«Liberalization, Stabilization and Growth»

1. Across the transition economies, extensive liberalization and determined stabilization have both been vital for improving economic performance.

2. Liberalization involves freeing prices, trade and entry from state controls.

3. Stabilization means reducing inflation and containing domestic and external imbalances.

4. They are essential first steps, they can achieve a great deal even when other key features of an effective market are lacking.

5. Liberalization is important, as it decentralizes production and trading decisions to enterprises and households.

6. It exposes firms to customer demand, the profit motive and competition.

7. When goods and services are traded freely, the price mechanism matches demand and supply.

8. Creating markets is an investment in a more dynamic system of economic coordination that fosters long-run productivity and output growth.

9. Liberalization, by depoliticizing resource allocation, helps governments cut subsidies to firms and thus facilitates economic stabilization.

10. Stabilization policy is vital for transition, because macroeconomic imbalance denies countries the gains of market reforms.

11. It is evident, that high inflation obscures relative price incentives and creates uncertainty, inhibiting saving and investment.

12. Price stabilization always complements liberalization as a basis for growth, which is also impossible without containing inflation at moderate levels.

Questions for Discussion:

1. What have been vital for improving economic performance across the transition economies?

2. What does liberalization involve?

3. What does stabilization involve?

4. Why is liberalization important?

5. When does the price mechanism match demand and supply?

6. Why is stabilization policy vital?

7. What is price stabilization impossible without?

Topic №8 «Retailers and Wholesalers»

1. All the firms can be grouped into «wholesalers» and «retailers».

2. A retailer is a tradesman who sells by retail.

3. Wholesalers are intermediaries between producers and retailers.

4. The main functions of wholesalers are «breaking bulk», warehousing, delivery and the provision of credit.

5. «Breaking bulk» means buying in large packages and selling in smaller ones.

6. So, the wholesaler buys goods in bulk from producers.

7. He sells them in small quantities to retailers.

8. In doing so he helps production.

9. He relives manufacturers and retailers of the risk of a fall in demand, e. g. fashion changes.

10. The holding of stocks is in itself a valuable economic function.

11. It evens out prices.

12. The prices may change as a result in temporary changes in demand and supply.

Questions for Discussion:

1. Who is a retailer?

2. Who are wholesalers?

3. What are the main functions of wholesales?

4. What does breaking bulk mean?

5. How does a wholesaler help production?

6. What is a valuable economic function? What does it do?

7. Why can the prices change?