Arye L. Hillman, Bar-Ilan University

Publications by topic



3.1  Surveys

3.2   Rents and transition

3.3   Privatization

3.4   International trade policy in transition

3.5   Public finance in transition

3.6   Other aspects of transition

3.6.1     The rule of law

3.6.2     Economic statistics in the transition

3.6.3     Country studies





Political-economy issues were at the fore of studies of the transition from socialism in the 1990s, although not always treated as such. Policies with regard to privatization in particular had the political-economy attribute of distributing wealth in accord with ability to influence decisions of policymakers.  Much of my research on transition took place in the course of cooperation with researchers from the World Bank and includes two co-edited volumes published by the World Bank. [1], [2], and [3] are surveys. [1] was written early in the transition. [2] was written when it was clearer that the “transition” would on-going for some time; the paper was published in Russian (and subsequently in English), with the intention of informing Russian researchers of the premises and predictions of the public-choice school. [3] is a more philosophical overview written more than a decade after the transition began, asking what was intended by “transition” and how would we know that “transition” was over.

[1] “The transition from socialism: An overview from a political-economy perspective”, European Journal of Political Economy, May 1994, 10, 191 – 225. Special issue, festschrift in honor of Peter Bernholz, edited by Manfred Gärtner and Heinrich W. Ursprung.

[2] “Western economic theory and the transition: The public choice perspective”.  Economics and Mathematical Methods (Journal of the Central Economic and Mathematical Institute of the Russian Academy of Sciences) 1996, 32, 77-90 in Russian, translated by Mark Levin.

Published in English in:

·        Trade, Growth, and Economic Policy in Open Economies: Essays in Honor of Hans-Jürgen Vosgerau, Karl-Josef Koch and Klaus Jaeger, editors, Springer, 1998, pp. 351 – 367.

[3] “Interpretations of transition”.  In Political Economy of Transition and Development: Institutions, Politics, and Policies, Nauro F. Campos and Jan Fidrmuc (Eds.), Kluwer Academic Publishers, Dordrecht, 2003, pp. 23 – 40.



The transition in Bulgaria in the immediate aftermath of the end of communism provides the background for [4]. [5] explains the extended transition as due to the distractions provided by the various rents that the transition created: the paper began as a background paper for a World Bank World Development Report. [6] describes the rents that arose through the privatization of banks and introduction of financial markets.


[4]  The private sector, state enterprises, and informal economic activity”.  In Financing Government in Transition, Bulgaria: The Political Economy of Tax Policies, Tax Bases, and Tax Evasion, Željko Bogetić and Arye L. Hillman (Eds.), The World Bank, Washington, D.C., 1995, pp. 47 – 70.  Lubomir Mitov and R. Kyle Peters, co-authors.

Summarized in:

·        Privatizing profits of Bulgaria’s state enterprises”, Transition March 1995, 6, 4 – 6. Željko Bogetić co-author.

[5]  Rents as distractions: Why the exit from transition is prolonged”.  In: Economic Interdependence and Cooperation in Europe, Nicolas C. Baltas, George Demopoulos, and Joseph Hassid (Eds.), Springer, 1998, 21 – 38. Alan Gelb and Heinrich W. Ursprung, co-authors.

Based on:

·        Rents and the transition, World Development Report Background Paper, The World Bank, Washington D.C., April 1996

[6]  The political economy of banking sector reform in the transition”.  In: Financial Sector Transformation: Lessons from Economies in Transition, edited by Mario Blejer and Marko Škreb, Cambridge University Press, New York, 1999, 132 – 149.  Heinrich W. Ursprung co-author.



“Market socialist” type economic systems that attempted to preserve the paternalism of socialism while introducing markets confronted inherent dilemmas [7]. The dilemmas are also the theme of the symposium in [8]. [9] recounts methods used for privatization and emphasizes the redistribution of wealth and income inherent in privatization and market liberalization. [10] applies the theory of clubs to describe socialism and the changes of the transition (where people were losing their “clubs” because of privatization and market liberalization). Also, in the transition people benefited who had under socialism been assigned to disadvantageous clubs.

[7]  Liberalization dilemmas.  In Markets and Politicians: Politicized Economic Choice, edited by A.L. Hillman, Kluwer Academic Publishers, 1991, chapter 10, pp. 189 – 207.

[8]  Debate on the transition of post-communist economies to a market economy, Acta Oeconomica (Journal of the Hungarian Academy of Sciences) 1992, 44, 285 – 289.

[9]  Progress with privatization, Journal of Comparative Economics, December 1992, 16, 733 – 749.

[10]  Socialist clubs: A perspective on the transition, European Journal of Political Economy, 1993, 9, 307 – 319.



