A further problem is connected with the unavoidable fragility and vulnerability of transition economies, especially when they are confronted with the growing and merciless requirements of a globalized environment. We quite innocently opened ourselves to the rest of the world and now we see trouble. The transition economies have very particular characteristics, particular propensities, to use the economic phrase, a propensity, especially, to higher inflation and to current account deficits, which are not compatible with fixed and stable exchange rates. 4 Transition economies have, at the same time, investment-savings imbalances. And therefore they need foreign capital to insure some sort of macroeconomic equilibrium.
Foreign capital wants fixed exchange rates and very easy outflow possibilities.
All of that does not exist simultaneously and will probably never exist. My experience tells me that the reconciliation of all these variables, economically speaking, cannot be masterminded beforehand. It must be enforced on the economy as a result of financial, economic, monetary instability or crisis, as it happened in many emerging economies and in many transition economies. Of course, then the political support disappears. Transition is a very complicated mixture of political, social, economic, and cultural aspects.