ABSTRACT

This chapter describes briefly the traditional view with reference to countries in transition. It shows the shortcomings of this view with reference to developing countries. The chapter sketches a framework which may provide a basis for an improved consideration of these new insights through the incorporation of new theoretical approaches. Although the transformation of the former socialist economies has key unique features, a number of similarities can nevertheless be drawn between developing and transforming countries. Transformation itself can also be regarded as a principal agents problem, not only between individual voters and the government, but also between the government and its administration. The chapter aims to open up a more comprehensive perspective on the transition process in the post-socialist countries. The starting point has been the argument that normative economics leads to a rather rigid recommendation for the transformation process.