The Dangers of Restructuring Economies with ’Cheap Money’
No. 2 2003 April/June
Vladimir Mau

Dr. Sc. (Economics), Prof., Director, Russian Academy of the National Economy and Public Administration under the President of the Russian Federation. Moscow, Russia (2002–2023)

After Kananaskis

During the latest G-8 summit in Kananaskis, Canada, its
participants stressed their commitment to aid the world’s poorest
countries. Russia, which is recovering from a systemic financial
crisis, is now one of the donors, rather than an aid recipient.

The world’s richest nations have their own specific reasons for
providing aid. One is their desire to ’buy’ political stability and
political allies. Another possible reason is the need to confront
the guilt complex which the rich and content nations often
experience with respect to the poor (nations are hardly different
in this respect from individuals). In both cases, the expected
effectiveness of the financial aid has little to do with actual
improvements in the poverty-ridden areas. The richest nations, as a
rule, fail to properly understand the logic which motivates the aid
recipients, as they tend to apply their own logic to the behavior
of others.

In this frame of reference, Russia’s position is unique. This
country, which itself required financial and technical aid not long
ago, and still receives rather substantial volumes of technical
assistance, now must bear a share of the responsibility for the
sustainable development of the poorest parts of the world. But
Russia’s unique position as both an aid recipient and a provider
gives it the right to scrutinize the overall effectiveness of
financial aid. Lessons learned through the administration of
financial aid in general, and those learned by Russia during the
past decade, can be valuable for discovering better solutions to
assisting nations in the future.

In this article, we will consider the general approaches to
evaluating foreign assistance, as well as the particular experience
of rendering aid to the post-Communist nations during the past
10-15 years. Incidentally, when we speak of aid in this article, we
will be referring to both subsidized credits, as well as the
various sorts of gratuitous (technical, financial, humanitarian)

Hopes And Doubts

The expedience and effectiveness of providing financial aid to
the poor and underdeveloped nations by developed countries has been
an issue of fierce debate for at least half a century. Five major
historical phases are the highlights of the financial aid efforts.
During the post-World War II years, particular focus was given to
restoring the Western European nations devastated by the war, and
that was accomplished through the framework of the Marshall Plan.
Later, as decolonization was gaining momentum in the 1950s-1960s,
aid donors increasingly focused their efforts on combating poverty
and, where possible, narrowing the gap between the poor and rich
nations. In the 1980s, they helped a number of developing and
medium-developed countries (primarily in Latin America) to overcome
the effects of macroeconomic and debt crises. The 1990s was a
decade of energetic efforts aimed at promoting the economic
transformation in the former Communist nations of Eastern Europe
and the Soviet Union. Now, the need to provide assistance to the
world’s poorest countries and regions is on the agenda once

Naturally, the years mentioned above were just the beginning of
those transitional phases, as the goals were not fully accomplished
during those periods; in this sense, efforts to render aid to
various nations occasionally coincided in time. Furthermore, in
certain cases, various types of assistance are provided to one and
the same nation. For example, in Latin America, problems related to
a macroeconomic crisis and poverty in general had to be addressed
simultaneously. Post-Communist economic transformation also
required addressing a range of macroeconomic stabilization issues
which were in many respects similar to those in Latin America.

In my opinion, reliance on foreign aid was to a great extent
predetermined by the success of the Marshall Plan [1]. The rapid post-World War II development of the
recipients of U.S. aid, which transformed them into effective
market-based democracies, generated numerous attempts to replicate
this success in other regions of the world. But as it inevitably
occurs in economics, numerous unforeseeable circumstances made such
models impossible to successfully replicate.

The Marshall Plan’s success, combined with an accelerated
industrialization in the Soviet Union, gave the impression that
poor nations needed only to receive capital which they obviously
lacked. This investment in certain priority sectors (“national
pride industries” – metallurgy, machine-building, etc.) was
believed to be necessary before their economic growth could start
at an unprecedented pace. The economic growth would, in turn,
permit real democracy to establish itself. This approach was
widespread in the 1950s, when prominent economists (many of them
affiliated with the World Bank) focused on building development
strategies for countries in the process of becoming emancipated
from colonial dependence. In particular, the proponents of breaking
the “vicious circle of poverty” included Paul Samuelson, Gunnar
Myrdal and Paul Baran. Samuelson provided a classical definition of
the problem: backward countries “cannot get their heads above water
because their production is so low that they can spare nothing for
capital formation by which the standard of living could be raised.”
[2] Many economists believed that those problems
could be resolved through the formation of a centralized planning
and regulation system, although not as all-embracing as the system
in Communist countries [3]. They proposed
providing ample financial resources for investment in the recipient
countries in order to promote their economic growth. Naturally, the
effectiveness of foreign aid increased if the recipient country had
a clear-cut state development plan. “The impact of foreign aid on
the recipient country cannot be properly assessed out of the
context of a development plan,” [4] Michal
Kalecki wrote, and his thesis seemed indisputable at the time.

