What is involved in the transition to the market economy?

Transition to the market economy from the Command economy requires regulations of legal, economic and political institutions and a significant period for implementation. One of the most important changes is that government industries must be transferred to private ownership and prices must be set by the market. At the same time, important financial system modifications must be made to ensure that financial companies can obtain private companies trying to involve new projects that can raise funds. New forms of business must be introduced and laws must be adopted to regulate new relationships with customers. New foreign investment laws must be adopted in order for the country to open up foreign investments, and customs regulations and tariffs may require modernization. New commercial laws must be presented to regulate business operations and the introduction of private property protection. A new judicial system and training for lawyers must be introduced to ensure that private enterprises can PRto install your contracts. The transition to the market economy requires that the new accounting and law of the company introduce the concept of liability to shareholders and outline the responsibilities of directors.

The banking system will have to be adjusted to ensure that it is focused on the task of evaluating private business projects and taking decisions on private companies. Very often, there will be an inheritance of unfulfilled loans by government industry and will need to make a decision on how to deal with them. Banks will have to cope with the concept of investment in risk capital and investment in risking in start -up businesses. When switching to the market economy, tbanks may have to adapt to the mentality of customer services and learn how to deal with small companies and entrepreneurs.

The tax system must be modified to move towards the idea of ​​taxation of income and profits of private people and SPOlečnosti. The transition to a market economy may require introduction of new business taxes such as sales or value tax. Foreign trade must be facilitated by amendment to customs and regulations, including shifting to reduce the barriers of tariffs and quotas for foreign goods. It is necessary to introduce laws on investment protection to support foreign investment and protect investors from appropriation of assets or nationalization. With regard to investment and taxation, new international contracts with business partners may be negotiated and the countries may have to join international organizations such as the World Trade Organization (WTO) and the World Customs Organization (WCO).