The State Reform: an Economic Perspective

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The state reform is one of the most important objectives for the authorities. If the political and administrative aspects of this reform are more often brought into discution, the transformation of the state’s economic role is not given the same amount of attention. The transition from a planned economy to a free market economy implies a complete transformation of the economic processes and institutions. In order to be functional, the free market economy needs another type of state than the communist one (“instrument of the proletarian dictatorship”). Thus, the free market economy needs a state that is able to protect the property, to enforce “the rules of the game”, to determine contract compliance, to promote the social objectives accepted by most of the citizens, to mobilize the resources needed for the public sector’s activity, to spend public funds in an efficient way and also to produce public goods. Moreover, the free market economy needs simple and clear regulations that won’t leave room for interpretations and arbitrariness. Unlike planned economy where the main rule is that nothing is permitted without an express approval, free market economy is based on the principle that if something is not forbidden then it is allowed.

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