ECONOMICS OF TRANSITION Pravna fakulteta Univerze v Ljubljani Erasmus 2013 Jože Mencinger, Franjo Štiblar

CONTENTS Part 1 (Mencinger) ECONOMIC CONCEPTS AND THEORY - ECONOMIC CONCEPTS AND SOME CONTEMPORARY ISSUES - GDP STRUCTURES AND MEASURES OF ECONOMIC ACTIVITY - AGGREGATE EXPENDITURE AND GDP DETERMINATION - AGGREGATE SUPPLY, ECONOMIC GROWTH, INFLATION, AND UNEMPLOYMENT - BASICS OF MONETARY ECONOMICS - ECONOMIC POLICIES - TRANSITION IN THEORY Part 2 (Štiblar) TRANSITION IN SEE EXAM: written exam: 4 questions If somebody wants. a paper can be added. A short description of the major characteristics of one of the main transition features (privatization. macroeconomic stabilization. institutional changes) in a country of SEE - up to 10 pages It should include basic tools and outcomes

LITERATURE - Bohle, D., Greskovits, B. Neoliberalism, embedded neoliberalism, and neocorporativism West European Politics, 2007; (provided on home pages) -Štiblar. F: The Impact of the Global Crisis on Montenegro and the Western Balkans. Central Bank of Montenegro. 2009; (provided ) -Mencinger. J: Privatization in Slovenia, Slovenian LawReview vol 3. no 1/2. pp ; (provided on home pages) -Mencinger. J :Transition to a national and a market economy : a gradualist approach in Mrak. M Rojec. M Silva-Jáuregui. C Slovenia : from Yugoslavia to the European Union Washington: The World Bank (provided on home pages) -Lectures: PP presentations (provided on home page)

SLOVENIA Surface: sqkm, 66% forests, Population: 2,02 millions, Language: Slovenian; (Italian, Hungarian minorities) Political Arrangement: parliamentary democracy, coalition governments; “left” or “right” History: until 1918 part of Austro-Hungarian empire; part of Kingdom of Yugoslavia; occupied by Germany, Italy and Hungary; Yugoslav republic; political transition: 1991 independence, May 2004: EU member state, January 1, 2007 EMU member; Economy: GDP 34 billions €, GDP/capita €, 88% of EU27 average, - GDP growth: 4%(2008) -7.6%(2009), 1.5%(2011), -1.0 (2012) - unemployment rate: 4.4%, (2008), 6.9% % (March 2011); - inflation 5.7 %(2008) 1%(2009), 2.3%(Feb.2012) - public balance/GDP: 0.4%(2008), -5,5%(2011) - CA/GDP: -4.5%(2008) -0.6%(2011)

ECONOMIC DEVELOPMENT OF SLOVENIA

GAMBLING AND THE END OF THE SLOVENIAN “SUCCESS STORY GAMBLING AND THE END OF THE SLOVENIAN “SUCCESS STORY”

PERFORMANCE INDICATORS -ECONOMIC WELFARE AND ECONOMIC GROWTH -CAPACITY UTILIZATION AND UNEMPLOYMENT -STABILITY AND INFLATION -EQUILIBRIUM: EXTERNAL AND INTERNAL -INCOME AND WEALTH DISTRIBUTION -OTHER CRITERIA -VALUE JUDGEMENTS

FINANCIAL CAPITALISM FINAFINANCIAL CAPITALISM NCIAL CAPITALISM Financial products Savers Financial investors investiments acquisitions speculations privatizations

THE ROOTS OF THE CRISIS 1 (JHuffschmid)

THE ROOTS OF THE CRISIS 2 (J Huffschmid)

THE ROOTS OF THE CRISIS 3 -AGGREGATE DEMAND

FINANCE DRIVEN CAPITALISM (JHuffschmid)

CRISIS AND EU COMMISSION Documents on the failure of strategies by EU Commission: - evaluation of Lisbon strategies: structural reforms increasing robustness of EU; - evaluation of the crisis: drop of industrial production. unemployment: 23 millions or 10% of active population; budget deficit 7%; public debt 80% GDP. 20 lost years in fiscal consolidation; - causes: low investments in R&D. structural problems. population ageing. business climate; Reality: - failed ilussions: of creation of knowledge based society and of ability to compete in a globalized world with ruthless societies. economic cannibalism. - destruction of European industry: growth of financial sector 6 times faster than growth of the “real” economy; - economy dominated by finance – finance dominated by speculations; profit making without value and job creation; -ideology: dogmatic liberalism. accent on the supply side. neglect of the demand side;

THE CAUSES OF PROBLEMS IN NMS AND FMS External vulnerability of NMS and FMS has been enhanced (1) by small size of the countries. (2) transition based on Washington consensus. (3) FDI addiction. and (4) too rapid convergence of standard of living enabled by foreign savings; The global credit reduction is hitting NMS and FMS with large external financing needs particularly hard; Continued exposure of parent banks is critical for NMS and FMS development to weather the storm; The recession in EU hitS NMS and FMS most through increased competition and resulting decrease of export demand