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Market Failure

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Market Failure

A Guide to the Eastern European "Economic Miracle"

Pluto Press,

15 min read
10 take-aways
Audio & text

What's inside?

If you plan to do business in Eastern Europe, you need to know how economic reform has gone wrong. Experts say economic reform will eventually benefit the populace, now hungry and unemployed, but they do not say when.

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Editorial Rating

7

Qualities

  • Comprehensive
  • Analytical
  • Background

Recommendation

Contributor Laszlo Andor and editor Martin Summers review the implementation of economic reforms in Eastern Europe. They present a strong critical analysis of the effect of economic reforms on the people in the post Soviet bloc countries. In great detail, they cover the fight to implement Western financial investment policies in order to break communist political legacies. The authors express their dissatisfaction with the results of reforms in the last decade. This is an important book for individuals who want another perspective on the rush to implement western financial policies globally. However, the book assumes some strong background knowledge of the region’s political history and the financial concept of globalization. getAbstract recommends this book to anyone who does business in Eastern Europe or who is intrigued by the politics of economic reform.

Summary

Structural Adjustment Loans and Economic Experiments

An economic experiment is being conducted in virtually all post-communist countries: the transformation of Soviet-style economies into modern, market-based economies. This transformation, called "structural adjustment," is policy-based lending from international financial institutions with the consent of the national governments receiving the loan money. The first structural adjustment program is traceable to Turkey in 1980, when the World Bank agreed to lend the government $200 million in exchange for specific policy measures. Since then, the number of structural adjustment loans has increased, as have their policy-making invasiveness.

Since 1989, countries in Eastern Europe and the former Soviet Union have been asked to accept aggressive internal policy changes as a condition for receiving structural adjustment loans. Eastern Europe can test this experiment by assessing the success - or failure - of these loans in transforming national economies, and by the impact of these internal policy changes on the people in these countries.

Specific changes to internal economic policies include:

    About the Authors

    Laszlo Andor is a lecturer at the Budapest University of Economic Sciences. Martin Summers is a former East European Desk Officer for the Catholic Fund, and an Overseas Development and East European Project Worker at the New Economics Foundation.

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