The late twentieth century was an era of reform. Most often, change ran in a liberalizing direction. Closed polities and economies became more open. The disintegration of the Soviet Union and the emergent hegemony of the United States heralded much more than the end of the Cold War. This period was characterized by the global diffusion of democracy and markets as organizing principles for society. The 1980s and 1990s were periods of fundamental regime change around the world, in which prevailing strategies for the development of poor countries were stood on their heads. In the realm of ideas and policies — and more gradually within institutions — an ascendant democratic capitalism displaced the doctrine of state socialism.

The spread of democratic and market values has been global in scale but uneven in impact. In much of Eastern Europe and Latin America, reformers effected a dual regime transition by transforming elements of both political and economic life. They pried open ossified bureaucratic systems by reducing the role of the state and increasing the amount of freedom available to individuals and groups. Wholly or partly, contested elections and competitive markets began to replace authoritarian rulers and centrally planned economies. The relaxation of official controls held out the promise that, henceforth, citizens and consumers would exercise a greater measure of choice in the governance of the state and the direction of the economy.