The Great Transformation of Central Eastern Europe: Success and Disappointment

Abstract

The study examines the changes of the Central Eastern European region first in the context of world history. It confirms by comparative historical analyses that the transformation was indeed unique. This has been the only total transformation that took place peacefully, without violence, and at the same time astonishingly fast, in the main direction of the economic and the political changes of Western civilization. From that perspective it is an exceptional success story. However, from the perspective of everyday life, the result is different. Deep economic troubles are experienced by a considerable portion of the population. The perception of losses is intensified by various cognitive problems. Based on the experience of today's generation, evaluating the change as an unequivocal success would be unwarranted. Both approaches are justified: it would be wrong to blend the two and to weigh them by the same scale. JEL classifications: P2, P3, P5.

Prospective Nato or EU Membership and Institutional Change in Transition Countries

“…3 It is important to highlight, however, that the fixed effects (FE) estimator identifies the vector β of marginal effects of the explanatory variables using only the variation of institutions within each country over time. While institutions are, in general, highly persistent and changes within countries are only relevant over longer time horizons, for our sample of transition countries, this variation within countries is also meaningful: transition countries experienced a unique period of accelerated and comprehensive institutional change which took only ten to fifteen years to completion (Kornai 2006). This would justify analyzing time horizons of one decade.…”

“…Institution building in transition countries offers a unique historic experiment (Kornai 2006). Because most countries had to start from scratch in the 1990s, institutional change was comparably comprehensive, proceeded at a relatively high speed, and was especially prone to external influences on domestic policy decisions.…”

What Did the Study of Transition Economies Contribute to Mainstream Economics?

“…They have succeeded in breaking decisively with Communism. This has been both a great success and a disappointment to many of those living through this process (Kornai, 2006;Sanfey and Teksoz, 2007) 21) . China has become the workshop of the world, and its prolonged high growth is the envy of the world.…”

Foreign and domestic growth drivers in Eastern Europe

“…This development lead to increasing trade flows to the high-income EU market and growing capital inflows for most CEECs. Catching-up with western income levels broadly advances, even if there is no unequivocal improvement of everyday life of the population (Kornai 2006) and the recent global crisis had a detrimental impact on several countries in the region. Especially, the experience of East Asian emerging and already industrialised countries represents an interesting and possibly fruitful parallel in this respect.…”