Eastern Europe: Two-Track Transition
NOW FOR AN ORIGINAL PAPER ASSIGNMENT:Eastern Europe: Two-Track Transition
The newly independent states of Eastern Europe were Communist-ruled during the Cold War era, which lasted for more than four decades. All were saddled with centrally planned economies patterned after that of the Soviet “Big Brother.” Just as central planning did not work in the long run in the Soviet Union, neither did it work anywhere else. But it is easier to demolish than to construct; for rebuilding, Eastern Europe had to look to the West. The West stood ready to help, but first the former communist states would have to create democratic institutions and market-based economies.
Poland
The boldest reforms were adopted in Poland, the Czech Republic, and Hungary. (The Baltic states of Estonia, Latvia, and Lithuania also moved quickly to jettison all vestiges of the Stalinist police state and central planning following the breakup of the Soviet Union.) Poland showed the way, launching “shock therapy” policies designed to create a functioning market and to privatize the notoriously inefficient state enterprises that were a legacy of Communist rule. Unlike the Soviet Union, Poland had never banned small-scale private enterprise, and a decade after its democratic revolution, private enterprise was flourishing as never before (with some two million registered businesses).
Poland’s tough approach to reform yielded impressive results in the 1990s, when its economy grew faster than that of its ex-communist neighbors, averaging over 5% a year between 1995 and 2000. Poland also managed to tame inflation, a major threat to social and economic stability throughout the region. As a direct result of these market-friendly reforms, Poland attracted infusions of foreign investment that were, in turn, a tonic to its reviving economy.However, double-digit unemployment (nearly 25% among young workers in 2014) remains a nettlesome problem, especially in a country where jobs had been guaranteed to all adults during two generations of Communist rule. A growing wealth gap is also a problem, as the relatively poor rural populations continue to lag behind the urban middle class. Because Polish agriculture was never collectivized (as in the Soviet Union), many of Poland’s impoverished villagers still live and work on its two million family farms.*
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