Transition economy

A transition economy or transitional economy is an economy which is changing from a <a href="/facts/Planned_economy/TCMJrC5M">centrally planned economy</a> to a <a href="/facts/Market_economy/d56S7haK">market economy</a>. Transition economies undergo a set of structural transformations intended to develop market-based institutions. These include <a href="/facts/Economic_liberalization/8KufLnlU">economic liberalization</a>, where prices are set by market forces rather than by a central planning organization. In addition to this, trade barriers are removed, there is a push to <a href="/facts/Privatize/TAtreKqK">privatize</a> state-owned enterprises and resources, state and collectively run enterprises are <a href="/facts/Corporatization/dIpf4ura">restructured as businesses</a>, and a <a href="/facts/Financial_sector/azqCQelN">financial sector</a> is created to facilitate macroeconomic stabilization and the movement of private <a href="/facts/Capital_(economics)/lLkzDdoB">capital</a>. The process has been applied in <a href="/facts/China/lTjIXY5p">China</a>, the former <a href="/facts/Soviet_Union/m7wWsPto">Soviet Union</a> and <a href="/facts/Eastern_bloc/12f32hA7">Eastern bloc</a> countries of <a href="/facts/Europe/DTAtrKfh">Europe</a> and some <a href="/facts/Third_world/AcuEJmhE">Third world</a> countries, and detailed work has been undertaken on its economic and social effects.
The transition process is usually characterized by the changing and creating of institutions, particularly <a href="/facts/Private_enterprise/B4wdkyJX">private enterprises</a>; changes in the role of the state, thereby, the creation of fundamentally different governmental institutions and the promotion of private-owned enterprises, markets and independent financial institutions. In essence, one transition mode is the functional restructuring of state institutions from being a provider of growth to an enabler, with the <a href="/facts/Private_sector/fQudW9hp">private sector</a> its engine. Another transition mode is change the way that economy grows and practice mode. The relationships between these two transition modes are micro and macro, partial and whole. The truly transition economics should include both the micro transition and macro transition. Due to the different initial conditions during the emerging process of the transition from planned economics to market economics, countries uses different transition model. Countries like the People's Republic of China and Vietnam adopted a gradual transition mode, however Russia and some other East-European countries, such as the former Socialist Republic of Yugoslavia, used a more aggressive and quicker paced model of transition.
The term "transition period" is also used to describe the process of transition from capitalism to the first stage of socialism, preceding the establishment of fully developed socialism (aka communism).

Transition economy open-in-new

Transition economy