The experiences of the economic transition in Central and Eastern Europe (1990-2000): The case of the Czech Republic, Slovakia and Poland

Abstract

In the years 1989–1990, economic and political transition in Central and Eastern Europe coincided with the general crisis of state socialism. The transformation process meant the general liberalization (abolition of state subsidies and fixed prices etc.) of the economic system in the former state socialist countries, which coupled with opening their markets to foreign investors. There were substantial differences in the creation of a freemarket economy in the region. Whereas Poland applied the method of shock treatment, based on the concept of the Washington Consensus, Czechoslovakia followed a double policy by mixing the gradualist approach with “shock” rhetoric to avoid the negative impacts of the economic transition. Although the Central and Eastern European countries followed a different road in restructuring their economies in the 1990s, but by the turn of the millennium due to the privatisation of state-owned assets, private companies accounted for 70 per cent of GDP, whilst the share of the state sector was 30 per cent. This paper aims to highlight the experiences of the economic transformation in the Czech Republic, Slovakia and Poland by comparing its main features and stages. Besides macroeconomic stabilization, emphasis will be placed on analyzing the impacts of privatisation and its main consequences. Due to length constraints, the essay will not focus on the social impacts of the transition process in the region.