Ten Years Later: What is special about transition countries?

Most countries commonly classified as ‘in transition ’ are still recognisably different in several respects from other countries with a similar income per capita: a larger share of their work force is in industry, they use more energy, have a more extensive infrastructure and invest more in schooling. However, in terms of the ‘software ’ necessary for a market economy, two groups emerge: the countries that are candidates for EU membership seem to have partly completed the transition. By contrast, the countries from the former Soviet Union that form the CIS and the Balkan countries are still lagging behind, especially in terms of the enforcement of property rights and the development of financial markets. The economics of transition has become a sizeable cottage industry in the profession and there is even a special international financial institution, the EBRD, which is supposed to look after the special problems of countries in transition. Ten years after the start of reforms it is time to ask whether this special treatment is still justified