ABSTRACT
This chapter discusses the transitions of Poland and Russia and explores the reasons for the divergent performance of these two economies. Poland was the first of the Central and Eastern European nations to begin the process of transition from socialism to capitalism. By 1947 Poland's democratic system had been dismantled and Soviet-style Communism was firmly in place. Macroeconomic performance in Poland was typical of socialist nations. Poland has also made progress toward liberalizing its trade institutions and promoting foreign investment. Political democratic institutions have progressed quite rapidly in Poland. The Russian transition has been very different and more problematic than Poland's. From 1547 to 1917, Russia was a feudal agricultural economy ruled by a hereditary line of czars. Czars granted land to the gentry, who then gave the czar financial support. Public finance has probably been the single largest macroeconomic problem for Russia during the transition.
