ABSTRACT
Much of the current literature on transitional economies discusses the order and speed of liberalization and transformation. But I would claim that a precondition for doing any empirical analysis of the order of events in the transition, or the speed at which it should be pushed forward, is the ability to measure changes in efficiency and productivity. Aggregate analysis fails to provide consistent measures of national performance, with the difficulties arising from two main areas. Firstly, real differences exist in the method of compiling national accounting data between the CEE countries and those in the West. And secondly, distorted prices and exchange rates, and the inherent political accounting biases, such as the ambiguous incentives of those reporting directly from the firm, make it difficult to construct consistent values at an aggregate level.
