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Transition and Growth in Post-Communist Countries

Transition and Growth in Post-Communist Countries

The Ten-year Experience

Edited by Lucjan T. Orlowski

Transition and Growth in Post-Communist Countries documents the first ten years of economic transition in Central and Eastern Europe.

Chapter 14: Do 'winners take all'? A comment on Rutkowski

Mikhail Dmitriev


14. Do ‘winners take all’? A comment on Rutkowski Mikhail Dmitriev WHY ARE WINNERS AND LOSERS OF TRANSITION SO DIFFERENT? Lessons from the recent experience of transition, which are so clearly exposed by Michal Rutkowski in his chapter, could provide a valuable framework for the reassessment of a longer-term perspective of pension reforms. The cornerstone of his argument is a deep divide between the winners and losers of transition, which became so visible in the area of pension reforms. The winners or Group 1 in the author’s terminology include a vast majority of the countries of Central and Eastern Europe (CEE) and the Baltic states. They were the most successful at the initial stage of transition and remain relatively unaffected by the recent global financial crisis. According to the EBRD (1999, p. 73), 1998 real GDP in these countries was on average at 95 per cent of the 1989 level. The losers of transition or Group 2, which includes all the CIS members and Albania, are the least successful transition economies. On average, real GDP in the CIS countries in 1998 was at 53 per cent of the 1989 level. Replacement rates and pension expenditures as per cent of GDP are much lower in Group 2 as compared with Group 1. In terms of pension reform, winners display a striking example of ‘herd behaviour’. As we could see from Michal Rutkowski’s chapter, almost every CEE country has already developed and/or approved proposals for a multipillar pension system, heralded by the...

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