ABSTRACT
The economics of transition, dealing with economic equilibria in moving from one economic order into another, is not a well trodden path. Transformation attempts in Eastern Europe so far failed because of inadequate forecasting techniques and planning ahead, lack of a comprehensive approach and inappropriate policies resulting therefrom. Economic forecasting and planning is a difficult proposition during transition periods. The conventional macroeconomic forecasting based on econometric techniques or input-output analysis fails, because many parameters assumed fixed, change drastically during transformation. An unconventional type forecasting and planning methodology is developed herein for transforming a socialist economy to market led economy. This methodology allows immediate transition into an open free market system. The methodology while ensuring immediate transformation of socialist economies into free market system, allows orderly transition and maintenance of producing units and plants which could survive and rehabilitated. Privatization and private entrepreneurship are important and essential for moving the socialist economies to the free market system.
