The State and the Transformation of Economic Systems

Most Central and Eastern European countries (CEECs) did not properly recognize the role of the state in the transformation process, and so the conditions needed to realize an orderly and productive transformation were missing. They could not undertake political reform of the state before economic transformation. Their policies mostly disregarded the differences in political, social, and economic conditions, institutions, and their respective perspectives. This chapter purports to offer a classification of these differences and suggest how the role of the state should be adapted to these differences. Although it is desirable that the proper reform of the state precedes privatization and stabilization, the cases of some countries that confronted the economic transformation without the preceding political reform are also discussed. These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.