Abstract
Since the fall of the Berlin Wall nearly a decade ago, the former centrally planned economies of Central and Eastern Europe and the Baltics, Russia, and other former Soviet Union countries have made major strides in moving toward market-based economies. Initially, this historic transformation was accompanied by considerable price and output instability. In many countries, stabilization programs supported by the IMF and the World Bank helped contain this instability and bolstered the momentum for structural reforms. Yet by 1998, only countries in Central Europe had achieved sustained growth and recovery from the recession that followed the transition. And even in that region, Albania, Bulgaria, and Romania suffered setbacks during 1996–97. The crisis that beset Russia in 1998 not only exacerbated the recession in the region, it highlighted the key challenge of transition: achieving sustained economic growth.
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