General and specific patterns of transition economy

Despite the differences in the types of transition periods, it is possible to identify their most general patterns, which are inherent in any transition period in economic development. General regularities can be considered:

combination of old and new elements and forms; economic disequilibrium with a possible slide into the general crisis state; the growth of prerequisites and elements of the new system, the increased variability of the elements of the new; inertia of old forms and relations; the growing inconsistency of old and new economic relations; increased social disequilibrium and tension.

Since these patterns are general, they more or less manifest themselves in any type of transition period, but are especially expressive in the system-economic type of transition. However, in recent years, along with the concept of “transition period” and, accordingly, “transition economy”, another one has appeared: “transformation period”. What do they have in common? And how do they differ? What are the specifics of the “transformation period”?

The transformation period is, in fact, also a transitional period, i.e. an intermediate state, but between two stable systems, reflecting a cardinal transition from one system of society to another. The term “transformation” in Latin means transformation and as if carries a charge of radicality or additional influence. It is associated with significant institutional changes and transformations, with large organizational interventions, with special, transformational functions of the state. Taking into account these features, the “transformation” and the “transformation period” are now called the transformation of the planned command-centralized system into a different, market economic system. And this is a new type of transition period for history.

The transformation process should not be confused with reform, because in the course of the first one, the unique tasks of creating a new system, a new economic system, i.e. the task of radically changing the entire system, are solved, and reforming is a change, improvement that does not break the foundations of society and its economic system.

The process of transformation means the process of breaking the attributes and relations of the former, for example, planned system and at the same time creating key forms of a new (market) economy: private business, developed competition, free pricing, market financial system, etc. This process is more “traumatic” and painful than the natural-evolutionary transition from system to system.

To the general patterns in the transformation period, specific patterns related to its economic features are added:

a significant decline in national production; disruptive structural shifts; a decrease in budget potential and an increase in its deficit; a sharp increase in inflationary processes; the imbalance of changes in the old and new economic environment; a sharp decline in investment activity; rising unemployment; the increase in mass disproportionality between the level of skilled labor and its remuneration; increasing income differentiation and stratification, polarization of the population.

Such patterns are clearly visible in the economies of the countries of Eastern Europe, as well as the countries – the former republics of the USSR, which have embarked on the path of socio-economic transformations of the transformational type.