Arbeitspapier

Structural change in transition economies: Does foreign aid matter?

This paper addresses whether the initial declines in the manufacturing and real wages in transition economies were anything unexpected to justify policy reversal, and whether the often-recommended foreign aid would have helped them curb these declines in any significant way. It answers these questions with the help of a two-sector three-factor small open economy model and simulation exercises. It concludes that, given the relative price distortions and the market disequilibria that transition economies inherited from their planning era, the initial declines in their manufacturing and real wages are to be mostly expected. Foreign aid, whose mpact is noticeable only when it is in excess of 5% of GDP, does not curb the decline in their real wages in any measurable way and exacerbates the decline in their manufacturing by a few percent.

Language
Englisch

Bibliographic citation
Series: Center Discussion Paper ; No. 982

Classification
Wirtschaft
Subject
liberalization
structural adjustment
transition economies
East European economies
Soviet Republics
foreign aid

Event
Geistige Schöpfung
(who)
Fardmanesh, Mohsen
Tan, Li
Event
Veröffentlichung
(who)
Yale University, Economic Growth Center
(where)
New Haven, CT
(when)
2009

Handle
Last update
10.03.2025, 11:44 AM CET

Data provider

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Object type

  • Arbeitspapier

Associated

  • Fardmanesh, Mohsen
  • Tan, Li
  • Yale University, Economic Growth Center

Time of origin

  • 2009

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