Liberalization and its Consequences

Liberalization and its Consequences

A Comparative Perspective on Latin America and Eastern Europe

Edited by Werner Baer and Joseph L. Love

The essays in this volume describe, analyse and compare the achievements and the failures of societies that adopted market-based economies within a democratic polity after a long period of communist rule (Russia and Eastern Europe) or military authoritarianism (Latin America). Together, they also trace the rocky course of liberal economic policies over the whole twentieth century.

Chapter 3: Rethinking economic performance in Central and Eastern Europe, 1870–1989: old narratives and new evidence

David F. Good and Carol Leff


1 David F. Good Conditioned by 40 years of cold-war rhetoric, even well-informed observers viewed the economic lag of the former East bloc chiefly as a legacy of communism. Not surprisingly, the initial euphoria in the wake of ‘1989’ quickly gave way to pessimism as the reality of lengthy economic restructuring set in. In long-term historical perspective, both the lag under communism and the shaky path of the Central and Eastern European economies since its demise have a familiar ring. From the middle of the 18th century, political and economic élites in the region have been preoccupied with its low levels of income and wealth compared to the rest of Europe and have advocated strategies of modernization to raise them. Since the mid-19th century, successive shocks on the scale of the collapse of the Soviet Union have led to dramatic, sometimes revolutionary shifts in these strategies. Taken together, these initiatives have led to a profound economic and social transformation that resembles the rest of Europe, but the region remains at best a junior member of the European growth league. The story of this persisting lag has not been told systemically because the very shocks that had such far-reaching effects in ‘the lands between’ Germany and Russia make it difficult to measure and interpret the region’s long-term economic performance. As a result, the literature on the region’s modern economic history is sizable but highly fragmented in its coverage.2 My current project seeks to provide the synthesis of the region’s modern economic...

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