ABSTRACT
Since the beginning of the dramatic recent wave of economic reforms in 1989, it was difficult to have a rational economic argument about the specific role which industrial policy can play in the current context of the transformation in Eastern Europe. The notion of industrial policy was too highly charged with associations of past planning experiences in communist countries; hence it was seen as anathema to any transition towards a Western-style market economy. In this atmosphere it was overlooked that industrial policies form an integral part of the set of policy instruments used by Western economies and that, more recently, economic theory has developed rigorous foundations for such policies. They also featured prominently in the experiences of countries which embarked upon successful catching-up processes. 1
