Transition Economics meets New
Structural Economics
Prof. Slavo Radosevic
Welcome and Introduction to the workshop: Research and Policy Rationale
London, 25-26 June 2013
Transition Economics meets New
Structural Economics
Transition Economics meets New
Structural Economics
Context and aims
• Post-2008 world
• The ‘unqualified benefits of integration’? 2010 Breugel report Whither
growth in CEE?
• Alternatives to Washington Consensus and ‘big push’ industrial
policies (old structuralism)
• To re-examine the usefulness of Transition Economics as a
conceptual perspective in promoting growth and democracy as
well as to explore what are viable alternatives.
• Transition Economics Plus/Augmented Transition Economics?
• To re-examine potential benefits of New Structural Economics
for CEE/CIS and its link to EU Structural Funds Smart
Specializaton strategies
The role of ‘structure‘
• TE = astructural approach to growth in terms of
economic structure
• TE = quite articulate view regarding the
institutional structure.
• A point of convergence between TE and NSE:
market is the major mechanism of structural
change and that government should maintain
well-functioning and advanced markets.
• But, …. important differences in nature of the role
of government
TE/NSE differences reflected in tools
• The Growth Identification and Facilitation Framework
(GIFF)
• EBRD transition indicators
• GIFF: towards sustainable and long-term growth based on
current and latent comparative advantages
• GIFF: focused largely on the process itself by assuming
that the government is able to maintain competitive market
environment as one if its major preconditions.
• TE: focused on transition itself which is from the NSE at
best an intermediate goal
CAD vs CAF
• NSE: comparative advantage following (CAF) vs.
comparative advantage defying (CAD) strategies.
• A failure of the old structural economics is largely due to
uncritical application of CAD policies.
• TE rejects all policies that are not consistent with current
comparative advantages.
• What each of these perspectives can say about recent
modernization attempts in the region through either EU
Structural Funds policies based on the approach of ‘smart
specialization’ or through actions like Russian Skolkovo
and similar newly emerging initiatives?
NSE vs TE : industrial policy
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NSE rationalises a gradualist approach to trade liberalisation and a
temporary protection to ‘comparative advantages defying’ industries built
during the past.
TE: no value in maintaining and subsidizing inefficient industries.
NSE: governments need to support industry specific infrastructures which
are consistent with current or potential (latent) comparative advantage and
hence only broad horizontal policies are not sufficient.
TE: there is ‘built in’ scepticism of TE towards any kind of vertical policies.
NSE: advise ‘dual track approach’ and ‘second best policies’ to which
transition economics is sceptical.
NSE recognises the role of pioneer firms in the process of industrial
upgrading –> firm heterogeneity > evolutionary and neo-Schumpeterian
economics.
Neo-Schumpeterian political economy (NSPE) can be considered as third
conceptual alternative which has many common points with the NSE.
Questions for discussion
• Is NSE a real alternative for (ex)transition economies?
• Or, NSE is useful only for countries that are less
developed (LIC) and hence less relevant for those TE
that are moving towards more knowledge intensive or
higher value added activities?
• Is NSE appropriate for middle income trap countries
(Lee, Keung, 2013, CUP, forthcoming)
• Or, maybe ‘transition region’ is so diverse in terms of
levels of development that no single theoretical lens
can capture its complexity?
Intellectual origins of the NSE and its
relevance for the EU27
• `Flying geese´ theory of development (Ozawa,
Akamatsu): growth and integration merged in one
conceptual framework > tandem theory of growth
• Comparative advantage recycling via OFDI and
trade
• How can that approach inform EU27 policies ?
Workshop outline: Tuesday
1. Transition Economics and New Structural Economics as
policy approaches to development
2. Extended Transition Agenda or replacement of paradigms
for supporting growth in Eastern Europe and FSU
3. Growth Identification and Facilitation and Transition
indicators as operational tools: benefits and limits
4. Financial integration and financial structure in the post2008 period with special reference to Eastern Europe
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Workshop outline: Wednesday
• Journal of Economic Policy Reform
1. The EU Smart Specialization strategies and lessons from
TE and NSE for EU new member states
2. The Role of the State in the Dynamics of Structural
Change: TE and NSE compared
3. Round Table: Transition Economics meets New Structural
Economics: lessons drawn and/or an agenda for future
research?
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