ABSTRACT
The aim of the transition process, independently of the model implemented, was first and foremost to increase social welfare in transition economies by the adoption of market relations. The problem of social choice in transition economies was to derive social preferences with regard to alternative models of transition based on the preferences of individuals, which required a minimum level of pluralism/democracy within the society or within the party. An optimal model of transition should minimize the cost of transition, on the assumption that the benefits of transition for all models equal the common minimum level of benefits, as a result of the establishment of a market economy. The cost of transition is the opportunity cost of implementing a model of transition. The cost of transition consisted of the Economic Cost, Political Cost and International Cost. International cost consisted of International Financial Aid Cost and Foreign Direct Investment Cost.