Later it became clear, however, that the success of the
technical aid provided under the Marshall Plan was not due to mere
planning [5]. The Marshall Plan had two important
and interrelated features which could not be replicated in the

First, the donor and the recipients were countries which
possessed approximately the same levels of socio-economic and
cultural development. True, the United States was by far richer
than postwar Europe at the time, but as a result of the war
European nations were poor as opposed to socio-economic (systemic)

Second, for resuming the economic growth these nations lacked
only one thing – capital, while all other prerequisites
(institutions of market-based democracy, manpower resources, etc.)
were available. As soon as they received this missing element their
rapid and steady growth began. This growth was equally successful
in countries which looked totally different: Germany, with its
Ordnungliberalism, and Italy which was still going through
one government crisis and corruption scandal after another. But it
was the high level of socio-economic development and solid
political institutions which ensured the effectiveness of foreign
aid in these countries.

Unfortunately, the efficiency of the aid left much to be desired
in many other cases. The disparity between the institutional
systems of the donors and recipients prevented the donors from
fully comprehending the essence of the problem of poverty and
underdevelopment, while the recipients were unable to use the aid
properly. Underdeveloped nations were given money for various kinds
of programs: food procurement, investment in heavy industries,
education, birth control, structural reform, debt write-off, and
macroeconomic stabilization. With rare exceptions, much of this
money was wasted [6].

The lack of any tangible success of the financial aid programs
strengthened the position of the critics. Peter Bauer [7] was among the first and most consistent critics of
aid with ’cheap money.’ “Economic achievements depend primarily on
people’s abilities and attitudes and also on their social and
political institutions. Differences in these determinants or
factors largely explain differences in levels of economic
achievements and rates of material progress,” [8]
he wrote.

The following is a list of the causes for the mostly negative
record of aid provision to the underdeveloped nations.

First, ’cheap money’ leads to the emergence of a “vicious circle
of destimulation” (as opposed to the “vicious circle of poverty”).
When there is immediate access to ’cheap money,’ the recipient
country sacrifices its inherent motivation to develop internal,
long-term growth factors, which are, most importantly, the
appropriate political and economic institutions. On the one hand,
those factors become less important from the point of view of the
government’s short-term interests. On the other hand, the
government, busy seeking foreign aid, simply has no time for
addressing long-term growth problems. As a result, aid-seeking
becomes similar to rent-seeking and has similar negative long-term
effects. That is, an increase in the scope of foreign aid may
possibly aggravate the economic situation in the recipient

Second, ’cheap money’ is simply too big a temptation for the
government authorities, and this actually leads to corruption. This
is especially perilous as financial assistance is usually provided
to underdeveloped nations with underdeveloped democratic
institutions which are beyond public control.

Third, the inflow of financial resources provokes an
overvaluation of the national currency, thus reducing the national
economy’s competitive edge. This is what makes financial aid
different from the inflow of investment in production – the latter
leads to higher labor productivity which offsets growth in the
national currency’s real exchange rate.

The above three factors imply the conclusion that foreign aid is
akin to an overabundance of natural resources which, as the 20th
century has clearly demonstrated, may exist as a serious negative
factor which impedes steady economic growth.

Fourth, aid donors pay little attention to whether the recipient
country and its institutions are prepared to adequately use that
aid. This aspect was underscored by William Easterly in his “people
respond to incentives” formula [9]. Ineffective
use of financial aid (especially provided through loans) leads to a
constant reproduction and aggravation of the debt burden. The
situation emerges where “foreign aid is necessary to enable
underdeveloped countries to service the subsidized loans… under
earlier foreign aid agreements.” [10]

Fifth, when donor countries consider allocating money, they are
strongly influenced by political factors (such as the recipient’s
significance for their strategic interests) rather than economic
factors. This approach is partly justified, as the strengthening
and development of democratic regimes is as important as economic
growth. But political incentives may prompt the donor to support
friendly authoritarian governments, which is much less justified
from the point of view of the recipient country’s strategic
interests. In this case, the recipient may lose out strategically
as it receives more foreign aid: suffice it to recall the
developments in Kenya in the 1960s-1980s and in Turkey during the
past decade.

