ABSTRACT
In this chapter we outline the starting point for socialist countries embarking on transition from plan to market. The chapter identifies a number of initial conditions that reflect the circumstances of these countries at the outset of transition. Differences in these inherited conditions are examined with a view to later explaining differences in cross-country performance during transition. Was it the case that countries with the most adverse initial conditions were indeed the same cohort of countries that were the worst performers? Other explanatory variables, such as reforms and external factors, are also identified. The chapter ends with a summary of the main quantitative studies examining the impact of initial conditions on performance, and the interrelationship between initial conditions, policy reforms and economic outcomes.
