Openness, Integration and Transition: Prospects and Policies for Economies in Transition

We survey different strategies in the transition process, and investigate their role in growth prospects. Openness, exchange rate regimes and approaches to trade and capital market liberalisation are examined. Their role in facilitating the diffusion of new products and processes to transition economies is discussed. Policies toward openness and integration have an effect on the ability of economies to attract capital inflows and foreign direct investment. Through these portals they affect trade and growth. Experience in the European transition economies, including East Germany, is examined, as are the Russian Federation and China, and comparisons are drawn. Domestic institutions and the phasing of liberalisation are seen to have a key role in the growth process. 1 The work discussed here has been financed by two European Union ACE grants, and especially by project number P97-8224-R and by the ESRC in the UK through its macro-programme grant to NIESR. The authors are grateful for the funding.