu.edu/departments/economics/bcaplan/museum/musframe.htm
de Soto, Hernando, “Citadels of Dead Capital: What the Third World must learn from U.S. history”, Reason, May 2001.
Hardin, Garrett „The Tragedy of the Commons," Science, 162(1968):1243-1248. http://dieoff.org/page95.htm
Hayek, F.A. “The Use of Knowledge in Society”, The American Economic Review, Vol. 35, No. 4. (Sep., 1945), pp. 519-530.
Hellman, Joel, 1998: “Winners Take All: the Politics of Partial Reform,” World Politics, 50, 203-234.
Hellman, Joel; Jones, Geraint; and Kaufman, Daniel. “Seize the State, Seize the Day: State Capture, Corruption and Influence in Transition”, World Bank Policy Research Working Paper Number 2444, September 2000. Available at: http://www.worldbank.org/wbi/governance/pdf/seize.pdf
Huggins, Laura E. and Anderson, Terry, Property Rights: A Practical Guide to Freedom and Prosperity, Hoover Institution, 2003. http://www.hoover.org/publications/books/3009301.html#toc
Johnson, Simon; Daniel Kaufmann and Andrei Shleifer, “The Unofficial Economy in Transition”, Brookings Papers on Economic Activity, 1997. pp. 159-239.
Kornai, János, “The Soft Budget Constraint”, Kyklos, 39:1 (1986) 3-30.
Kornai, János. “What the Change of System From Socialism to Capitalism Does and Does Not Mean”, Journal of Economic Perspectives 14:1 (Winter 2000), 27-42. Available at http://www.economics.harvard.edu/faculty/kornai/papers/wtcosf.pdf
Maddison, Angus, The World Economy: A Millennial Perspective, Paris: OECD, 2001.
Salerno, Joseph, Why a Socialist Economy is "Impossible", Postscript to Mises, Ludwig von, Economic Calculation in the Socialist Commonwealth, Mises Institute, 2001. http://www.mises.org/econcalc/POST.asp
Shleifer, Andrei et. al. “Tunnelling”, American Economic Review Papers and Proceedings, 2000. Available at http://www.economics.harvard.edu/~ashleife/papers/tunnelling.pdf
Shleifer, Andrei, and Vishny, Robert. “Corruption”, Quarterly Journal of Economics, 108, 599-617.
Tullock, Gordon. “The Transitional Gains Trap”, Bell Journal of Economics, 6:2 (Autumn, 1975), 671-8.

COURSE FORMAT
The course will be conducted in the form of lectures (2 hours per week) and seminars (2 hours per week). The course also includes students’ presentations and discussions.

CLASS PARTICIPATION: Active participation is expected. Mid-term and final tests are based on lectures, assigned literature and on the discussion during seminars. Students are graded on their attendance and contribution to class discussions, group project and on the test results.

GROUP PROJECT: At the first session, all students will be assigned group projects to be presented during the seminars.

 
ATTENDANCE
Attendance of students is expected. It is a part of students' evaluation. Each session is valued 1 point. The maximum one can get is 20 p. points (there are 26 sessions: lectures and seminars).

STUDENT EVALUATION
Course grade will be determined on the basis of the following: attendance (20 %), team project (30%), mid-term test (20%), final test (30%).

COURSE SCHEDULE AND CONTENT
WEEK 1: Introduction, relevance of economic systems among causes of economic growth.

WEEK 2: Theory and classification of economic systems; Intellectual sources of socialism.

WEEK 3: True reality of socialist countries - why economic transformation was required

WEEK 4: Did socialism have to fail?

WEEK 5: Where to go? Economic freedom needed, failures of capitalism

WEEK 6: Site visit – RFE/RL.

WEEK 7: Midterm

WEEK 8: Why institutions matter and how to change them

WEEK 9: Overview of Czech transition, price deregulation, trade liberalization.

WEEK 10: Privatization.

WEEK 11: Fiscal and monetary policy.

WEEK 12: Labor market and social policy.

WEEK 13: Impact of EU on economic transition.

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