Property Rights, Institutions, and Market Reform

Abstract

The debate on the appropriate role of the state in the transformation from socialism to a democratic and market-based society has three major facets. The first concerns the desirable endpoint of the transformation process, i.e. the role which should finally be assigned to the state in the new economic and political order that an ex-socialist country is trying to establish. The second facet concerns the possible role that a competent, determined and powerful government could and should play to ease the pains of transformation. The third facet transcends narrow economic theory; it focuses on the question whether and to what extent policy recommendations should be different for countries that, for the time being, have weak governments with largely incompetent bureaucracies.