With-all these methodological reservations, the available statistical data seem to show an advantage to countries which belong to the second and third group in comparison with the groups 4, 5 and 6. Also countries from group 4 generally look better than countries from groups 5 and 6. This statement relates both to the inflation figures and to the cumulative output decline. The latter is also influenced by at least two other, and to some extent, interrelated factors: inherited macroeconomic and structural distortions, and the size of adverse external shocks (see Section 4). Slovenia, for example, has not depended on CMEA trade (however, it suffered, to some extent, from the collapse of the Yugoslav market). The Hungarian economy before 1989 was more open to the West than other Comecon countries. On the other hand, Bulgaria heavily depended on CMEA trade and additionally suffered very much from the Gulf Crisis in 1990-91 as well as from the UN sanctions against new Yugoslavia.

The same type of differentiation can be observed in the former USSR. On the one hand, Ukraine, Belarus, and the Baltic states lost very much from the collapse of the FSU market and from energy price adjustments. On the other hand, Russia, Turkmenistan, and Uzbekistan, as net exporters of energy resources and other raw materials, could probably gain something from trade reorientation and changes in the price structure.

The advantage of the first three groups (including the GDR) would be even greater if our analysis included fiscal balances, balance of payments statistics, stability of the exchange rate, or factors such as quality of consumer and producer markets. Also the microeconomic restructuring seems to be more advanced in the first three groups than in the others. The unemployment statistics presented in Table 3 seem to support this hypothesis indirectly.

Of course, one can propose a completely opposite interpretation of Table 3. Countries that adopted quicker and more radical strategies experienced generally higher unemployment than did countries that either went slower (group 4 with the exceptions of Bulgaria and Romania) or have not start the real transition yet (group 5). Perhaps the superiority of gradualism and softer macroeconomic policy might be seen as socially less painful and politically less risky. Such an interpretation, however, would be very short-sighted. **First,** the increase of unemployment seems to be unavoidable, and the soft macroeconomic policy and the blockade of privatization may only delay this phenomenon. Prospects of microeconomic restructuring and economic recovery are delayed by these policies. Second, very high inflation or hyperinflation, an unavoidable product of the soft fiscal and monetary policies supporting employment, may do more political damage than high unemployment. Third, hoarding labor in SOEs without any production tasks (because output has declined) creates no fewer social tensions than does open unemployment.

Slow and inconsistent changes also make the transition difficult. Macroeconomic instability and the lack of sufficient competition create greater income and wealth differentiation and often encourage criminal practices.

Comparing the strategies used by the second and third groups is extremely interesting. Both groups of countries achieved about the same level of progress in the transition process, 10