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Rausser, G. C. and S.R. Johnson (1993). 'State-market-civil institutions: The case of Eastern Europe and the Soviet Republics'. World Development 21(4): 675-689.
http://www.sciencedirect.com/science/article/B6VC6-45BC32G-3Y/2/473e942d3233b0be6d02697e808ae481
The transition tasks facing the countries of Central and Eastern Europe are monumental. The public sector will play a dominant role during the transition process. Available evidence suggests that orthodox prescriptions for public sector reform cannot be effectively implemented without an underlying constitution and a legal and regulatory infrastructure (LRI). A well-designed constitution and LRI instill confidence and policy credibility. With perfectly rational expectations and confidence in the constitution and LRI, the sequence of reforms matters little; future reforms are perfectly anticipated today and agents act as though the reforms will occur with certainty. Short of such confidence, reforms need to be simultaneously pursued on many fronts. The most important activity is to redefine the role of the state, setting a constitution that clearly defines and secures basic political, civil, and economic freedoms and designing an LRI that creates a fertile environment for a vibrant market economy.