No one doubts that liberalization is an essential part of transformation to a market economy. Narrowly defined, liberalization is the degree of freedom that economic agents have to form prices and to respond to price signals. This freedom has two sides. On the one hand, it implies a reduction in direct government interference in economic decision making. On the other hand, it requires an activist role for the authorities in creating a stable environment in which property rights are protected and contracts are readily enforced. Thus, liberalization can also be broadly defined as the shift in the role of the state from hands-on administrative control to provision of market infrastructure.