At a 1999 conference which marked the 10 year anniversary of reforms in Eastern Europe, two very intriguing papers were presented.  Both were written by prominent economists and summarize the developments that had taken place in the 10 year period.  What is particularly interesting is that the authors, Joseph Stiglitz and Andres Aslund, had completely opposite views of the reform process.  Read the two articles carefully and decide which point of view you favor. You should understand the differences between the two articles and be prepared to defend the position you take.  You must let me know your position by email by 9:00am on Wednesday.  In addition, be prepared to discuss the following questions:

If you favor the view by Aslund you should be prepared to discuss the following questions:
 

1. What is rent seeking?
2. What were the distortions in the Soviet Union after communism collapsed? What were some examples of rent seeking?
3. What were the main problems in Russia?
4. If a lack of reforms was the main  problem of the Russian economy, why weren’t more reforms implemented?
5. Were macroeconomic policies  too restrictive?
6. Was privatization the main source of enrichment?
7. Did the west fail Russia? What should have been the appropriate response from the west?

If you favor the view by Stiglitz, you should be prepared to discuss the following questions:
 

1. Why does Stiglitz compare Russia to China in the introduction to his paper?
2. What is creative destruction? According to Stiglitz, why didn’t it work in transition countries?
3. What is social and organizational capital and how did it evolve in transition economies?
4. Why did “standard” privatization failed to provide “natural" incentives?
5. What is the appropriate speed and sequencing of reforms according to Stiglitz?