Introduction

Abstract

The transition process has been the major challenge for the Commonwealth of Independent States (CIS) and Central and Eastern European countries (CEECs) since the end of the 1980s (EBRD, 1999, 2000; CBRF, 1997, 1998, 2001). The process of transition and economic opening up is a complex one, whose goal is restructuring the economy and the establishment of a functioning market economy. According to SACHS (1996, p. 128) systemic transformation means: “…the institutional, legal, political and administrative change of the economic system from state-ownership and market allocation of resources.” The distorted economic systems of CIS and CEECs, inherited from socialist times has made transition no easy task (KRASNIKOVA, 2001; BRODSKII, 1998). Distortions in combination with transition relevant factors caused sharp output declines in both CIS and CEECs.