Economic Transition in Hungary and East Germany

What factors determine the success of economic transition, development and growth? Examining the contrast between East German shock therapy and Hungary's gradualism, this work generates a set of generalizable conditions for economic development which imply some degree of state intervention and strategy. A stability-oriented incomes policy and a carefully managed integration strategy can enable the achievement of sustainable export surpluses, a competitive currency and macroeconomic stability, whilst providing sufficient room for economic restructuring, structural transformation and technological catch up. The dangers of premature integration are also examined.