The system international trade among communist countries created impediments to trade liberalization. [11], [12a] and [12b] describe the subsequent difficulties of international trade when the communist system of planned suddenly ended. [13] is about policy commitment. [14a] and [14b] extend this theme.

[11] Creating the reform-resistant dependent economy: Socialist comparative advantage, enterprise incentives and the CMEA.  In: The Transition from Socialism in Eastern Europe: Domestic Restructuring and Foreign Trade, Arye L. Hillman and Branko Milanovic (Eds.), The World Bank, Washington, DC, 1992, chapter 10, pp. 243 – 262.  Adi Schnytzer co-author.

[12a] The transition from the CMEA system of international trade.  In: Trials of Transition: Economic Reform in the Former Communist Bloc, edited by Michael Karen and Guru Offer, Westview Press, Boulder, 1992, 271 – 289.

[12b] The transition from socialist trade to European integration.  In: The EC after 1992 - Perspectives from the Outside, edited by Silvio Borner and Herbert Grubel, Cambridge University Press, 1992, pp. 61 –  79.

[13] The political economy of trade liberalization in the transition, European Economic Review (Papers and Proceedings), April 1996, 40, pp. 783 - 794.  Heinrich W. Ursprung, co-author.

[14a] Protectionist pressures and enterprise restructuring: The political economy of trade policy in transition.  In: Trade and Tax Policy, Inflation and Exchange Rates, edited by Assaf Razin and Hans-Jürgen Vosgerau, Springer, Berlin, Heidelberg and New York, 1997, 215 – 243 Manuel Hinds, Branko Milanovic, and Heinrich W. Ursprung, co-authors.

[14b] What is special about endogenous international trade policy in transition economies?  In: Balance of Payments, Exchange Rates, and Competitiveness in Transition Economies, edited by Mario Blejer and Marko Škreb, Kluwer Academic Publishers, Boston and Dordrecht, 1999, 255 – 282.  Heinrich W. Ursprung co-author.



The following papers from World bank volumes describe problems of public finance in the transition. Budgetary consequences in the early transition of the end of the communist system of international trade are described in [15]. [16] describes problems of sustaining the tax base.

[15] The government budgetary consequences of reform of the CMEA system of international trade: The case of Hungary.  In: The Transition from Socialism in Eastern Europe: Domestic Restructuring and Foreign Trade, Arye L. Hillman and Branko Milanovic (Eds.), The World Bank, Washington, DC, 1992, chapter 12, 277-293.  Istvan Abel, David Tarr co-authors

[16] The tax base in the transition: The case of Bulgaria, Communist Economies and Economic Transformation, December 1994, 6, 267-282.

·        Policy Research Working Paper number 1267, The World Bank, Washington, DC, March 1994. Željko Bogetić, co-author.


Updated as:

·        The choice of a tax system, in: Financing Government in Transition, Bulgaria: The Political Economy of Tax Policies Tax Bases, and Tax Evasion, Željko Bogetić and Arye L. Hillman (Eds.), The World Bank, Washington, D.C., 1995, pp. pp. 33 – 46.



3.6.1 The rule of law

The role of the rule of law in facilitating transition is described in [17] and [18]. [17] was written for presentation at a conference in Belgrade. [18] was first published in Russian.

[17] “The legal system in the transition from social to private property: with reference to Hobbesian anarchy, Locke's natural right of freedom, and the rule of law”. In proceedings of conference on Challenges and Opportunities for Economic Transition in Yugoslavia, edited by Goran Pitić, USAID, Economic Institute, Chesapeake Associates, 1998, pp. 264 – 69.

[18] “On the way to the promised land: ten years in the wilderness without Moses” (English). Published in Russian (translated by Mark Levin). In Economics and Mathematical Methods -Journal of the Central Economic and Mathematical Institute of the Russian Academy of Sciences, 2002, 38, pp. 78 – 94.

3.6.2 Economic statistics in the transition

In a market private-property economy, production and consumption decisions are made before statistics become available. In a planned socialist (communist) system, the statistics precede production and consumption. [19] considered the role of statistics in the transition from the latter economic system to the former.

[19] Some problems of statistical measurement of economic activity in the transition from planned socialism.  In: Economies in Transition: Statistical Measures Now and in the Future, Petr O. Aven (Ed.), International Institute for Applied System Analysis, Laxenburg, Austria, 1991, 69-78.

3.6.3 Country studies

[20] Macroeconomic policy in Hungary and its microeconomic implications. In: European Economy, Economic Transformation in Hungary and Poland, Economic Commission of the European Communities, Directorate-General for Economic and Financial Affairs, March 1990, 43, 55 – 66.

[21] Comment on: Money and credit in the transition of the Czechoslovak Republic. In: The Transformation of Socialist Economies, edited by Horst Siebert, J.C.B. Mohr Paul Siebeck, Tübingen, 1992, 326 – 330.