1. Economic Transitions

2. Moving Toward a Market Economy
Today, many countries are undergoing economic transition. Some are enjoying rapid growth, while others are changing their entire economic systems
For many nations, economic transition has meant moving from central planning to a market-based economy
Privatization: the sale or transfer of government-owned businesses to individuals

4. Privatizing Business
Only profitable enterprises will survive in a free market
No one will want to buy unprofitable businesses, so many people will lose their jobs
Government leaders might make it easier for their own friends and associates to gain control of businesses when going through privatization (Russia)
Workers must adapt to new work ethics and job security

5. Case Study: Russia
After the fall of the Soviet Union in 1991, price caps were lifted, which resulted in massive price increases
Wealth was distributed unevenly in the 1990s
State-owned companies were auctioned off, many at low selling prices
Billions of dollars in financial aid flooded into the country. However, due to mismanagement and corruption, these funds were not used efficiently

7. Russia in the 21st Century
Tight controls from the central government, combined with rising prices for Russian oil, allowed Russian leaders to stem the crisis and repay foreign debt
Challenges
Russia’s economy relies too much on the export of natural resources (oil)
Control of the economy is in the hands of a few ultrawealthy individuals who are close to President Vladimir Putin (called oligarchs)
a shrinking workforce and corruption are limiting growth
The political situation in Russia is discouraging investment from Western corporations

9. Case Study: China In the 1980s, China made major economic reforms
Its new leader, Deng Xiaoping, gave farmers and factory managers more freedom to make decisions about what to produce and how much to charge for it
Special Economic Zones (SEZs)
Foreign businesses could operate, and local governments were allowed to offer tax incentives to foreign investors
Chinese businesses could operate freely here, with managers making most of their own investment and production decisions

10. Case Study: China Issues
The poor complain that the government is abandoning its promise to provide jobs and healthcare for all the nation’s people
Growth has not reached all parts of the country, especially rural areas
The One Child policy has reduced the size of China’s labor force
Economic development has not meant political liberty