From the Soviet Bloc to the European Union
Covers EU accession as the main driver of Romanian institutional change.
Summary
Berend continues the economic history of Central and Eastern Europe from 1973 to 2005, covering the final decline of the state socialist economies, the collapse of 1989 to 1991, the transition, and accession to the European Union.
The analysis of the transition is the substance. Berend examines the different paths taken: shock therapy in Poland, gradual reform in Hungary, voucher privatisation in the Czech Republic, and the far worse outcomes in the former Soviet republics and in the Balkans. He documents the transformational recession, in which output fell across the region by amounts comparable to the Great Depression, and argues that this was inevitable in part, because the industrial structure inherited from central planning produced goods for markets that ceased to exist, but that policy choices determined its depth and length.
He treats foreign direct investment as the decisive variable in the Central European recovery. Where Western firms bought and modernised plants, integrating them into European supply chains, productivity rose and exports followed. Where they did not, either because of policy or because the assets were not worth buying, decline continued. He also documents the social costs: the collapse of employment, the rise of inequality from very low levels, the demographic effects and the emigration.
On accession, Berend argues that the European Union anchored institutions and provided both market access and structural funds, and that the prospect of membership disciplined domestic politics in a way nothing else could.
The book was published in 2009 and its assessment predates the eurozone crisis, the subsequent political turn in Hungary and Poland, and the maturing of the region's growth model. Berend writes as an economic historian with data rather than as a narrator, so the book is demanding.
Key takeaways 7
- The transformational recession after 1989 produced output declines comparable to the Great Depression across the region.
- Part of the output collapse was unavoidable because planned industry produced goods for markets that no longer existed.
- Foreign direct investment integrating plants into Western supply chains was the decisive variable separating recovery from continued decline.
- Different privatisation methods produced very different ownership structures and very different subsequent performance.
- The prospect of European Union membership disciplined domestic policy in ways that domestic politics alone could not.
- Inequality rose sharply from very low starting levels, which shaped the political reaction that followed.
- Countries that delayed stabilisation experienced longer and deeper contractions than those that acted quickly.
Who should read it
Investors and analysts working in the region who need the economic history of the transition and the evidence on what separated the successful cases.
Similar books 6
Chosen by shared topics, the entries that hold them, and the people who recommended both.
Comparative transition account; Czech vouchers judged against other sequencing choices.
Includes the Czech voucher scheme written up by people who designed and criticised it.
Economic history that explains the industrial base the Czechs privatised.
How Poland achieved Europe's fastest sustained growth after 1989.
What happened to Eastern Europe in the thirty years after 1989, measured.
How socialist economies really worked: soft budgets, shortage and party power.
Where it sits in the reference 3
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