Sixth, organizations authorized to deal with financial aid
issues are not neutral agents – they have interests of their own.
This is primarily true with regard to the International Monetary
Fund and the World Bank. These powerful bureaucratic structures
have their own development interests and their own judgments
concerning the effectiveness of their activities, which very
occasionally do not coincide with the real interests of both donors
and recipients. This also strains decision-making concerning
financial aid and influences the efficiency of resources allocation

To sum up, effective aid is only possible if there are
attractive incentives for both parties. The need to take account of
a given country’s political and institutional readiness for
accepting foreign financial aid is admitted in official World Bank
documents – one World Bank report stated, rather ironically, that
recommendations by most technical aid experts, as a rule, proceeded
from the following assumption: “Good advisers and technical experts
would formulate good policies, which good governments would then
implement for the good of society.” [12]

Lessons Of Post-Communist Development

The collapse of Communism brought foreign aid problems and
related institutions to the foreground. In the 1990s, Central and
East European nations of the former Soviet Union became a kind of
proving ground for the activities of the various international
organizations and individual Western nations; they sought to help
them assail the Communist heritage and take the path of sustainable
economic growth. In my opinion, the lessons of the past 15 years
have produced new evidence confirming that ’cheap money’ allocated
by developed nations and international financial institutions is
inefficient. At the same time, the new experience allows refining
and spelling out more clear conclusions and recommendations for the
future [13].

First of all, the lessons have fully confirmed that the need for
democratic institutions is far more important for a successful
reform than the availability of any financial aid. When building a
relevant statistical model, it is obvious that foreign aid only
plays a marginal role, provided there is a steady reformist
government. A reformist government should not necessarily stand for
an unchangeable cabinet: the ruling party may be replaced, but it
is of paramount importance that the incumbent ruling party and the
opposition share one system of basic values which is the formation
of market-based democratic institutions. In particular, this
conclusion proceeds from the experience of Poland, Hungary, the
Czech Republic and the Baltic states, where the rotation of
rightist and leftist cabinets has not led to changes of the overall
political course, whereas Romania and Bulgaria have provided
contrary examples.

The demand for market democracy institutions, however, does not
always remain stable. Support for a reformist government may be
rapidly replaced by the public discontent caused by painful
reforms, possibly resulting in a populist government coming to
power. Such a turn of events causes the pendulum to swing between
populism and stabilization, which may last for several decades, as
the turbulent experience in Latin America indicates. Such erratic
reforms were conducted in the 1990s in Russia and some other
post-Communist nations (such as Ukraine, Romania and Bulgaria). In
these circumstances, special importance is attached to the ’window
of opportunities’ – a period favorable for carrying out reform,
thus making impossible a return to the past. In such cases, foreign
aid acquires more importance – naturally, if it is provided at the
appropriate time.

The ’window of opportunities’ issue has been the focus of heated
debates in post-Communist countries between the reformists and
their critics: they disagree on the significance of this factor and
on whether or not it should be taken into account in economic
policies. Reformists engaged in practical activities view the
’window of opportunities’ as an important external factor and
advocate focusing efforts on the implementation of the maximum set
of reforms when political opportunities open up for that [14]. Their opponents (mostly reformers-theoreticians)
argue that this kind of policy is inconsistent, that it does not
always rely on the political will of the electorate and even
undermines the political base of reform, as a majority of the
population is unprepared to accept the ’reform package’ as a whole.
Consequently, they criticize the provision of foreign aid in the
’window of opportunities’ logic. Instead, they propose waiting for
a solid pro-reform coalition to emerge in the country, and only
then beginning cooperation with that particular government.

Statistical analysis which focuses on the impact of technical
aid on economic growth provides evidence in favor of the ’window of
opportunities’ thesis. According to our estimates, a concentration
of aid during the first two years of market-based restructuring is
particularly important for further economic development. By
contrast, we have failed to find any substantial correlation
between the volume of aid provided to a given country during the
first decade of reform and subsequent economic growth.

