The Yugopluralist Model
In contrast to reform in COMECON (Council for Mutual Economic Assistance) nations, policy changes in the former Yugoslavia were initiated at the local level. This resulted in an economic model unique to Yugoslavia, and a function of its pluralism. Dana (1994d) explains how the Yugopluralist model was a result of a week central government and the cultural heterogeneity of its constituent republics.
Members of the federation gained substantial autonomy as decentralization of the federal system nabled each one to implement change at its own pace; culture was thus an important determinant of difference in economy policy which in turn contributed to the regional disparity. The PerseritJe Model Reform in Albania was even more radical than in the USSR and COMECON countries. In 1986, there were only forty automobiles in Albania; there neither bananas nor Coca-Cola in this country with imports were few.
Yet, once the nation moved away from Enver Hox ideology and embarked on its PereritJe Model of Transition, the Brea Woods institutions considered Albania to be one of the most successful transitional conomies in Europe. The PerseritJe Model is analyzed in de in Dana (1996a; 2000b). Top down Reform Model While reform in the former Yugopluralist was initiated at the local level and subsequently caused changes at the federal level, the top-down reform model illustrates reform by decree, from the top levels, of government, down to the people. Several governments declared the change from a centrally planned economy to one driven by market forces.
The German Democratic Republic followed the top-down reform model when transforming itself into a market economy and merged into the German Federal republic. Dana (1994c) notes that while this model causes rapid reform, side-effects include a variety of economic problems during a period of transition. Thousands of East German enterprises could not survive without the subsidies to which they had been addicted. Unemployment in east Germany skyrocketed immediately from almost nil in June 1990 to 200,000 following economic unification in July and possibly over 2,000,000 after political unification.
Furthermore the top-down reform model does not take into account the social conditioning intrinsic to the former system. A consequence of being conditioned to having to wait o be told what to do during four decades of centralized planning, the East Germans were not used to taking risks. Although new ventures would eventually, translate into profits, it took time for former planners to stop thinking they are there to give orders, and for everybody else to stop waiting for the orders in order to obey them.
The East Germans did not benefit from opportunities to the fullest extent, due to (1) a lack of practice at identifying opportunities; (2) uncertainty about how to pursue opportunities; and (3) aversion to risk and unfamiliarity with entrepreneurial ehavior The Bazaar Model The Bazaar is a social and cultural system, a way of life and a generation of commercial activity, which has been in existence for millennia. In bazaar, economic relationships. In this scenario, consumers do the necessary seek the lower price or the best quality.
An individual gives business to another with whom a relationship has been established to ensure, to ensure that this person will reciprocate. Reciprocal preferential treatment reduces transaction costs. The multiplicity of small- scale transactions in the bazaar, results in a fractionalization of risks and therefore of rofit margins, the complex balance of credit relationships is carefully managed as described by (Greertz 1963) Prices in the bazaar are negotiated, as opposed to being specified to the seller.
In contrast to the firm-type sector, in which the principle competitive stress is between sellers, the sliding price system of the bazaar results in the primary competitive stress being between buyer and seller (Parsons & Smelzer, 1956). The lack of information results in an imperfect market and with few exceptions, such as basic food staples, retail prices not indicated; rather, these are determined by negotiations.