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Socialist economies in Eastern Europe have collapsed and em-
barked upon market-oriented reforms. The causes of the
demise of centrally planned economies are analyzed and the
basic challenges of systemic tranformation discussed.
Negative income and wealth effects as well as distribution
issues make adjustment extremely difficult. The fundamental
roles of privatization and foreign investment are adressed.
Foreign economic liberalization is considered to be of
centralimportance for a growth-oriented adjustment path in
a stage of conflict-prone policy and options.
Politico-economic aspects of the new European developments
in addition to North-South issues are analyzed. Difficult
choices await decison-makers in economic policy and the
business community in Eastern Europe and in leading market