The Central Role of Entrepreneurs in Transition Economies.

This article summarizes the entrepreneurial patterns in the transition economies, particularly Russia, China, Poland and Vietnam. All the transition economies, from the Soviet Union and central and eastern Europe, to China and Vietnam, were similar in one important respect, their planned economies has been dominated by large firms, producing few consumer goods. Some governments actively made it hard for entrepreneurs to operate. The government's decisions on privatizing state firms may also have affected the environment for new firms. Four transition countries, Poland, Russia, China and Vietnam, span the range of entrepreneurship patterns. In the early years of economic transition, the absence of credit markets, courts and other market institutions created substantial impediments to entry. Other circumstances of the transition aided informal contracting. Cooperation is easier to sustain when reserving the relationship results in higher cost. Cooperation is more easily sustained, also, if punishment for malfeasance comes not only from the trading partner who has been cheated but also from other firms in the community. The importance of entrepreneurs in the transition economies is a reminder that the task of economic transition is not just a matter of government officials enacting certain policies or setting certain rules of operation for the new economy.