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Additional info for Economic Reforms in the Socialist World

Example text

The other 10 000 tons were directly allocated by central and provincial departments and designated for three centrally owned, ten provincial-owned and fourteen city-owned enterprises under sheng zhigong (provincial direct supply). 20 These latter materials were routed through the prefectural materials bureau, completely bypassing the city's material supply system. In this way, central and provincial plans passed through Shashi without interacting with the city plan (Shashi Materials Bureau, 1984, p.

At the same time, the enterprises are permitted to dismiss employees who violate the contract. (iii) To ensure the efficiency of management through competitive pressure on the market, new laws concerning the bankruptcy of enterprises have been enacted. They appear to follow the principle that 'those who have lost out in competition should be eliminated, no matter whether they are state-owned or collectively owned'. 17 Now we turn to some of the key problems of the new reform. (a) The first problem to be settled is how to delineate in clear-cut terms the scope of decentralisation of the decision-making power regarding prices.

According to one estimate, if prices of basic products alone were to rise at an average rate of 10 per cent a year, the cost of machinery and light industrial products would rise 4 to 5 per cent a year. 19 It is therefore to be expected that concern for the general price level will be an important restraint on the price reform. Theoretical and Practical Aspects 31 It seems to be the general perception of policy-makers and economists that two conditions, among others, must be satisfied to reduce the inflationary pressure of the price reform: the formation of a buyers' market and abolition of monopoly in the state sector.

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