Economic Transformation in the East: A Critical Appraisal of Its Development and Suggestions for a Possible Way Out

Abstract

The former socialist countries of Eastern Europe have been trying to adopt a system of capitalist market economy with a preponderance of private property. During the transformation process, lasting for more than three years, democratically elected parliaments and governments were installed and various policy steps — of varying intensity — were taken to move towards a market economy.

This chapter is based on a study, “Transformation from the Command to the Market System: what went wrong and what to do now?”, presenting the results of a research project undertaken by The Vienna Institute for Comparative Economic Studies (WIIW) from 1991. The project, under the supervision of Kazimierz Laski, WIIW Research Director, was carried out by the WIIW staff together with WIIW consultants Amit Bhaduri and Friedrich Levcik, as well as several outside experts. References to the fuller treatment in the relevant chapters of the project report (published as WIIW Working Paper no. 1, 1993) are given in brackets in the present chapter as “Laski 1993”. The authors and titles of auxiliary studies completed within the framework of the project are listed at the end of this chapter.

Professor of Economics, Consultant, The Vienna Institute for Comparative Economic Studies, Vienna.