unconsciously, until the onset of later reforms. These countries were fortunate in being able to utilize these assets when they began their attempts at reform.

On the other hand, Mongolia moved from being a nomadic society to the adoption of a centrally-planned system without the benefit of experiencing a market economy. This serious handicap can also be observed in the former Soviet Union, including the republics of Central Asia. In these countries, adjustment to the new and unfamiliar rules of the market economy was very difficult.

## (3) Industrial Structure

Another important feature of transitional economies in Asia is the greater influence of agriculture, particularly in comparison with Eastern Europe and Russia. While in China in 1978 farmers accounted for 69 percent of the total labor force, the share was only 14 percent in the former USSR immediately prior to Perestroika (Kondo and Wada, 1993 and Sachs and Wing, 1994). This difference between the industrial structures played an important role as one determinant of the transitional strategies adopted in these two regions.

## (4) The International Environment

Most of the transitional economies in Asia were closely related to the Council for Mutual Economic Assistance (CMEA). In particular the dependence on the CMEA was of great significance in the case of Mongolia-90 percent of its total trade during the 1980s was with the CMEA (source: IMF), and the CMEA was by far the largest aid donor. The role of the CMEA was also significant in Vietnam, although to a lesser extent-until 1988 trade with the CMEA accounted for more than 50 percent of its total and the CMEA was easily the largest source of capital flows. These economies were therefore inevitably severely affected when the CMEA collapsed in the late 1980s.

At the same time, most Asian transitional economies were able to take advantage of their close geographical proximity to the dynamic economies of East Asia (Japan, the Asian NIES and ASEAN). The merits of this are especially apparent in China and Vietnam. After the adoption of open-door policies, China and Vietnam became integral parts of the rapidly-developing intra-regional networks in East Asia. In particular, the connections with overseas Chinese and Vietnamese residents enabled these two countries to increase exports and attract foreign investment. They also enjoyed the advantages of being latecomers, learning the effectiveness of an outward-oriented development strategy from the experiences of their neighbouring predecessors. Thus they were able to adopt tried and proven methods to realize outward-oriented growth, taking advantage of the external economies of dynamic development in the region. Unfortunately, Mongolia is more physically remote from the spreading dynamism in East Asia and so has not benefited to the same degree from these factors.

## 4 Common Features of Asian Economies in Transition

Notwithstanding the diversity within Asia described above, at least two common features can be observed among the Asian economies in transition (with the exception of Mongolia and the former Soviet republics of Central Asia). These are their improved macroeconomic performance and the mode of economic reform adopted.