Transition Economy of Brazil Research Paper Example | Topics and Well Written Essays - 2250 words

Transition Economy of Brazil - Research Paper Example The success story of Hungary, Russia, Poland and China shows that former communist countries can create growth from the ruins and limitations of socialism. In Poland, a decentralized and comprehensive approach to the twin problems of bank and enterprise restructuring proved effective in transforming its economy and establishing the foundations for sustained economic growth. During the 1991-97 period, nonperforming loans declined and the number of creditworthy enterprises rose substantially. As for Russia, the largest post-communist transition economy of them all, it endeavored to establish strong fiscal and monetary controls as its bedrock of macroeconomic stability. These served as levers to check imbalances in public sector financing. Russia learned its lesson well from an earlier financial crisis when the unwieldy growth of soft loans skewed its market (Dunn, 2006). The non-collateralized loans had been liberally granted to state-owned enterprises that could not afford to pay them back. All the transition economies realized early the importance of privatization to dismantle the state monopolies that characterized the former communist countries. In Brazil, vital industries and services like oil, gas, telecommunications and postal service used to be under state monopolies. A series of constitutional amendments were taken up in 1995 and 1996 to do away with the distinctions in nationalized and foreign companies, thus effectively lifting the government stranglehold on these industries.