Post-communist countries offer new evidence on the relative importance of courts and relationships in enforcing contracts. Belief in the effectiveness of courts has a significant positive effect on the level of trust shown in new relationships between firms and their customers. Well-functioning courts also encourage entrepreneurs to try out new suppliers. A major role of the courts is to support the development of new relationships. While relationships can sustain existing interactions, workable courts help new interactions to start and develop.

Abstract not found

The capitalist and socialist societies of the 20 th century assigned firms different roles within their economic systems. Enterprises transforming from socialist to market economies thus face fundamental organizational restructuring. Many former state-owned firms in the transition economies of Central and Eastern Europe have failed at this task. These firms have pursued primarily defensive downsizing, rather than strategic restructuring, as a result of both internal and external constraints on restructuring strategies. Building on the organizational learning and resource-based theories, we analyze strategies available to management in privatized, former state-owned enterprises in transition economies to restructure their organization. Both internal forces promoting or inhibiting the restructuring process, and external constraints arising in the transition context are examined. A model and testable propositions are developed that explain post-privatization performance. Implications of our research point to the ways in which firms should manage and develop their resource base to transform to competitive enterprises.

Michael Bruno Martin Ravallion Lyn Squire From Plan to Market: Patterns of Transition Martha de Melo Cevdet Denizer Alan Gelb Housing Finance in Transition Economies: The Early Years in Eastern Europe and the Former Soviet Union Bertrand M. Renaud Liquidity, Banks, and Markets: Effects of Financial Development on Banks and the Maturity of Financial Claims Douglas W. Diamond WPS1567 Population Growth, Factor Accumulation, and Productivity Lant Pritchett Determinants of Diarrheal Disease in Jakarta Anna Alberini Gunnar S. Eskeland Alan Krupnick Gordon McGranahan WPS1569 Improving Water Resource Management in Bangladesh Rashid Faruqee Yusuf A. Choudhry Janua1996 N. Cueliar 37892 39065 E. Khine 37471 F. Hatab 35835 P. Sader 33902 84768 R. Garner 37670 S. Fallon 38009 C. Bemardo 37699 C. Anbiah 81275 Traps of Slow Transition TRAPS OF SLOW TRANSITION Microeconomic traps- mainly the danger of systemic vacuum in regulatory se

This paper examines the elements of institutional development critical to the enhancement of company performance in transition economies. This includes initial conditions, forms of privatization, institutional frameworks and the competitiveness of markets. Comparing empirical evidence, the paper concludes that there is a clear distinction in effectiveness of policies followed and their impact between Central Europe and CIS countries. This divergence is attributed to fundamentally different political attitudes toward reform, the need of CIS governments to gain political support for reform and as a consequence of the desire of Central European countries to join

The transition from plan to market has hinged on the development of a dynamic private sector that would serve as the engine of growth and employment creation. This paper examines the link between the availability of skilled workers and the creation of new private firms. Using a dynamic search model, it shows how the lack of skilled workers inhibits entrepreneurship and depresses the rate of firm creation, slowing the recovery of aggregate output and labor productivity during the transition. The paper also shows how policies designed to encourage skill acquisition by workers have a positive impact on the economy.

This paper reports new and unique firm-level survey evidence to investigate the microeconomic nature of the growth process and structural change in three transition countries,

The paper is based on the findings of a research project which aimed to identify the critical barriers to small business growth and development in Slovenia. The key barriers identified in the research included factors linked to the institutional environment including bureaucracy, and to external financial constraints including the high cost of capital. Internal organisation and resource issues, and social support through local development coalitions were found to be less important. The research was based upon a sample survey of small firms in Slovenia, and on an econometric analysis of the sources of firms ' growth. This provided evidence that firms ' growth was negatively linked to firms ' size, and that growth was reduced by the presence of institutional and financial barriers. On the other hand employee benefits such as severance pay were positively linked to growth. The paper provides a possible explanation for this unexpected finding and discusses the policy implications. Address for correspondence:

Empirical evidence, especially in case studies, shows that individual leaders often have a crucial role in successful enterprise transformation in transition economies. Conventional economic analysis alone cannot explain this role of leadership. In this paper we use coordination games to analyse transitions from one Nash-equilibrium to another. We argue that the creation of common knowledge among stakeholders by a leader allows firms to overcome coordination failures. This is crucial for enterprise transformation because of the multiplicity of stakeholders who need to coordinate their action to implement radical organizational change.

How do economic reforms affect resource reallocation processes and their contributions to productivity growth? This paper studies the consequences of enterprise privatization and liberalization of product markets, labor markets, and imports in the former Soviet Republics of Russia and Ukraine. Analyzing interfirm reallocation of output, labor, capital, and an input index with annual industrial census data from 1985 to 2001, we find that Soviet Russia displayed low reallocation rates that bore little relationship to relative labor and multifactor productivity across firms. Since reforms began, resource flows have increased in both countries, and their contributions to aggregate productivity growth have become substantial both through increased flows from less productive to more productive continuing firms and through higher exits of less productive entities – i.e., through creative destruction. Among the policy-relevant factors that may explain firm-level variation, privatization is estimated to have positive effects on productivity-enhancing reallocation, but there is less evidence of such effects from domestic product market competition, labor market competition, or import