Extending the economics of disorganization

Alan A. Bevan, Saul Estrin, Paul G. Hare, Jon Stern

    Research output: Contribution to journalArticle

    11 Citations (Scopus)

    Abstract

    Many of the states of the former Soviet Union have experienced a dramatic collapse of output during transition, which has not yet been reversed in a sustainable way. The economics of disorganization, proposed by Blanchard (1997) and tested empirically by Blanchard and Kremer (1997), reasons that this phenomenon can be explained by specificity of inputs and the breakdown of traditional domestic supply linkages. We replicate the Blanchard-Kremer study for Ukraine and Kazakhstan, and also find that longer and more complex domestic supply chains are associated with greater reductions in output. When we extend their analysis to incorporate measures of the complexity of the Commonwealth of Independent States (CIS) trade and non-CIS trade however, we find that complexity of non-CIS trade is the significant factor in explaining the output collapse. We therefore argue that the disintegration of the Council for Mutual Economic Assistance and the requirement of hard currency trade, are equally, if not more, significant in explaining the output declines experienced by Ukraine and Kazakhstan.

    Original languageEnglish
    Pages (from-to)105-114
    Number of pages10
    JournalEconomics of Transition
    Volume9
    Issue number1
    Publication statusPublished - 2001

    Keywords

    • Disorganization
    • Former Soviet Union
    • Output
    • Supply complexity

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  • Cite this

    Bevan, A. A., Estrin, S., Hare, P. G., & Stern, J. (2001). Extending the economics of disorganization. Economics of Transition, 9(1), 105-114.