Slow and Steady Wins the Race? An Appraisal of Ten Years of Economic Transition

Historically unprecedented transition from a central planned to a market economy during the last decade took different forms and produced different outcomes across former socialist countries of Central and Eastern Europe and of the Commonwealth of Independent States. The Optimal Speed of Transition (OST) models elaborated over the 1990s to explain the process of transition provide a fruitful frame of mind. However, they leave unanswered important features of the reform process, such as the persistent output fall of some former Soviet Union countries. In fact, the OST literature adheres to the emphasis of the Washington Consensus on neglecting initial conditions across countries and the role of institutions in the well functioning of market economies.