The 'New Economy' and the Old Problems. Prospects for Fast Growth in Postsocialist Countries

Abstract

Structural reforms create a systemic foundation for the increase of microeconomic efficiency and hence faster growth. However, sustained economic expansion requires an appropriate development strategy and sound government policy to reinforce the market forces during postsocialist transformation. In this context, it is not enough to address the "old problems" related to the restructuring of the real economy and to the institutional reformsit is also necessary to exploit the opportunities offered by the "new economy". How much can this phenomenon contribute to sustained growth acceleration in postsocialist countries and their catching-up with developed economies? Can the advances of information technology and the increasing reliance on the Internet be a significant growth-stimulating factor in the face of persistent bottlenecks, poor "hard" infrastructure, scarce capital and immature institutions? What barriers can be overcome by entrepreneurship alone and where government must intervene through its educational, financial, industrial and trade policies? The "new economy" provides a fresh opportunity to enhance growth. However, to turn such prospect into reality, the postsocialist countries-unlike developed market economies-need not only aptly utilize the potential of e-business, but first raise efficiency of the "old economy", since these two "economies" are destined for a lengthy coexistence.