The Transition According to Cambridge, Mass.

TLDR

The essays offer a high‑quality cross‑section of transition literature, yet the expectations derived from standard reform theories are frequently unmet. The paper reviews the NBER volume *The Transition in Eastern Europe*. The volume comprises 18 essays covering privatization, stabilization, fiscal policy, nascent private sector, bankruptcy, foreign trade, investment, and six studies focus on individual country performance. The authors find that the book’s stronger conclusions lack robust evidence, that two unemphasized conclusions emerge, and that the mismatch between expectations and outcomes can be attributed to the ahistorical nature of the theories.

Abstract

This paper reviews the NBER's The Transition in Eastern Europe. This book's 18 essays examine privatization, stabilization, fiscal policies, the nascent private sector, bankruptcy, foreign trade, and investment, etc. Individual country performance occupies six studies. These essays, which are of high quality, provide a cross-section of the literature on transition. However, the book's stronger conclusions are not supported by strong evidence. Two conclusions, unemphasized by contributors, emerge. Expectations, which reflect the theories used to design standard reforms, are often unfulfilled during reforms. A plausible explanation for the misplaced expectations is the ahistorical approach of those theories.