The Perspectives of Transition of Angolan Economy in the Light of Experience of Central and Eastern Europe Countries
Autor: mustgetout • September 17, 2016 • Essay • 3,035 Words (13 Pages) • 984 Views
The perspectives of transition of Angolan economy in the light of experience of Central and Eastern Europe countries
The events the occurred in the 20th century all around the globe has changed the world diametrically. The first and second world war had enormous influence on the development of involved countries. The period after the wars in some countries was the period of rebuilding, in some of them on the other hand, especially those influenced by communism, the system was slowing down the economy and development very significantly. When acquired full freedom, countries had to go through difficult periods of transition to catch up with democratic highly developed countries. The same process had to be done in Angola, Subsaharian country of Africa. The last civil war there ended in 2002 and with the turn to democratic system, the country had to boost its economy and implement a lot of changes. The wisest way to manage with such a difficult and complex process is to learn on others mistakes and try to use the best practices from others experience. There are a lot of factors that may make Angola one of the richest and the fastest developing countries in the world, but to achieve these goals, country has to take as much as possible from the experience of countries that went through long process of transition before – countries of Central and Eastern Europe.
The process of transition of the system means fundamental transformation of each essential element of the system and links between these elements in a way that allows to pursue objectives different from the preceding; transition is the transformation of the system that violates its paradigm (its base, the key terms). If this paradigm remains intact and only minor quantitative changes are made - then it regards reforms.
Every system has its own characteristics that differ it from others. The table below shows the comparison between characteristic features of system operating in Central and Eastern Europe in 1980s and the system that is operating in this region now.
POLITICAL AREA | SYSTEM FROM 1980s | MODERN SYSTEM |
Entities forming the system | Monopoly of the Communist Party, in the Soviet Union an absolute monopoly, in the countries of Central and Eastern Europe was apparent multi-party system (from a formal point of view), but the in reality monopoly of the Communist Party. There were various institutions subordinated to the party. | Multi-party system, a wide range of political parties. |
Aims | Strenghtening the communistic ideology. | Strengthening civic, political and democratic freedom. |
Principles of functioning of the system | Political centralism with the greatest importance of the Communist Party. | Parliamentary democracy, representation of the will of the citizens. |
The means to achieve the objectives | Direct coercion (extensive security apparatus, repressive - performing tasks independently from the social approach to the task) and indirect coercion (environments behaving properly from the point of view of the Communist Party received privileges, if they were not - "punished" for example, by the lack of privileges) | Elections are the means of pressure. |
ECONOMIC AREA | SYSTEM FROM 1980s | MODERN SYSTEM |
Entities forming the system | Domination (in some countries close to monopoly) of state-owned enterprises and state-owned economic institutions. The key feature of the system is state property. In the private sector a significant part of the services was a craft and (mostly in Poland) agriculture. In Soviet Union domination was close to a monopoly. It was a system impoverished in terms of market institutions (did not exist or existed in imperfect form, for example there was no stock exchange). Marketplaces were quasimarket institutions. | The basis of the system is private property, mainly institutions and private companies. State ownership is not eliminated, but pushed to the complementary role. Extensive market infrastructure. Changes triggered an explosion of entrepreneurship. |
Aims | Determined at the central level and accurately identified quantitatively and in terms of value. Central planner dictated almost everything what is to be made in the economy. The main objective was the implementation of the plans set by the planner. | The main objective of management is to achieve a profit. Specific economic tasks are formulated by the same operators that implement them, and the parameters of the operation of enterprises are created by state. |
Principles of functioning of the system | Central management of the economy. From the center were flowing injunctions, prohibitions, permits, licenses, concessions, and the other way – information about execution (these prohibitions and injunctions) by executive level - executive level is not a decision maker. State defined the full details of an economic activity, the tasks: quantitatively, qualitatively, in terms of value. State formulated at the same time their economic parameters according to the criteria of the balance sheet, not the effectiveness. The task was formulated to balance the economy, i.e. to achieve a specific structure and quantity of production to balance production and consumption (these plans failed in practice). Firstly, it was necessary to achieve these objectives, and then it was decided by what means, leading to wastage, increase in economic costs, the rising tension in the economy. | In contrast to the socialism, there are market principles of operation of the system. It does not mean that there is no place for the state, government policy, but the main principles are the market-based multiplying mechanisms. Market economy in the most part is self-regulating, the state has to take care so these market mechanisms are the most favorable for the state. |
The means to achieve the objectives | Central allocation of resources; occurred in two forms: as direct allocation (institutions and enterprises financed by the state budget) or indirect (budget left a portion of their income potential in companies, provided that they were spent on the implementation of the objectives planned by the center.) | Allocation of resources and funds is carried out using market mechanisms (market determines the allocation of resources), assuming that the majority of funds are at the disposal of the implementing institutions. In a market economy state measures exist, but they play only a complementary role. |
SOCIAL AREA | SYSTEM FROM 1980s | MODERN SYSTEM |
Entities forming the system | Sectors of society, all social institutions were controlled by the government or were assumed as state. Monopoly in the sphere of social institutions, the monopoly of state-society. The trade unions can’t be the part of state, but in this system were completely controlled by the state. | Pluralism, multiplicity, wealth, expansion of social institutions, such as private and public ones. |
Aims | In communist system social institutions were engaged more in political objectives than in those for which they were created. | From the assumption they pursue social objectives, there is the multiplicity of social aims and multiplicity of institutions. State only cares so the institutions and social goals wouldn’t undermine the safety and functioning of the state. |
Principles of functioning of the system | Centralism, actions formulated by the political headquarters. | Social institutions operate according to market needs, the market is specific to the needs of social institutions; they operate within the framework set by the law of legal norms, but they have a lot of freedom. |
The means to achieve the objectives | The measures came from the center, mostly a budget; part of the funds came from contributions, but without budget subsidies most institutions wouldn’t have a chance to keep up. | Some institutions are based on the resources from the state budget, but most of them are based on private funds. However, there cannot be a situation than the state does not take responsibility for the social institutions. Depletion of the state's role must have some limits, otherwise the state is too weak, it cannot develop. |
EDUCATIONAL AREA | SYSTEM FROM 1980s | MODERN SYSTEM |
Entities forming the system | The state had a monopoly in the field of education. Even among the various forms of training, private entities represented a small percent. | Mixed system, both state and private, growing importance of private institutions, state institutions often act as private (payment for studies). |
Aims | Education of socialist society. | The state creates a framework in which goals must be located. The economic development and success of reforms depend on the level of education of the society. |
Principles of functioning of the system | Determined by the state. | Beyond the framework constraints determined by the institutions. |
The means to achieve the objectives | Budgetary resources. | The importance and the scope of private funding is increasing, but it binds with danger: growing polarization of income, some social groups are not able to cover the cost of education, what can lead to underdevelopment. It is visible right now, about 1% of the students are from rural areas while this environment equals one third of society. |
The system of communist economy could function only under the following conditions:
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