Are the Transition Economies Still in Transition?

Abstract: Thirty years ago, most observers thought that the transition from a planned to a market economy would be a long process. Instead, the changes occurred very quickly and the transition countries do not look all that different than many emerging market economies. In the first part of the paper we discuss whether transition was truly special. In the second part, we look at the characteristics of the transition economies. Our data shows that they have similar economic structures and share many similar economic and political problems as other countries at similar income levels. We found only one area where transition stands out as different. The financial sectors of the transition economies are smaller and less well functioning than those in other countries. Forthcoming in Handbook of Comparative Economics, ed. by Elodie Douarin and Oleh Havrylyshyn, Palgrave. Pre-publication paper available from author pwachtel@stern.nyu.edu