This volume reviews the experience of 25 non-Asian transition economies 10 years into their transformation to market economies. The volume is based on an IMF conference held in February 1999 in Washington, D.C., to take stock of the achievements and the challenges of transition in the context of three questions: How far has transition progressed ineach country? What factors explain the differences in the progress made? And what remains to be done?


  • Foreword

  • Horst Köhler

  • Acknowledgments

  • 1. A Decade of Transition

    • Oleh Havrylyshyn and Saleh M. Nsouli

  • 2. Opening Address

    • Michel Camdessus

  • 3. Disinflation in Transition—1993–97

    • Carlo Cottarelli and Peter Doyle

  • 4. Growth in Transition Countries, 1990–98: The Main Lessons

    • Oleh Havrylyshyn and Thomas Wolf

  • 5. Inflation and Growth in Transition: Are the Asian Economies Different?

    • Sanjay Kalra and Torsten Sløk

  • 6. Lessons of the Russian Crisis for Transition Economies

    • Yegor Gaidar

  • 7. Time to Rethink Privatization in Transition Economies?

    • John Nellis

  • 8. Banking Sector Reform in Central and Eastern Europe

    • Lajos Bokros

  • 9. Challenges for the Next Decade of Transition

    • Nicholas Stern

  • 10. Institutions and the Underground Economy

    • Simon Johnson and Daniel Kaufmann

  • 11. Transition and the Changing Role of Government

    • Vito Tanzi and George Tsibouris

  • 12. Inequality During the Transition: Why Did It Increase?

    • Branko Milanovic

  • 13. Concluding Remarks

    • Shigemitsu Sugisaki

  • List of Participants


A decade of experience in the transformation of former centrally planned economies to market-oriented economies has produced important lessons. To identify the lessons from the experience of 25 non-Asian transition countries, the IMF held a conference, “A Decade of Transition: Achievements and Challenges,” on February 1–3, 1999, in Washington, D.C. The conference brought together senior government officials, staff from the European Bank for Reconstruction and Development, the IMF, the World Bank, and academics to answer three questions: How far has the transition progressed in different countries? What factors explain the differences in progress and in economic performance? And what remains to be done?

The contributions in this volume cover a broad range of issues relevant to transition: financial stabilization, growth recovery, privatization, banking reform, income inequality, and the changing role of government. The conference discussions raised at least as many questions as they answered. The discussions, and the papers in this volume, provide some answers to the three questions posed above. First, transition countries have made substantial progress in financial stabilization, but progress with structural reforms and institutional development has been distinctly greater in Central Europe and the Baltics than in countries farther to the east. Second, although financial stabilization is essential for renewed economic growth, it is not enough: structural reforms and the development of market institutions must also be sufficiently advanced. Third, while in the next phase of transition the consolidation of stabilization will need to continue, the emphasis will need to shift to several other tasks: carrying through the unfinished structural agenda (especially in lagging countries), accelerating institutional development, addressing egregious cases of income inequality, and dealing firmly with corruption and the growth of vested interests.

I believe that this volume will contribute to deepening the understanding of the challenges still facing the transition economies and the policies needed to address them. The tasks that remain are great, re quiring continued determined effort by the countries concerned.

Horst Köhler

Managing Director


Many people contributed to the success of the conference, A Decade of Transition: Achievements and Challenges, and to the ensuing book. We wish to express our appreciation to all the conference participants whose presentations and interventions made for a lively discussion, and to the authors of a comprehensive and insightful set of papers that appear in this volume. We are grateful to the three organizing departments, the European I and II Departments and the IMF Institute, and in particular to their Directors, Michael Deppler, Mohsin S. Khan, and John Odling-Smee, for their encouragement and support. Further, we want to thank Deirdre Clark, Gabriele Monnett, and Chris Withee of the Administrative Division of the IMF Institute for their valuable assistance in organizing the conference, as well as Joan Campayne of the European II Department, who contributed tirelessly from the inception stage to the final preparation of this volume. We also want to thank Farah Ebrahimi, who, along with Mike Treadway, edited the volume and saw it through production; Frank Welffens, for editorial assistance; and Marie Therese Culp for her thoroughness and hard work in preparing the final manuscript.