D545 (1.5 credits)
EAST EUROPE and RUSSIA IN TRANSITION 1
4:00 - 5:30
Room BU 327

Papers/messages may be left in our mail trays in Suite BU 650.

1. Focus of the Course

Among the most important world events of our time are the demise of the communist political and centrally planned economic system in the former Soviet Union and Central and Eastern Europe (CEE) and the attempt by their successor states to become viable market economies. What happens in these countries in the years and decades ahead will shape the international economic and political environment. And the speedier their transition to a market economy, the more lucrative the business opportunities that will be created for firms and individuals in the U.S. and other Western countries.

The course offers a brief examination of how centrally planned economies operated and why they failed; why transition to a market economy is so difficult and how it is progressing in these countries; and discusses the practical experiences--the opportunities as well as the problems--of doing business in these economies.

There are close to 50 "transition economies" in the world today. The course will focus on Russia,on three Central European countries--Poland, the Czech Republic and Hungary--and the Baltic state of Estonia. Students who have a special interest in any of the other transition economies will be given the opportunity to prepare a brief paper on their countries of interest.

2. Course Objectives

(1) To provide a conceptual-historical framework for analyzing the past of what are called the "historically planned economies" (HPEs), that is, countries that had, or still have, a communist political and centrally planned economic system. The past experiences of the HPEs have left a series of important legacies that are shaping their current environments and prospects.

(2) The economic and business environments of the HPEs are no longer centrally planned but also not yet well-functioning market systems. Hence the label that they are "transition economies" (TREs). TREs have many common features but also significant country-specific differences. Both are important determinants of their business environments, creating special problems and opportunities for foreign traders and investors. An objective of the course is to identify such problems and opportunities and to discuss their practical implications for doing business with them.

(3) By learning about the difficulties of creating a market economy by design, we'll gain a new perspective on how the United States and other market economies have evolved and function today.

3. Prerequisites

There are no formal prerequisites. Business and/or area studies background, having taken D503 and/or D504, and/or having working or just living experiences in some transition economies, should be helpful but not essential.

4. Text and Reading Materials

Given the topics, the selective country coverage, and the rapid changes taking place in those nations, there is no single book that covers all the material comprehensively and in an up-to-date fashion. Approximately half of the material is covered in a just-published paperback, which we are using as a text: Murice Ernst, et al., Transforming the Core: Restructuring Industrial Enterprises in Russia and Central Europe (Boulder, CO: Westview Press, 1996).

Much of the remaining parts of the course are covered by a Reading Packet (RP) the instructors have compiled. A few of the longer readings will be on Business-SPEA Library Reserve. Additional handouts may be given in class.

5. Method

The course will use lectures, discussion, homeworks, brief research reports, case analyses, and a final exam. Students will be cold-called upon to contribute.

6. Homeworks

Homework assignments will be given approximately weekly, at least one week ahead.Homeworks should be typed, approximately one page in length. On four random occasions, the homeworks will be collected and evaluated; only the three best grades will count. (In case of absence, the homework may be turned in before the class.) Grading will be based on
(1) the answer integrating the reading assignments and, if appropriate, material covered during class;
(2) clarity with which the logic of the argument is stated;
(3) originality and style (including grammar and spelling) of presentation.

7. Brief Research Reports

Each participant will have a negotiated brief research assignment on which she/he should turn in an approximately three-to-five-page paper, typed and double spaced.2 (No page limit on attachments/appendices, if any.) The purpose of the brief research assignment is to give each participant an opportunity to delve a bit more deeply into an area of his/her special interest. Based on background and interest, the instructors will make individual recommendations for topics;suggestions by participants are also welcome. In choosing a topic, the main criteria are that the report should be related to the material covered in the course and that it should not duplicate work a participant has done or is doing in another course.

Grading will be based on (the three criteria will be approximately equally weighted):
(1) conciseness with which the assembled facts are stated (please avoid wordiness);
(2) clarity and validity of the logic that backs the arguments; and
(3) originality, style (including grammar and spelling) of presentation.

Most participants will be asked also to make a very brief presentation in class, either summarizing the key points of their research report, or on another agreed topic (for example, on some relevant personal experience). The key points should be presented with the aid of well-prepared overheads(enclosure). The elaboration of the key points should also be brief (typically, five minutes, unless otherwise agreed to in advance) and professional (enclosure), to be followed by a brief class discussion.

8. Final Exam

The final will be take-home. It will be given out 48 hours before it is due (date and time of the final is set by the MBA Office), with page limits and other instructions indicated. The essays or essay-type exercises will ask the participants to integrate aspects of the material covered in the course.

9. Grading

The grade will be determined as a composite, as follows:

The grades will be curved to reflect approximately the distribution recommended by the MBA program. Consequently, each assignment will be evaluated by indicating the points earned, not the grade:

10. Schedule of Tonics and Readings

[RP- refers to the numbered item in the Reading Packet]

Part I. Marx and Marxism; Brief History of Communism and Central Planning; Basic Features of the Traditional (Soviet-Type) CPE; Economic Reform Strategies & Experiences

 Part II. Transforming the CPE  

Part III. Doing Business in the TREs

1. First eight weeks of the semester. A follow-up 1.5 credit course, D546, meeting during the second eight weeks at the same time and in the same room, can be taken either as a research seminar course (typically but not necessarily enlarging on the brief research paper completed in D545) or as a tutorial course, China in Transition.

2. For those who are taking D546 as a seminar, the research report may be extended to into a longer research essay.

D546 (1.5 credits)
CHINA IN TRANSITION

OBJECTIVES: The broad objective is to examine why the former centrally planned economies generally and China specifically are attempting to transform themselves into viable market economies,how the transformation is progressing, and what are the implications for doing business with China and Hong Kong. The more specific objective is to learn how central planning operated in China; how it differed from the economic systems of the Soviet Union and those of the USSR's old allies in Central and Eastern Europe; how China has transformed its economic system between 1978 and 1995; in what ways the country is now at crossroads; what are the main plausible scenarios about the future of China's economic system; and the practical ways of doing business with that country. (There will be a brief review of developments in Vietnam also.) The third objective is to gain insights about developed market economies by noting the difficulties of transforming one type of economic system into a fundamentally different one,in contrast to allowing an economic system to evolve over along period of time.

TEXTBOOK: Reading packet compiled by instructor

GRADES: Based on homework assignments, case discussions,class
participation, and a final exam.

TERM PAPER: None