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Organized by National Bank of Croatia
Dubrovnik, June  8-9, 1995

The First Dubrovnik Conference On Transition Economies

In economics a five-year period is considered to be long enough for the macroeconomic stabilization and microeconomic structural changes to be activated. Five years have passed since the fall of the Berlin Wall. Not all of the former socialist countries launched comprehensive reform programs at the time of the Berlin Wall fall. By 1990 several countries already had had some experience in reforming socialist economies, while others joined "the club" only recently. Nevertheless, now it seems to be the right time to reflect on the results of transition programs and to draw lessons from the most successful (or the least successful) cases. The main objective for organizing this Conference is therefore to identify, if possible, common principles and regularities, as well as common mistakes, in the transition process. 

Conference papers include both general issues papers and country experience papers. The countries represented by the case studies are chosen in such a way so as to embrace both already extensively studied economies (such as Poland or Hungary), and economies about which not much is known but whose experiences could still be very useful to other economies in transition.

The Conference is organized by the National Bank of Croatia. Participants include senior officials from govetnments, central banks. The World Bank and the International Monetary Fund, as well as researchers from universities and institutes. The number of participants was limited to a relatively small number in order to facilitate a "think tank" atmosphere. The National Bank of Croatia intends to organize follow-up conferences every 2 or 3 years in Dubrovnik in order to contribute to a continuing study of the progress being made in transitional economies.

I would like to welcome you all in Dubrovnik. I am sure the beauty and cultural richness of this city provide a perfect environment for meeting with fellow economists and exchanging thoughts and ideas. I wish you all a successful Conference and hope that you will remember it with pleasure. 

Chairman of the Scientific and
Organizing Committees
Governor of the National Bank of Croatia
Pero Jurkovic



Scientific Committee

Organizing Committee

List of Participants

About the Book

The Book:
                  by Mario I. Blejer and Marko Skreb
   Publisher: Cambridge University Press, 1997

About the Editors

The Book Reviews


Mr. Pero Jurkovic - Chairman
National Bank of Croatia

Mr. Robert A. Mundell
Columbia University

Mr. Mario I. Blejer
International Monetary Fund

Mr. Marko Skreb
National Bank of Croatia


Mr. Pero Jurkovic - Chairman
National Bank of Croatia

Mr. Ivica Prga
Chief of Staff
National Bank of Croatia

Mr. Marko Skreb
Executive Director 
National Bank of Croatia

Ms. Lidija Pleadin - Secretary
National Bank of Croatia

Mr. Mario Kastrapeli
Sales Manager
Travel Agency "Atlas"


1. Mr. Zoran Anusic, Ministry of Finance, Zagreb, Croatia
  2. Mr. Mate Babic, University of Zagreb, Croatia
  3. Mr. Neven Barac, Dubrovacka banka, Dubrovnik, Croatia
  4. Mr. Ivo Bicanic, University of Zagreb, Croatia
  5. Ms. Gordana Bival, Institute for Advanced Studies, Vienna, Austria
  6. Mr. Mario I. Blejer, International Monetary Fund, Washington, USA
  7. Mr. Velimir Bole, Economic Institut of Law Faculty, Ljubljana, Slovenia
  8. Mr. Hernan Buchi Buc, Centro de Economia International, Santiago, Chile
  9. Mr. Eric Clifton, International Monetary Fund, Washington, USA
10. Mr. Michael Connolly, Columbia University, New York, USA
11. Mr. Thomas Dorsey, International Monetary Fund, Washington, USA
12. Mr. Adrian Fullani, Bank of Albania, Tirana, Albania
13. Mr. Ivan Gerovac, Privredna banka, Zagreb, Croatia
14. Mr. Oliver Gordon, The World Bank, Washington, USA
15. Mr. Ardo H. Hansson, Stocholm School of Economics, Stocholm, Sweden
16. Mr. Oleh Havrylyshyn, International Monetary Fund, Washington, USA
17. Mr. Pero Jurkovic, Governor, National Bank of Croatia, Zagreb, Croatia
18. Mr. Janos Kornai, Harvard University, Cambridge, USA
19. Mr. Ricardo Lago, European Bank for Reconstruction and Development, London UK
20. Mr. Franjo Lukovic, Zagrebacka banka, Zagreb, Croatia
21. Mr. Greorgy Marchenko, Central Bank of Kazakhstan, Almaty, Kazakhstan
22. Mr. Relja Martic, National Bank of Croatia, Zagreb, Croatia
23. Mr. Zlatko Matesa, Government of Croatia, Zagreb, Croatia
24. Ms. Martha de Melo, The World Bank, Washington, USA
25. Ms. Mia Mikic, University of Auckland, Auckland, New Zealand
26. Mr. Robert A. Mundell, Columbia University, New York, USA
27. Ms. Piroska M. Nagy, International Monetary Fund, Washington, USA
28. Mr. Tome Nenovski, National Bank of the Republic of Macedonia, Skoplje, Macedonia
29. Mr. Mario Nuti, London Business School, London, UK
30. Mr. Djuro Navro, Adviser to the President of Croatia, Zagreb, Croatia
31. Mr. Damir Odak, Trgovacka banka, Zagreb, Croatia
32. Mr. Gur Ofer, The Hebrew University, Jerusalem, Israel
33. Ms. Lidija Pleadin, National Bank of Croatia, Zagreb, Croatia
34. Mr. Bozo Prka, Ministry of Finance, Zagreb, Croatia
35. Mr. Einars Repse, Bank of Latvia, Riga, Latvia
36. Mr. Zdravko Rogic, National Bank of Croatia, Zagreb, Croatia
37. Mr. Zeljko Rohatinski, Economic Institute, Zagreb, Croatia
38. Mr. Massimo Russo, International Monetary Fund, Washington, USA
39. Mr. Mladen Stancic, Institute for Development and International Relations, Zagreb, Croatia
40. Mr. Borislav Skegro, Government of Croatia, Zagreb, Croatia
41. Mr. Marko Skreb, National Bank of Croatia, Zagreb, Croatia
42. Mr. Velimir Sonje, National Bank of Croatia, Zagreb, Croatia
43. Mr. Vito Tanzi, International Monetary Fund, Washington, USA
44. Mr. Imre Tarafas, National Bank of Croatia, Zagreb, Croatia
45. Mr. Nikica Valentic, Government of Croatia, Zagreb, Croatia
46. Ms. Ruzica Vuger, National Bank of Croatia, Zagreb, Croatia
47. Mr. Matthew Vogel, The World Bank, Washington, USA
48. Mr. Stanislaw Wellisz, Columbia University, New York, USA
49. Mr. Boris Zenic, Raiffeisenbank Austria d.d. Zagreb, Zagreb, Croatia

