Socialist economies in Eastern Europe have collapsed and em-barked upon market-oriented reforms. Difficultchoices await decison-makers in economic policy and thebusiness community in Eastern Europe and in leading marketeconomies.

A: Characteristics of the Centrally Planned Economy and Systemic Collapse.- 1. The Rise and Fall of Marxist Theory and Socialism.- 2. Distortions of Socialist Economics.- 3. Stagnation and Collapse.- 4. Dramatic Changes in Eastern Europe.- Appendix Al: Quality Gaps in Socialism Modelled in a SALOP-SALANT Approach.- B: Inefficiency, Instability, and Restricted Options.- 1. Introduction.- 2. The Scope of Transformation and the Sequencing Issue.- 3. Restricted Options in Transforming Socialist Economics.- C: Privatization and Foreign Investment in Eastern Europe.- 1. In Search of Private Owners and Entrepreneurship.- 2. Privatization and Resistance to Systemic Change.- 3. Economic Challenges of Foreign Direct Investment in Eastern Europe.- 4. Normative Conclusions for Policy Concepts.- Appendix C1: Competition and Prices in Systemic Transition.- D: Foreign Economic Liberalization in Eastern Europe.- 1. The Challenge of Foreign Economic Liberalization.- 2. Strategic Role of Foreign Economic Liberalization.- 3. Liberalization and Economic Integration.- 4. Role of a New Marshall Plan.- Appendix D1: Ratio of Consumer Surplus to Producer Surplus.- Appendix D2: A New Supply-augmented IS-LM Model.- Appendix D3: Exports to European A Partners as a Percentage of Total Exports.- E: East-West Problems in Europe and North-South Conflicts.- 1. The New Europe.- 2. Economic Aspects of Instability and Conflict in Europe.- 3. North-South Conflicts and Global Aspects.