The Microeconomics of Transformation and Growth

This groundbreaking book discusses the significance of a microeconomic approach to the transformation process in Eastern Europe from a theoretical and empirical perspective. It reveals that microeconomic conditions constitute the framework for the successful restructuring and recovery of the post-socialist countries in Europe. The analysis of transformation cannot be fully conducted on a macroeconomic level alone. Successful progress needs a change of individual behaviour and so microeconomic analyses are required. The authors illustrate this argument with the use of case studies from firms and industries throughout Eastern Europe. They demonstrate that modern microeconomics goes far beyond the neoclassical approach in analysing the transformation process. They adopt realistic assumptions and insights from institutional and evolutionary economics to explain the need for and the rise of new institutions during the period of transformation. In conclusion, they argue that the new state has to play a strong role in shaping and generating the institutions necessary to help overcome the transformation crisis. The Microeconomics of Transformation and Growth will prove invaluable to students and scholars of transition studies, institutional economics and evolutionary economics.