The pace and success of the various transition countries towards the market system has varied widely. The countries of South-Eastern Europe constitute a prime example in which progress was slow and the economic consequences of transition were particularly severe. This book provides a comprehensive analysis on the main factors that affected the course of these countries during transition, thus contributing to the region's poor economic performance. The role of initial conditions as well as the effectiveness of macroeconomic policies and reform measures, are analyzed in detail and compared with the experience of the countries of Central Europe, while their importance is empirically tested as well. Furthermore, the book focuses on issues linked to the external economic relations of the region. It examines developments concerning international trade patterns, foreign direct investment inflows as well as the role of the Euro with respect to the existing exchange rate regimes of the countries of the region.