The conference discussion and related papers produced seven broad lessons relating to the transition process. First, the conference recognized the critical importance of political and macroeconomic stability in enabling effective microeconomic market reforms, deregulation and the development of rational incentives.

Second, the creation of private sector incentives in the farm and non-farm sectors is critical to the rapid realization economic benefits and the broad geographic, economic and social distribution of these benefits. The distribution of benefits early in the reform process is necessary for the creation of a broad-based constituency for continued reform, including more difficult policy measures such as state-owned enterprise (SOE) reform and privatization.

Third, the stimulation of private sector activity can also help raise the savings rate and broaden the tax base, both of which are essential to increasing the rate of investment in a sustainable manner. Avoiding dependence on foreign savings was seen as an important dimension of financial sustainability.

Fourth, effective governance and institutional development are critical to a successful transition. The rise of powerful interests opposed to accountability and competition can be a major obstacle to the sustainability of reform.

Fifth, effective decentralisation and the empowerment of local government can play a critical role in broad based development outside of the major urban areas. However, decentralization must be managed effectively to promote accountability, administrative efficiency and policy co-ordination.

Sixth, transition to market has in some cases been associated with a substantial rise in inequality and social disparities. Policies to protect the poor and otherwise vulnerable populations must be put in place to ensure that increasing inequality does not jeopardize human development and the progress of reform.

Seventh, carefully sequencing policy and institutional, trade and financial reforms is essential to successful transition and to minimize the negative impact of policy change on vulnerable groups. The objective of further integrating transition economies in regional economic blocks (e.g. E.U.) or global economic institutions (e.g. WTO) has provided a critical external anchor that has assisted internal policy and institutional reforms.

In addition, a wide range of specific policy and institutional reform experiences were shared at the conference and in the conference papers, including, among others: China’s effective decentralization process and related local incentives which generated vibrant local economies outside the major urban areas; Viet Nam’s successful land and agricultural reforms; Hungary’s cash-based privatisation program; Poland’s success with pension reform; and Russia’s experience with the international financial institutions (IFIs).