From the Soviet Bloc to the European Union

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.