Author Description

The transition from socialism to capitalism in former socialist economiesis one of the main economic events of the twentieth century. Not only does it affectthe lives of approximately 1.65 billion people, but it is contributing to a shift inemphasis in economics from standard price and monetary theory to contracting and itsinstitutional environment. Economic research in transition shows not only thatinstitutions matter but also how their evolution toward higher efficiency depends oninitial conditions and on sustained political support.Unlike early policy literatureon transition economics, which focused on the so-called Washington consensus, thisbook provides an overview of current research, analyzing issues raised by transitionfor which economic theorists and policy makers had no ready answers. It shows howresearch on transition contributes to our understanding of capitalism as an economicsystem and of the dynamics of large-scale institutional change.The book is dividedinto three parts. The first part looks at how large-scale reforms are decideddynamically through the political process. The second part looks at the generalequilibrium and macroeconomic effects of liberalization in economies withoutpreexisting markets. The third part looks at the economic behavior of firms in thetransition from state to private ownership and compares the effects ofprivatization, restructuring, and financial reform. Although focused on transitioneconomics, the discussions are relevant to topics in political economics, development, public economics, corporate finance, and micro- andmacroeconomics.