Abstract
This paper presents a model determining the available political and economic reform space as well as the economic performance in a society where interest groups are powerful relative to the state. Two types of determinants are derived. The first concerns the vulnerability of unorganized groups to rent seeking. The second includes the ability of interest groups to cooperate with each other and the share of the economy's resources that they control. The results are used to interpret transition experiences of countries where authoritarian rule has collapsed.