Political Economy of Transition

This book addresses the policy questions around the challenge of transforming eastern European economies from their planned, administrative past to vibrant market-based entities.
The "annus mirabilis" in the eastern part of Europe inaugurated an unprecedented movement toward society-wide changes throughout the communist world. These were partly based on widely held ambitions for pluralistic democracy and market-based resource allocation. This book addresses the policy questions around the challenge of transforming these economies from their planned, administrative past to vibrant market-based entities. Initially, the broad range of analysts and policy makers advocated a predominantly neoclassical approach. They viewed the task of transformation as consisting primarily of stabilization, privatization and liberalization rather than the construction of markets supported by all of the institutions required to function well. By disregarding the "initial conditions" or the legacies of over 40 years of state-socialist policies throughout society, their critical importance for path-dependent transformation was largely ignored. Joseph van Brabant considers in turn, the wider set of challenges facing these economies - stabilization, privatization, liberalization, institution building, and developing and maintaining the sociopolitical consensus - before examining the