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This paper focuses on nonlinear properties of economic transformation and provides illustrations from nearly a decade of economic transition experience of the formerly planned economies. A particular argument is that policies that move a system along “the edge of chaos” may have the best chance of succeeding. This paper also highlights various difficulties and possible complexities that have not been pointed out by earlier analysts. It suggests that policy makers should keep a watchful eye on smaller incremental changes in the economic and institutional environments critical for their general effectiveness, as some may have enormous impacts at certain points in a dynamically complex environment.

This paper argues that a new economic system is emerging in the world economy, that of the new traditional economy. Such an economic system simultaneously seeks to have economic decision making embedded within a traditional socio‐cultural framework, most frequently one associated with a traditional religion, while at the same time seeking to use modern technology and to be integrated into the modern world economy to some degree. The efforts to achieve such a system are reviewed in various parts of the world, with greater analysis of the Islamic and neo‐Confucian economic systems.

Argues that the collapse of socialism in the former Soviet Union as well as the collapse of that state resulted from a complex interaction of both internal and external factors. Internally the systemic transformation is significantly impeded by the hysteretic memory of the old system and its functioning. External pressures influence the pace and the scope of this transformation, conditioning Western assistance to the reform process by the demands for rapid convergence to the path of the resolute marketization. The evolution of the internal and external circumstances has brought about the current crisis in the former Soviet Union and raised the critical question of tactical and strategic goals.

The article discusses the commonalities and differences between the Soviet Union and China in the evolution of the philosophy and practical policy vis‐a‐vis joint ventures with the West. The comparative study is set against the background of the ongoing reform in both countries which seeks to integrate Soviet and Chinese economies into the world economic community. It is emphasised that the terms, impact on the overall economic situation, and prospects of joint ventures with the West in the USSR and China, are determined by the scale, scope and consistency of the implemented reforms which, in their turn, are dependent to a certain extent on the results of business co‐operation with Western firms.