THE INSTITUTIONAL HIATUS IN ECONOMIES IN TRANSITION AND ITS POLICY CONSEQUENCES

The collapse of Communism created an 'institutional hiatus' in the eco nomies of eastern Europe and the Soviet Union because the old politica l and economic institutions were destroyed more rapidly than they coul d be replaced by those of a market economy. The importance and complex ity of institution-building has been played down in the mainstream 'ec onomists' consensus' which has presented a highly restricted set of po licy options as the only route to a vibrant marker economy. This paper argues that entrepreneurship provides a missing conceptual link betwe en enterprise reform and the creation of market institutions. A number of measures for closing the institutional hiatus in transition econom ies are considered.