About the book

Most countries in Eastern Europe and the Baltics recorded healthy output growth in 1995 following a precipitous contraction during the early 1990s. Inflation in these countries fell sharply during 1994/95. A sharp deceleration in the pace of price increases was also recorded in many countries of the former Soviet Union, although the level of inflation in most of these countries remains substantial and, more importantly, output has still been declining. The emerging picture is one of renewed growth in countries that showed early determination to implement market-oriented reforms and stabilize their macroeconomy, and of gradual and slow stabilization of output in those countries that entered the process only recently.

The essays collected in this book study in detail both the analytical underpinning of this process – the overall relationships between stabilization, reforms, and growth – as well as the specific stabilization experience in a number of Eastern European and former Soviet Union countries. In addition, the volume discusses some of the central policy issues related to enterprise behavior in post socialist countries and looks at the longer-run dimensions of a successful transition.

                   by Mario I. Blejer and Marko Skreb


   1. Stabilization After Five Years of Reform: Issues and Experiences
            Mario I. Blejer and Marko Skreb


        2. From Plan to Market: Patterns of Transition
            Martha de Melo, Cevdet Denizer and Alan Gelb
The Great Contractions in Transition Economies
            Robert A. Mundell
Enterprise Credit and Stabilization in Transition Economies:
            Experience with Enterprise Isolation Programs
         Marcelo Selowsky and Matthew Vogel
Employeeism: Corporate Governance and Employee Share Ownership
            in Transitional Economies

            D. Mario Nuti


        1. Inflation and Stabilization in Poland, 1990-95
            Stanislav Wellisz
The Political Economy of the Hungarian Stabilization and Austerity Program
Janos Kornai
Preparation and Implementation of a Credible Stabilization Program
            in the Republic of Croatia
Nikica Valentic
Exchange Rate and Prices in a Stabilization Program: The Case of Croatia
Velimir Sonje and Marko Skreb
Stabilization in Slovenia: From High Inflation to Excessive Inflow of Foreign Capital
Velimir Bole
Macroeconomic Stabilization in the Baltic States
Ardo H. Hansson
Economic Reform in Ukraine
Oleh Havrylyshyn


1. Economic Transformation and the Policies for Long-Term Growth
            Vito Tanzi


Mario I. Blejer, International Monetary Fund
Marko Skreb
, National Bank of Croatia
Martha de Melo
, The World Bank
Cevdet Denizer, The World Bank
Alan Gelb, The World Bank
Robert A. Mundell, Columbia University
Marcelo Selowsky, The World Bank
Matthew Vogel, The World Bank
Mario Nuti, London Business School
Stanislaw Wellisz, Columbia University
Janos Kornai, Collegium Budapest and Harvard University
Nikica Valentic, Prime Minister of Croatia
Velimir Sonje, National Bank of Croatia
Velimir Bole, Economic Institut of Law Faculty
Ardo H. Hansson, Stocholm School of Economics
Oleh Havrylyshyn, International Monetary Fund
Vito Tanzi, International Monetary Fund
Pero Jurkovic, National Bank of Croatia

