Experiences of economic transition in complex contexts

This paper focuses on nonlinear properties of economic transformation and provides illustrations from nearly a decade of economic transition experience of the formerly planned economies. A particular argument is that policies that move a system along “the edge of chaos” may have the best chance of succeeding. This paper also highlights various difficulties and possible complexities that have not been pointed out by earlier analysts. It suggests that policy makers should keep a watchful eye on smaller incremental changes in the economic and institutional environments critical for their general effectiveness, as some may have enormous impacts at certain points in a dynamically complex environment.