The importance of concentrating aid during the first two years
of reform can be logically explained. At the initial stage of
reform, when a reformist government is lifted into power (the first
post-Communist government), the opportunities are very high for
removing the primary causes of the grave crises. Moreover, the
ability to properly use the provided technical aid, together with
the availability of appropriate institutions, is not only a
precondition but also the result of reform. For instance, economic
liberalization and macroeconomic stabilization, which are more
effective when market economy institutions (primarily, private
property) are in place, themselves create important preconditions
for the development of those institutions. And vice versa:
privatization creates conditions for sounder solutions in the field
of macroeconomic stabilization.

On the other hand, the initial stage of reform, when price
controls are lifted and markets are beginning to open up, is
characterized by a low exchange rate of the national currency.
Therefore, the value of hard currency provided to a reformist
government is quite excessive, and even a relatively small amount
of aid can have substantial social and political effects. This
situation cannot continue for long; the actual rate of the national
currency starts growing rather fast, thereby substantially
increasing the price of reform. For example, during the first few
months of reform in Russia a monthly salary of $10-$15 was
considered good money, whereas two years later the size of a ’good
salary’ was approximately ten times higher. The steepest growth was
registered during the first six months from the day prices were
released. Accordingly, the real value of foreign aid rapidly
decreased thereafter.

This reasoning is quite in line with Marek Dabrowski’s view that
1993-1994 was too early for providing aid to Russia. He noted that
there needs to be a consensus on the principles of reform as a
precondition for aid to be efficient [15]. The
notions ’too early’ and ’too late’ are not absolutely contrary in
economic and political realities. The formation of a consensus
cannot be regarded as an external factor of reform. Readiness to
implement far-reaching reform initiatives depends on numerous
specific factors present in a particular country at a particular
time. At the start of 1992, Russian society’s readiness to accept
consistent, in-depth reform was higher than in 1993 and 1994.
Financial lenders should have taken this factor into account while
they were making decisions concerning financial aid allocation.

So, foreign aid should not be regarded exclusively as an
external factor of economic and political reform. Naturally,
financial aid is particularly effective when there is clear demand
for reform on the part of the country’s population and government,
but, politically, this assistance may prove the least significant
measure (reforms would have been implemented without that aid
anyway, although at a higher cost). On the contrary, if the
political situation is unstable, foreign aid may be a factor which
keeps the situation stabilized, while permitting the reform
initiatives to continue, however inconsistently. In this situation,
the effectiveness of foreign assistance is far less obvious for the
donors themselves, and is often subject to sharp criticism. But
even this support for a somewhat sporadic reform may eventually
allow for the stabilization of the situation.

Let us take a look at a correlation between the ’window of
opportunities’ in post-Communist Russia’s reform policy and foreign
aid. The situation is illustrated in Fig. 1. Critical moments can
be singled out, which allow estimating support for reform in the
country (as percent of the electorate or those polled): 1991 – the
vote for Boris Yeltsin as President of Russia; 1993 – the April
referendum, during which a majority voiced support for economic
reform; 1994 – the formation of the Duma elected in December 1993
(votes cast for democratic parties – Choice of Russia, the Russian
Democratic Reform Movement and Yabloko); 1995 – Duma elections
(votes for the Democratic Choice of Russia, Forward, Russia! and
smaller reformist groups); 1996 – presidential election (rightist
liberal blocks plus around 10 percent of Our Home is Russia); 1997
– Boris Nemtsov’s rating until the last quarter of the year (around
18 percent); 1999 – combined vote for the Union of Right Forces and

Fig. 1. Political conditions and foreign aid

It is rather obvious that fluctuations in the number of those
supporting economic reform have not influenced the final decisions
of the international financial institutions concerning Russian
financial aid distribution [16]. During the
first such ’window of opportunities’ (1992), and even during the
second (September-December 1993), foreign aid either did not arrive
in time or its amount was minimal (some analysts insist that the
impact of humanitarian aid was mixed, while in the opinion of
Anders Aslund, it was flatly negative). The only exception was the
so-called ’scared financing’ in the spring of 1996, when there were
serious fears that the Communists might win the presidential
election. Moreover, foreign aid peaked at a time when public
support for economic reform had plummeted.

