They feed off market
failures, market imbalances, arbitrage opportunities, shortages and
inefficiencies. Many post-Communist countries have either made the
provision of such services a part of their economic life or are about
to do so.
Free zones, off shore havens, off shore banking and transshipment ports
proliferate, from Macedonia to Archangelsk.
Aid Economies - Economies that derive most of their vitality from aid
granted them by donor countries, multilateral aid agencies and NGOs.
Many of the economies in transition belong to this class. Up to 15% of
their GDP is in the form of handouts, soft loans and technical
assistance. Rescheduling is another species of financial subsidy and
virtually all CEE countries have benefited from it. The dependence thus
formed can easily deteriorate into addiction. The economic players in
such economies engage mostly in lobbying and in political manoeuvring -
rather than in production.
Derivative or Satellite Economies - These are economies, which are
absolutely dependent upon or very closely correlated with other
economies. This is either because they conduct most of their trade with
these economies, or because they are a (marginal) member of a powerful
regional club (or aspire to become one), or because they are under the
economic (or geopolitical or military) umbrella of a regional power or
a superpower.
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