Issue 1: April - June 2000

The transition to a market economy should be seen as an instrument of long-term development strategy and not as a goal in itself, according to a new book, From Shock to Therapy: the Political Economy of Postsocialist Transformation, from the World Institute for Development Economics Research of the UN University in Helsinki (UNU/WIDER).

Author Grzegorz W. Kolodko, Poland's former finance minister and deputy prime minister, argues that ongoing change only makes sense if productivity eventually grows and competitiveness and efficiency advance so that the standard of living – including the quality of consumption, of social capital and of the natural environment – is bound to rise.

"The experience of the first decade of transition shows clearly that the major difficulties occur not because of a lack of the theoretical knowledge required to tackle the issues, but because of the inability of governments to carry out sound policies based on this knowledge," says Professor Kolodko. "What seems to be necessary from the economic viewpoint often turns out to be impossible from the political perspective. This is the core contradiction and the nightmare facing policymakers involved in the transition."

From Shock to Therapy is available from the publisher Oxford University Press.

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