One obvious lesson of the post-Communist development in general,
and Russia’s development in particular, is that humanitarian aid
played a negative role. Russia’s experience shows that in most
cases such aid is ineffective and even harmful for the recipient
country [17]. With rare exceptions (for example,
in the winter of 1991-1992), humanitarian aid has been an extra
source of corruption and has had a strong destabilizing effect on
the overall situation in the domestic markets. Shortages of
essential goods in countries at this level of socio-economic
development are not a natural phenomenon – they are caused by the
improper functioning of relevant institutions. Humanitarian aid
creates additional obstacles to the development of those
institutions and ’feeds’ those who regard humanitarian aid as a
profitable business.

Today, an increased number of analysts suggest that facilitating
conditions of trade with the developed nations for the economically
developing countries would be substantially more effective than
providing direct financial aid. Some economists mentioned this
opportunity back in the mid-1960s, including some traditionally
strong supporters of large-scale financial aid to third world
countries [18]. During the past few years, the
issue has become particularly topical in the context of
globalization processes as there is now the need to find new ways
to improve the situation in the poorest nations. The proponents of
this approach insist that a decision by the developed nations to
cease providing large-scale subsidies to their agricultural
sectors, while opening up their markets for imports from thirdworld
countries, could improve the economic situation in the poorer
nations at least as effectively as the provision of ’cheap money.’
This thesis is supported by surveys analyzing the relationship
between foreign economic activities and economic growth [19]. The record of post-Communist nations fully
confirms this conclusion. As is shown in a number of studies, the
successful implementation of reform strategies in Central and East
European countries, and their rapid development during the first
few years after the collapse of Communism, was to a great extent
due to the fact that these countries received early access to the
EU market [20]. Furthermore, excessive
protectionist policies pursued by the world’s most developed
nations (especially in the agricultural sector) have been one of
the primary factors contributing to the persistent economic
backwardness in other regions of the world. Therefore, losses
incurred as a result of particular EU member states barring Russian
goods from the European market cannot be offset by any financial
aid, even if that amount is very substantial.

Recognition of the predominance of the ’demand for reform’ over
foreign aid suggests another conclusion. Assistance with the
formation of political and economic institutions is a priority
objective of foreign aid. In conditions of profound structural
reform, the formation of institutions is more important than
investment in production, because the lack of an appropriate
institutional environment is the main obstacle to an inflow of
investment. In contrast, compulsory (state) investment is extremely
ineffective in the absence of the required infrastructure (first
and foremost, political and law enforcement institutions).

Naturally, respectable institutions cannot emerge overnight, and
at different reform stages the government gives priority to the
formation of different kinds of institutions. For example, during
the initial stages of post-Communist reform, the main priority was
the formation of institutions which would ensure macroeconomic
stability and, as was the case in Russia, guarantee that there
would be no return to Communism. This explains why particular
attention was paid at the time to a new constitution, budget and
banking legislation, and privatization. Only after those problems
were solved did it become possible to consider promoting the
development of financial markets, the reform of labor and social
legislation, and various kinds of tax and social innovations.

The role of institutional reconstruction, far from decreasing,
is growing as post-Communist reforms advance. New steps are no
longer as effective as price liberalization, stabilization or
privatization, yet their impact on the country’s development is
equally significant.

Demand for reform is not only more important than foreign aid.
Real demand for reform substantially increases the efficiency of
aid, whereas the reverse is only true in certain periods of reform
and within certain limits. Therefore, countries considering aid
allocation and aid priorities should be guided by the recipient’s
wishes and plans to attain specific goals. If the priorities and
plans coincide with the way the donor understands these issues, the
latter can decide to finance a given project. But imposing a
particular mode of behavior (policy) on the recipient nation almost
always proves ineffective.

1. Much has been written on
the Marshall Plan. Initially, it was regarded as a great success,
later doubts were expressed about its efficiency, but then it was
again brought into repute as a model to follow. In this article, we
do not intend to join in the discussion as enough time has passed
to objectively estimate its results as quite successful.

2. Samuelson P.A. Economics:
An Introductory Analysis. 2nd ed. New York: McGraw-Hill, 1951, p.

3. Myrdal G. An
International Economy: Problems and Prospects. New York: Harper,
1956, p. 201; Baran P.A. The Political Economy of Growth. New York:
Monthly Review Press, 1957, p. 261.

