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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