FROM PLAN TO MARKETS

While formerly planned economies lack critical institutions, ailing we lfare economies have too many, reducing investment incentives in both. While institutional redesign is urgent in the formerly planned econom ies, then is no instant concern in the West, where institutional chang e must be realized through reluctant democratic procedures. Some forme rly planned economies, therefore, are likely to improve upon the West in institutional design and experience superior long-run economic grow th, They explicitly link investment incentives one way to property rig hts and the other to investment and growth, to demonstrate how such su perior performance can be achieved. (C) 1998 Elsevier Science B.V.