Econ Test 2 Part 4

  1. What caused the end of Soviet bloc socialism?
    • centrally planned socialism needed reform
    • reforms turned into complete rejection of the system
    • hold outs: china, cuba, north korea
  2. Glasnost
    • openness
    • let people criticize business and gov't problems w/o punishment
  3. Perestroika
    • restructuring
    • reform the companies to operate better
  4. What do transition economies need to do? 
    • liberalize (free things up): use free market more, decentralize, and deregulate
    • compete (have more competition): motive people/businesses to do better jobs/be efficient
    • reform the gov't (new style): more democratic and accountable
  5. Does shock therapy or gradualism usually work better?
    shock therapy (big bang approach) when moving from central planning to a market economy
  6. What is SOE?
    state owned enterprises
  7. How can you privatize them?
    • selling to foreigners
    • give/sell companies to ther current managers and workers
    • sell to a few wealthy domestic investors
    • voucher system (sell shares to public)
  8. Selling to foreigners: benefits and problems
    • benefits: gain foreign management ideas, tech, money and export contacts
    • problems: fear and resentment of foreign domination, fear of profit repatriation, huge job loss
  9. Give/sell companies to managers and workers: benefits and problems
    • benefits: motivated to save jobs, contacts with local gov't, know good suppliers and local distribution networks
    • problems: lack of entrepreneurial mindset and modern business skills.  may lack export contacts
  10. Selling to few wealthy domestic investors: benefits and problems
    • benefits: no foreign domination, new managers with good business attitudes
    • problems: may not be entrepreneirial, may lack export contacts, might not have enough money
  11. Voucher system: benefits and problems
    • benefits: more widespread ownership, less domination by an old elite, more fair
    • problems: old style managers have not been replaced
Card Set
Econ Test 2 Part 4
Econ Test 2 Part 4