Eastern Europe, Russia, and the New Independent States have accomplished an impressive transformation, privatizing a large share of production, liberalizing domestic markets, and liberalizing commercial relationships with the world market. At the end of 1995, 14 of the transition economies had, indeed, rekindled economic growth.

However, recovery in some of the largest transitional economies—Russia, the Ukraine, and Kazakhstan—appears to be in serious jeopardy. They face the task of building new state structures that can fulfill the essential functions of government and create the environment needed to support a healthy, prospering economy. However, the international community and international investors are uncertain whether the fragile new institutions of these countries are up to the task. In Russia in particular, missing institutions and harmful policies impede investment and the entry of new small firms. The lack of ownership rights to land blocks agricultural reform and retards construction of housing. At the same time, a confiscatory tax and regulatory environment, in conjunction with increasing crime and corruption, impedes the establishment of new private firms.

The following are some of the specific research questions that relate to institutional change with respect to the productive and financial sectors:

• To what extent are the transition economies creating well-functioning private sectors in agriculture, industry, and services? What factors impede the emergence of new private producers?

• What institutional arrangements are important in providing frameworks for production and investment in Western market economies? To what extent are similar institutional frameworks available to producers in the transitional economies? What are the consequences of missing infrastructure? What, if anything, can producers do when financial, legal, or administrative infrastructure is missing or dysfunctional?

• How do differences among various forms of privatization (employee buyouts, managerial/nomenklatura buyouts, mass privatization, auctions, and negotiated tenders) affect enterprise organization, performance, and productivity?

• How does the availability of legal, financial, and administrative infrastructure influence the form of enterprise governance and the scale of firms? How does it affect the supply of investment and domestic and foreign investors' perception of risk?

• What policies and mechanisms (such as prudential regulation and introduction of international accounting standards) are necessary to support well-functioning financial markets? What institutional changes are needed to allow financial institutions to bring savers and investors together in well-functioning financial markets?

• Are the institutional changes being introduced in stock exchanges and other mechanisms for financial mediation creating more transparent and ac-