Structural change in transition economies: Does foreign aid matter?

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Center Discussion Paper ; No. 982

Classification and Topics

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

Contributors, Places and Time

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

Further information

• Handle: http://hdl.handle.net/10419/59139
• Last update: 10.03.2025, 11:44 AM CET