Thirty years ago, a vast share of low- and middle-income countries was heavily state controlled. The liberalizations of the 1980s and 1990s had greatly different effects on growth in countries in Africa, Asia, and Europe. A comparative framework is used to document these differences, and a model is developed to formally analyze how liberal- ization affects production and income distribution when the institutions that govern production and exchange are also affected. Hypotheses are derived for how endogen- ous institutional adjustments affect the growth response to liberalization. These insights motivate a series of explanations for the differences in performance across regions and commodities following liberalization. JEL codes: O13, O43, O57, Q12
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