The fall of communism created expectations that the centrally planned economies would experience rapid economic growth and gradually catch up with middle-income developed countries as they moved to a market system. Yet, the relative performance of the transition economies since 1989 has fallen short of expectations for three principal reasons: advanced western economies did unusually well in the 1990s; the economic problems associated with the transition were underestimated; and policymakers made a number of errors. The question therefore arises as to what has worked and what could have been and still could be done better.