Private and Financial Sector Development in Transition Economies: The Case of Macedonia
Posted: 18 May 2001
Large gaps have opened up between the transition countries in terms of the real income rises the have achieved since 1989. Since phases of hyperinflation are a thing of the past in nearly all of the reforming countries, and the private sector has established itself as the largest contributor to every country's gross domestic product, stabilization and privatization can largely be discounted as likely causes of the differences in economic performance. Macedonia, for instance, has rigorously implemented a set of conventional stabilization policies, but its growth performance is rather disappointing. An analysis of the development of its private sector and financial system shows that this can be traced to inadequate corporate governance. Hence, Macedonia can be regarded as an example which demonstrates that corporate governance arrangements play a key role in explaining the overall performance of the transition economies.
JEL Classification: E44, G21, G28, G30
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