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Richard Layard

Titles by This Author

The Alternatives


This sequel to Reform in Eastern Europe reports on one of the most pressing issues for countries with economies in transition and their neighbors. Focusing on the problem of East-West migration, the authors clearly delineate European free trade and capital flows as a means of raising productivity and increasing worker stability in the East and of reducing income gaps between countries.

The authors first outline the problem and recommend that Western Europe begin to admit primary migrants and that the U.S. increase its quotas for them. They then look at migration statistics from previous eras to take into account the long-run and short-run effects of migration in the U.S. and Europe. They conclude with a detailed discussion of "the best defense of all," economic progress, and lay out the necessary conditions for free trade, investment, and aid.


Pain and Progress

In their earlier report, Reform in Eastern Europe, the WIDER group assessed the main building blocks of a successful transition in Eastern Europe: stabilization, price liberalization, privatization, and restructuring. For the last three years this group of leading economists has been heavily involved in the reform process. In this new report, they take stock, returning to the original themes and assessing progress and prospects, particularly in Russia.Stabilization in the major Central European countries was done very much by the book. Russia, in contrast, is following a path of restructuring without stabilization. The authors discuss how far this alternative strategy is likely to get. Turning to privatization, they note that initial plans started from the assumption that the state owned the assets. As slow progress of those plans has painfully shown, this was the wrong assumption. They point out that assets have in fact many de facto claimants, from managers to workers to local authorities to ministries, and discuss how the current Russian privatization program starts and builds up from this more realistic assessment.In the face of a collapse of trade in Eastern Europe, triggered by reform in Central Europe and a similar collapse between republics following the breakup of the Soviet Union, the authors show how simple measures such as a payments union can be used to increase trade and output.Post-Communist Reform concludes with a look at restructuring in Poland. The authors focus on the behavior of the state, the growth of the private sector, the role of financial systems, and the coherence of overall government policy, ending on a note of cautious optimism.

How can the new governments of Eastern Europe succeed in moving from centrally planned to freemarket economies? This incisive report identifies the major policy choices to be made and discusses what will work and what will not.

Reform in Eastern Europe provides a comprehensive, accessible statement of reform policy that stands in the mainstream of modern Western economics. Based on their experience with stabilization policies in other countries, the authors show how Eastern Europe can reduce unemployment during the painful adjustment process, create effective and socially acceptable mechanisms to subject enterprises to market discipline, and replace barter trade under CMEA with market-based international trade.

Although conditions vary from country to country in Eastern Europe, Reform in Eastern Europe argues that all countries must seek stabilization and price liberalization, privatization, and then economic restructuring. It describes and evaluates the alternatives available to eliminate fiscal deficits, control money creation, and decontrol prices while blunting the immediate painful effects of lower wages, unemployment, and other disruptions.

The authors propose a plan for privatizing stateowned enterprises without placing them in the hands of those who accumulated wealth under the communist regimes. They recommend and detail methods for achieving orderly restructuring—in effect, closing most of the existing production structures and creating a whole new economy—covering issues of national saving, the creation of a financial intermediation system, the role of direct investment, labor allocation, and unemployment.

Titles by This Editor

Macroeconomic Papers from the Centre for European Policy Studies

Restoring Europe's Prosperity is the first annual produced by the Centre for European Policy Studies (CEPS), an independent research institution which focuses on the major medium- and long-term issues facing the European community and Western Europe both internally and internationally.

The most important economic problems of past years have concerned unemployment, economic growth, fiscal deficits, and the value of the US dollar. It is clear that past and present economic policies have not effectively addressed these problems. This CEPS annual selects the best work of the Centre's Macroeconomic Policy Group; a rotating group of distinguished economists who are studying macroeconomic conditions and trends, the implications of the economic policies being pursued, and possible alternative policies.

The breakup of the Soviet Union and the consequent extraordinary problems faced by Eastern European nations raise pressing economic questions. The case studies in this book examine significant parallels between the situation in Eastern Europe today and the issues facing Europe and Japan after World War II, offering insights on what kinds of policy actions will be most effective in this difficult period of reconstruction.

The essays address such topics as the relative roles of government and the market; economic openness; industrial conversion from war to peacetime production; the roles of institutions, enterprises, the business community, and their work staffs; and external control of policy measures, of resources made available by the outside world, and of the general external environment. In their introductory chapter, the editors provide an overview that addresses the question of whether reconstruction can ever be managed smoothly.

Rudiger Dornbusch is Professor of Economics at the Massachusetts Institute of Technology. Wilhelm Nolling is President of the Landeszentral Bank in Hamburg, Germany. Richard Layard is Professor of Economics at the London School of Economics.

Contents: Openness, Wage Restraint, and Macroeconomic Stability: West Germany's Road to Prosperity 1948-1959, H. Giersch, K. H. Paqué, M. Schmieding. The Lucky Miracle: Germany 1945-1951, H. Wolf. Inflation and Stabilization in Italy 1946-1951, M. De Cecco and F. Giavazzi. Economic Reconstruction in France 1945-1958, G. Saint-Paul. Reconstruction and the U.K. Postwar Welfare State: False Start and New Beginning, P. Minford. A Perspective on Postwar Reconstruction in Finland, J. Paunio. The Reconstruction and Stabilization of the Postwar Japanese Economy, K. Hamada and M. Kasuya. The Marshall Plan: History's Most Successful Structural Adjustment Program, J. B. De Long and B. Eichengreen. Lessons for Eastern Europe Today, 0. Blanchard, R. Portes, W. Nolling.