About the editors

Mario I. Blejer is senior advisor at the Monetary and Exchange Affairs Department of the International Monetary Fund and currently holds the Walter Rathenau Chair in Economics at the Hebrew University of Jerusalem. He began his career at the IMF in 1980, and during his tenure he has been involved in a wide range of issues, including work on the assessment of the effectiveness of Fund stabilization programs, financial policies, and economic reforms. He was chief of the Fund's Fiscal Studies Division and also worked as head of the Macroeconomic Division of the World Bank in the early 1990s. He was in charge of the preparation of the monetary and financial section of the Joint Study of the Soviet Economy, produced by the IMF together with the World Bank, the OECD, and the EBRD in 1990.
Mario I. Blejer took a B.A. and a M.A. from the Hebrew University of Jerusalem and received a Ph.D. in economics from the University of Chicago. He worked at the Center for Monetary Studies in Latin America (Mexico) and has taught at Boston University, New York University, and the Graduate Institute for International Studies in Geneva. He has Served as a consultant with the Inter-American Development Bank and currently maintains recurrent visiting professorial appointments at the Central European University in Budapest and at the Universidad de San Andres in Buenos Aires. He is currently member of board of editors of the European Journal of Political Economy.
His numerous articles have appeared in international journals including the American Economic Review, the Journal of Political Economy, the Review of Economics and Statistics, and others and have dealt with fiscal issues, trade and balance-of-payment problems, monetary economics, and economic stabilization and liberalization in Latin America and in economies in transition. He is the author of several books and has also coedited a large number books on fiscal policies, international macroeconomic issues, and economic and financial reforms. His most recent publications include The Making of Economic Reforms in Eastern Europe: Conversations with Leadine Reformers in Poland, Hungary and the Czech Republic (with F. Coricelli); Financial Factors in Economic Stabilization and Growth (with L. Leiderman et al.); The Macroeconomic Dimensions of Public Finance (with T. Ter-Minassian); Macroeconomic Stabilization in Transition Economies (with M. Škreb); and Financial Sector Transformation: Lessons from Transition Economies (with M. Škreb).

Marko Skreb received a B.A. (1980), an M.A. (1984), and a Ph.D. (1990) in economics from the Faculty of Economics at the University of Zagreb (Croatia).
He received a certificate from the Salzburg Seminar in American Studies (Austria) in August 1984 and a certificate from the Economics Institute (Boulder, Colonado) in August 1987 as a Fulbright fellow. Also as a Fulbright fellow, he spent academic year 1987 to 1988 at the Department of Economics at the University of Pittsburgh.
He started his professional work as planner at the Bureau of Planning of Croatia and continued it as assistant and then senior assistant at the Faculty of Economics, the Department of National Economy. From September 1991 to November 1992, he was assistant professor at the Department for Macroeconomics and Economic Policy.
He became director of the Croatian National Bank Research and Analysis Department in 1992, which has since expanded into the Research and Statistics Area.
He was appointed economic adviser to the President of the Republic of Croatia in 1995 and was appointed for a six-year term as governor of the Croatian National Bank in 1996, the youngest governor of the central monetary authority ever to be appointed in the new Croatian state. Since 1997, he also has been associate professor at the University of Zagreb.
In 1997, he was awarded Central European Annual Award for Excellence-Best Central Bank Governor and was proclaimed the Best Eastern European Banker by Euromoney Publications. He received the Order of Prince Branimir with Collar for his outstanding contributions to promoting the international position and reputation of the Republic of Croatia and the Order of the Croatian Morning Star with the Figure of Blaz Lorkovic for exceptional achievements in economy.
He is also the author of innumerable articles, books, and other publications and has been an active participant in a number of conferences, seminars, and workshops. His publications include "Croatia: An Insider's View of Transition," Sais Review 18(2) (Summer) (Summer-Fall, 1988); Macroeconomic Stabilization in Transition Economies (coedited with Mario I. Blejer, 1997); "A Paradox of Transition to a Market Economy: How Will the Role of the State Change?" (with Ivo Bicanic), in F.Targetti (ed.), Privatization in Europe: West and East European Experiences (1992); "Service Policy and Development," in S.Sharma (ed.), Development Policy (1992); "The Service Sector in East European Economies: What Role Can It Play in Future Development?" (with Ivo Bicanic), Communist Economies and Economic Transformation 3(2) (1991).

The book reviews

"This is the best overall book on post-communist economic transformation to date. It offers overwhelming evidence that radical economic reform provides the greatest economic welfare and the least social costs."         – Anders Aslund, Carnegie Endowment for International Peace

"The book edited by Blejer and Škreb is a wonderful primer on transition economies. Joining the forces of a crowd of distinguished economists, the book takes stock on the state of our knowledge on the topic. Carefully pointing at the differences between the seven countries under study, the book draws a common and convincing thread: Macroeconomic stabilization is a prerequisite to microeconomic successes."
Daniel Cohen, University of Paris (Pantheon-Sorbonne) and Co-director of the International Macroeconomic Programme, CEPR

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