ABSTRACT
This chapter argues that the extreme difficulties many countries have had in economic reform results from the fact that efficiency is a secondary or even tertiary goal. Modern regime transitions generate expectations for economic reforms. Post-communist countries confront the challenge of fundamental economic reconstruction from a central-planning system with almost total state ownership. The process of economic reform and stabilization has been tortuously slow in most countries. The fact that management can benefit from privatization of "people's" property may be objectionable on a distribution basis, but it is not necessarily detrimental to economic reform. Countries that seek drastic economic change typically face high levels of political resistance. The International Monetary Fund and the World Bank follow well-known prescriptions for economic recovery, stability, and growth. The scale of economic change affects transition costs, social dislocation, and the level of political resistance. It is also related to the difficulty in merging a domestic economy with the global economic system.
