That is why strategic investors with new knowledge are so important for overall growth. Let me be a little provocative and state that unfortunately multilateral institutions rarely talk about human capital explicitly. For example, the EBRD Charter (quoted after Bronstone, 1999) does not mention developing human capital as EBRD’s role. A bureaucratic answer might be that that is not its mandate. But, according to the EBRD’s Transition Report: “The EBRD seeks to foster the transition to an open market-oriented economy and to promote private and entrepreneurial initiative in all 26 of its countries of operation”. (EBRD, 1999, p. vi.) If we agree that human capital is so important in transition, I ask myself how we can achieve this ambitious goal without knowing more about the level and development of human capital in its countries of operation? Does the EBRD have a set of measures of human capital in transition countries (both cross-country and time series), maybe invent a new index on human capital (like the broadly quoted one for privatization), a separate chapter in the Transition report? Please, let me assure all EBRD governors, management and staff that these remarks are made only in good faith in the hope that we will all reflect upon them a little bit. In a more general framework let us ask ourselves the following question: Have we done enough in the past to achieve this goal? I doubt whether a lot of people in this room (and policymakers in transition economies in general) will say yes without hesitation.
There is not a single doubt in my mind that for transition to be successful countries need to open up, promote foreign direct investment as much as possible, extensively use foreign technical assistance, embrace transfers of knowledge, participate and benefit from globalization, and, last but not least, exploit to the maximum the beneficial role of international financial organizations in general and the EBRD in particular as this institution was created for us. All those elements are necessary. But, it is my strong belief that the ultimate test of a successful transition lies within us. Why? Simply because, it’s the people’s transition, isn’t it? Thank you very much for your attention. BIS Review 43/2000  8  Literature: Bronstone, A (1999): The European Bank for Reconstruction and Development. Manchester University Press, Manchester. Collier, P (1998): Social capital and poverty, The World Bank, Social Capital Initiative, WP No. 4 EBRD (1999): Transition Report, London. Fischer, S and R Sahay (2000): The Transition Economies After Ten Years of Transition. IMF Working Paper, February. Flanagan, R J (1998): Were communists good human capitalists? The case of the Czech Republic, Labour Economics, Vol. 5, No. 3, pp. 295-312. Frydl, E J (1999): The Length and Cost of Banking Crises: IMF Working Paper (WP/99/30). Fukuyama, F (2000): Social Capital and Civil Society. IMF Working Paper 00/74. Hillman, A L (1999): In Transit to the Promised Land: Ten Years in the Wilderness Without Moses. Fifth Dubrovnik Conference on Transition Economies, June 1999.