Bruno Dallago

The Organisational and Productive Impact of the Economic System. The Case of SMEs

The paper explains how the economic system determines the role and features of SMEs in a competitive environment. The economic system is defined as the co-ordinated set of institutions and structures that are economically relevant. As such, the economic system defines the way in which economic actors react to economic variables by adapting and acting and the way in which they interact.In particular, the fundamental features of the economic system contribute to determine what actors can and find profitable to do, i.e. determine the level and configuration of non purely material costs and the features of markets. The economic system also determines incentives to economic actors by defining property rights and their enforcement and the nature of contracts. This in turn influences investment and consumption decisions, the supply of resources, and the production and utilisation of information and knowledge. Finally, the economic system determines the type and features of actors, what actors do and how they do by defining the possibility and profitability of specific human and organisational investment.Based on these functions and given material technology, the economic system defines advantages and disadvantages of different organisational forms. Given capabilities and features of individuals and organisations, that cannot be easily changed in the short run, advantages and disadvantages determine the organisational form that is most efficient in any given context. Finally and considering network externalities and strategic complementarities, such an organisational form determines the organisational configuration as a stable configuration including features, weight and role of particular economic actors, the relation among actors of similar or different size and with governments. In the paper I consider the case of small and medium-size enterprises.

SME policy and competitiveness in Hungary

SMEs in Hungary account for 99.9% of all enterprises and since 1989 have been the only net makers of employment. However, results have been modest compared to the amount of resources poured into the sector. In spite of bright spots, the context is problematic and SMEs features are often unfavourable and hardly competitive. In recent years, the goal of upgrading and strengthening SMEs has acquired central position among policy goals and activity. Although progress has been made, the results are weak, and in some cases, drawbacks have happened. The paper starts from analysing the SMEs situation, reviews the main features of the recently implemented policy strategies, assesses whether these strategies are appropriate to address the situation, including the effects of the domestic and international crises, and considers whether the targets pursued are realistic and important, and the instruments considered in line with the targets.

Some Reflections on Privatization as a Means to Transform the Economic System: The Western Experience

The transformation of socio—economic systems is the outcome of complex changes in institutions and economic and non—economic variables. Transformation can take place in different ways (cf. Wagener 1993), provided that changes in various areas are mutually compatible, that other elements of the socioeconomic system adapt, and that barriers to change are overcome.

THE PROGRESSIVE RIFT OF THE EUROZONE: RISKS AND REMEDIES

Due to rigid rules, incomplete institutions and concentration on short-run fiscal discipline, economic and institutional diversity and insufficient reforms caused the progressive segmentation of the Eurozone. Insufficient integration process is due to lack of trust among member countries and the need to keep a hard budget constraint of national budgets to avoid uncontrolled inflationary pressure and moral hazard. Although understandable in the short run, this situation is causing serious economic and social costs and damages to the development of vulnerable countries. The paper enquires possible solutions to this dangerous stalemate, that could also provide useful suggestions for other countries.

Diverging Paths of Entrepreneurship in Transition Countries: A Comparative View

The concluding chapter considers the findings of the book at the light of academic studies and research of entrepreneurship and looks at what explains the evolution of entrepreneurship in transition countries. The chapter stresses that there are still differences between these countries, even those integrated in the European Union (EU), and the most developed countries of Western Europe and North America. Differences are of economic, political and social nature and, increasingly so, also in geostrategic sense. These differences apparently justify that the need for, the role of and the features of entrepreneurship in transition countries may be different compared to what we are used to see and consider in mature economic contexts. This is so for different reasons: the context that globalization brought about; the need to contribute to the success of transition; the peculiar origin of entrepreneurship and entrepreneurs and their evolution in the process of transition first and consolidation of the new market context then; the similarities and differences among Central and Easter Europe (CEE) and the Commonwealth of Independent States (CIS) countries in a comparative perspective. The chapter looks at the relevant literature and properly places the contributions presented in the book.

Puzzles in Local Development and Transformation in South East Europe

The overall economic aim of transformation in South East Europe (SEE) over the last 20 years has been to support sustained economic growth. This required states to ensure conditions for the pursuit of freedom and the creation of innovating institutions, organizations and structures. Local development should have played a central role in this, on its own merit and in consideration of the centralized nature of the pre-transformation economic system.