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A quarterly magazine of the IMF
  June 1999
Volume 36, Number 2
Transition: Achievements and Challenges

A Decade of Transition: An Overview of the Achievements and Challenges
Saleh M. Nsouli
To take stock of the accomplishments of the transition economies over the past 10 years and identify the challenges ahead, in February 1999 the IMF organized a conference for high-level officials from transition countries, academics, and staff members of international organizations. This article highlights the key issues discussed at the conference, some of which are explored further in the articles that follow.

Lessons of the Russian Crisis for Transition Economies
Yegor Gaidar
Soft budget constraints and weak administrative controls brought Russia to the brink of hyperinflation. The lesson is to disinflate rapidly and to impose hard budget constraints quickly.

Taming Inflation in the Transition Economies
Carlo Cottarelli and Peter Doyle
Between 1992 and 1997, most of the transition countries succeeded in getting inflation under control without evident cost in terms of lost output. An understanding of the factors behind their success could not only shed light on the transition process but also yield lessons for other countries seeking to tame inflation.

Determinants of Growth in Transition Countries
Oleh Havrylyshyn and Thomas Wolf
Perhaps the most useful criterion for assessing success in the transition is the sustainable recovery of output, which can be achieved only by controlling inflation and liberalizing markets.

Time to Rethink Privatization in Transition Economies?
John Nellis
Privatization has won the day in transition countries . . . or has it? Where have privatization efforts—particularly those in Central and Eastern Europe and the former Soviet Union—succeeded, where have they failed, and how can these countries best pursue further privatization?

Transition and the Changing Role of Government
Vito Tanzi
Over the past decade, many centrally planned economies have set out to transform themselves into market economies. To be successful, they need to develop the necessary institutions and ensure a proper role for government.

Escape Routes from Post-Soviet Inflation and Recession
Michael Kaser
The 12 CIS countries inherited from the Soviet system strong inflationary pressures and distorted prices. By 1998, most had greatly moderated inflation. In the wake of the Russian crisis, how can they now secure economic growth without prejudicing the gains that have been made?

Financial Markets

The Asian Crisis: Causes and Remedies
Bijan B. Aghevli
Until their sudden fall from grace in 1997, the countries hit hard by Asia's financial crisis—Indonesia, Korea, Malaysia, and Thailand—had been widely admired for their economic achievements and much favored by foreign investors. What happened, and is there a prescription for reducing the risk of future crises?

Developing and Transition Countries Confront Financial Globalization
Malcolm Knight
In recent years, many developing and transition countries have become more closely integrated into the global financial system. But to benefit fully from their growing access to international financing, they need to strengthen their financial systems.

Developing Indicators to Provide Early Warnings of Banking Crises
Brenda Gonz�lez-Hermosillo
Bank failures and banking system crises can have very painful effects. Developing basic indicators that provide early warnings of incipient banking crises, therefore, is an essential step in improving countries' abilities to manage their financial sectors and their economies.

The Challenge of Predicting Economic Crises
Sunil Sharma
As financial systems around the globe become increasingly integrated, policymakers have less time to respond to swiftly moving developments. Is it possible to develop early warning signals to help them anticipate incipient problems in currency markets and banking systems?

Other Topics

The Euro and Latin America
Dorte Verner
The introduction of the euro will affect foreign exchange and financial markets and economic activities around the world. What risks and opportunities does the euro represent for Latin America and the Caribbean?

How Extensive Is the Brain Drain?
William J. Carrington and Enrica Detragiache
How extensive is the "brain drain," and which countries and regions are most strongly affected by it? This article estimates the extent of migration, by level of education, from developing countries to the United States and other OECD countries.


Letter from the Editor

Book Reviews

Older & Wiser: The Economics of Public Pensions by Lawrence Thompson and Public Policy Toward Pensions edited by Sylvester J. Schieber and John B. Shoven—Peter S. Heller

De la d�pendance � l'interd�pendance: Mondialisation et marginalisation—une chance pour l'Afrique? by Yves Ekou� Ama�zo—Philippe Beaugrand

Money and the Nation State: The Financial Revolution, Government, and the World Monetary System edited by Kevin Dowd and Richard Timberlake—Omotunde E.G. Johnson

The Wealth of the World and the Poverty of Nations by Daniel Cohen—Sara Kane

Unintended Consequences: The Impact of Factor Endowments, Culture, and Politics on Long-Run Economic Performance by Deepak Lal—Ian S. McDonald

Kapitalizm: Russia's Struggle to Free Its Economy by Rose Brady—Jorge M�rquez-Ruarte

Letters to the Editor