Introduction
The collapse of the communist regimes in the former Soviet Union and Eastern Europe brought about sweeping changes in the economic and political institutions of the formerly centrally planned economies. With the critical influence of a number of supranational and international institutions, an unprecedented process of transition took off in these countries, encompassing both the political and economic spheres.
The main political (democratization, civil society, institution building) and economic (market liberalization, privatization and restructuring, macroeconomic stabilization) priorities under this process were meant to address the key problems that the transition countries were facing in the advent of the 1990s: very centralized and inefficient state bureaucracies; inefficient organization of production (both within firms and across sectors or space); lack of private and, importantly, financial capital; and a disparity between use values, market prices and production costs. More importantly, however, they aimed at two much more immediate and crucial deficits: on the one hand, the democratic deficit and problems in the rule of law; on the other, the problems of indebtedness and hyperinflation that the fast monetization of the economy and the liberalization of market mechanisms brought about. In this context, attention to issues of regional and cohesion policy was at best limited.
This deficiency of regional policy is, of course, important on theoretical grounds, given the fact that persistent regional imbalances raise issues not only of economic cohesion and social justice, but also of economic efficiency.