“The process of economic transition in the former centrally planned economies has rarely been painless and smooth”
Economic transition is an economic change from a centrally planned to a free market economy. A centrally planned economy is an economic system where the government owns all the finished goods and services, known as collective ownership, and makes the economic decisions rather than businesses, households, or individuals. While in a free market economy there is private ownership or resources, finished goods, and freedom of enterprise.
After the death of communism in the 1990s, the Central and Southeastern Europe and the Baltics (CSB) and the Commonwealth of Independent states (CIS) both abandoned central planning and moved towards …show more content…
Countries, like those in Central Europe and the Baltics, took up strict reforms and, therefore, had faster recoveries. While other countries were more sensitive to the crisis and had to set up new policies, especially after the loss of social services provided by the state.
Some countries had already tested market reforms while others were transitioning with central planning still intact. Countries, such as the USSR, had placed unrealistically high economic restructuring programs, which may have restricted their growth post transition.
Whether the country was developed or is still developing played a big role, as developing countries suffer from lack of capital, such as new technology, needed to increase efficiency. This could also limit or prolong the growth of a transitioned economy.
External factors also play a big role in growth of a transitioned economy. For example, corruption in former communist countries, within USSR for example, may have restricted the effective introduction of market reforms. Poorly manufactured products, illegal black markets, and criminal gangs increased, filling the gap of communism in a market
Economic transition is an economic change from a centrally planned to a free market economy. A centrally planned economy is an economic system where the government owns all the finished goods and services, known as collective ownership, and makes the economic decisions rather than businesses, households, or individuals. While in a free market economy there is private ownership or resources, finished goods, and freedom of enterprise.
After the death of communism in the 1990s, the Central and Southeastern Europe and the Baltics (CSB) and the Commonwealth of Independent states (CIS) both abandoned central planning and moved towards …show more content…
Countries, like those in Central Europe and the Baltics, took up strict reforms and, therefore, had faster recoveries. While other countries were more sensitive to the crisis and had to set up new policies, especially after the loss of social services provided by the state.
Some countries had already tested market reforms while others were transitioning with central planning still intact. Countries, such as the USSR, had placed unrealistically high economic restructuring programs, which may have restricted their growth post transition.
Whether the country was developed or is still developing played a big role, as developing countries suffer from lack of capital, such as new technology, needed to increase efficiency. This could also limit or prolong the growth of a transitioned economy.
External factors also play a big role in growth of a transitioned economy. For example, corruption in former communist countries, within USSR for example, may have restricted the effective introduction of market reforms. Poorly manufactured products, illegal black markets, and criminal gangs increased, filling the gap of communism in a market