Promoting Sustainable Market Institutions in the Transition Economies: the Role of International Assistance

This paper examines the role of international technical assistance in building the institutions critical to the success of market reform in the Transition Economies. While there have been many successful grass roots projects aimed at helping individual firms or associations compete in the market, projects aimed at institution building (credit markets, market information, agricultural extension, food safety and animal health regulations, etc.) are not always so successful. These projects succeed only when the recipient Government truly buys into the project and is willing to commit its own resources. These services tend to be public goods, so attempts on the part of donors to bypass Government institutions and privatize these activities are usually not sustainable.