4. Kalecki M. Essays on
Developing Economies. Hassocks: The Harvester Press, 1976, p.

5. Equally, centralized
planning was not the real source of the fast industrialization in
the Soviet Union. The unprecedented violence with which the state
redistributed resources among economic sectors played a key role.
The Soviet industrialization could not have been carried out
without the pauperization and liquidation of peasantry and without
unpaid forced labor by millions of convicts at mammoth construction
sites. The five-year plans were only an outward form of the
country’s economic policy, but not its core or instrument.

6. William Easterly
described the World Bank’s financial aid projects as a total flop
in his book The Elusive Quest for Growth, Cambridge, Mass. and
London: The MIT Press, 2001. The sequence of ’cure-alls’ used is
seen from the chapter titles: “Aid for Investment,” “Investment Is
Not the Key for Growth,” “Education for What,” “Cash for Condoms,”
“Forgive Us Our Debts.”

7. Bauer P.T. Dissent on
Development. Cambridge, Mass.: Harvard University Press, 1972;
Bauer P.T. Reality and Rhetoric: Studies in the Economics of
Development. Cambridge, Mass.: Harvard University Press, 1984;
Bauer P. T. Western Subsidies and Eastern Reform // Dorn J.A.,
Hanke S.H.., Walters A.W. (eds.). The Revolution in Development
Economics. Washington, D.C.: CATO Institute, 1998.

8. Bauer P.T. Dissent on

9. Easterly W. The Elusive
Quest for Growth. Cambridge, Mass. and London: The MIT Press, 2001,
p. 141.

10. Bauer P.T. Dissent on
Development, p. 127.

11. Yegor Gaidar
highlighted this when he criticized leading Western nations for
having authorized international financial institutions to play the
key roles in organizing and coordinating aid to post-Communist
countries, for the “deliberately inadequate solution of shifting
the burden of responsibility to the IMF.” Gaidar’s conclusion is
clear: “The scale of problems brought to life by the disintegration
of a superpower, political in nature, were beyond the competence
and scope of the IMF” (Gaidar Y. The IMF and Russia. American
Economic Review, 1997, Vol. 87, No. 2, p. 14).

12. World Bank. World
Development Report 1997: The State in a Changing World. New York:
Oxford University Press for the World Bank, 1997, p. 1.

13. Below this article
will also be based on the analysis of statistics for 17
post-Communist nations, in which we measured quantitative impacts
of foreign aid on the resumption of economic growth (See: Mau V.,
Yanovsky K. Programs of Aid to Post-Communist Countries: Some
Approaches to the Estimation of Factors Having Influence on Its
Effectiveness. The report presented at a conference devoted to
technical aid to Russia and held by USAID and the Institute for the
Economy in Transition in December 2002.

14. On the ’window of
opportunities’ problem in Russian reform, see: Zhavoronkov S.V.,
Yanovsky K.E. Political Economy of the Reform: Mechanism of
Decision-Making at the Stages of Revolution and Stabilization. In:
Effectiveness of State Government in Russia. Moscow: Institute of
Law and Public Policy, 2002, pp. 124-136.

15. Dabrowski M. Western
Aid Conditionality and the Post-Communist Transition. CASE, No. 37,
April 1995, p. 17.

16. Data borrowed from the
report by the General Accounting Office, U.S.A., Nov. 2000, Foreign
Assistance. International Efforts to Aid Russia’s Transition Have
Had Mixed Results.

17. “Humanitarian aid
never justified,” Anders ‚ Aslund noted quite rightly. “The
agricultural ’aid’ went into the pockets of the old agricultural
establishment, but it was added to the state debt.” (‚Aslund A.
Building Capitalism. Cambridge: Cambridge University Press, 2002,
p. 423. See also: ‚ Aslund A. How Russia Became a Market Economy.
Washington, D.C.: Brookings Institution, 1995).

18. “Advisable form of aid
can be achieved… through multilateral schemes of trade promotion,
bilateral long-term export contracts on the basis of fully or
partly stable prices, as well as the so-called ’branch industrial
agreements.’ ’Aid through trade’ is thus a complement – although
not an alternative – to ’pure’ aid.” (Kalecki M. Essays…, p. 89).
This approach still sounds quite topical today, although certain
corrections need to be made in it, as in the 1950s-1960s there were
different ideas of stability and economists tended to exaggerate
the role of national economic plans in combating economic

19. See: Sachs J., Warner
A. Economic Reform and the Process of Global Integration. Brookings
Papers on Economic Activity, 1995, No. 1.

20. Aslund A., Warner A.
The EU Enlargement: Consequences for the CIS Countries. MIMEO.