As you know, there are two basic models of the economy: the command and market.Command (planned) economy is characterized by direct state regulation of economic processes, as is typical for the market to minimize regulatory intervention in the economic activity of residents.The intermediate space is occupied countries in transition.We'll talk about them in this article.
countries with economies in transition - the ones that are currently in the way of the planned mode of farming to market.In fact, it states of the former Soviet Union, who after the collapse of the chosen market model.Therefore, all countries of the former Soviet Union, except, perhaps, Belarus - a country in transition economies.They are characterized by the acceleration of economic development after a period of crisis planning system (in fact, because of the inability of the government to plan the entire economic life of the state, and there was a disintegration of the Union), the creation and development of new businesses, improve living standards, wage levels, the elimination of commoditydeficit and so on.The economy becomes more open, both inside and outside - which means that as entrepreneurs, residents receive a greater degree of freedom in creating and developing their own businesses and foreigners have an opportunity to invest their available funds in facilities and companies in the country.
Generally, countries with economies in transition attracted attention from foreign entities wishing to perform so-called direct investments in the economy of these countries.The reason for the increased interest is the possibility of more lucrative capital investment, which can be explained by the laws of supply and demand.Capital - is the same resource as raw materials and labor force, which means that there exists a market, and its price is the rate of return on investment.Of course, in the capital markets of developed countries there are already some of its surplus, which means that its yield is very low (for example, can serve the interest rates in foreign banks rarely exceeds 3-4 per cent per annum).At the same time, the economy in the countries in transition there is a substantial lack of capital and, therefore, the rate of profitability of investment projects there will be significantly higher.
characteristic of countries with economies in transition, and includes some of the negative traits: rapid social stratification, in which the difference between the incomes of the rich and the poor is hundreds of times.Moreover, there is political and social instability, a high probability of conflict, increasing crime and others.Also worth noting is that the countries with economies in transition may be characterized by imperfect and unstable system of national legislation that may be difficult to perceive foreign investors who prefer more stable countries with a lower rate of return.
main tasks of the government's transition should be:
In the social sphere - equality and stability, to minimize the potential for conflicts in the social soil, caring for vulnerable segments of the population (pensions, scholarships, unemployment benefits);
In the economic sphere - increasing the investment attractiveness of the state, bringing the legislative system (including in the field of taxation) in line with international standards, the protection of foreign investors against changes in legislation and the tax system for a long period.
