Instructions for action: Reforms in post-communist countries

Time shows that only successful reforms can provide sustainable development. Moreover, one cannot run away from reforms: it be done sooner or later. Instead of reinventing the wheel, we can use the experience of other, more successful reformers, writes “Investor”.Why are some states rich, and others are poor? What contributed to their success? Answers to these questions can be found by looking at their development history. Of course, we will not find a universal recipe for success, but will receive some important lessons.

One can see that all the states of the former communist bloc, after its collapse, remained more or less in the same conditions. Nevertheless, each of the states has chosen its way to development.

Experience has shown that early radical reforms were better than slow and moderate ones. Privatization, however, is a real dilemma: it is essential for a market-economic reform and has become less and less popular. One can notice another tendency – it is never too late to start a change. Slovakia, a country with a delayed start, and Bulgaria, where reforms were accompanied by frequent rolling back, are good examples. However, the main thing is that reforms are not eternal.

The economy needs not only to change, but also to keep those changes. A transformation that has been made in Hungary is an example of how you can start powerfully, and subsequently roll back.

A market economy can be built in a relatively short period, but it requires leadership and perseverance. One must be prepared for fails along the way, as well as the fact that over time, reforms slow down and it affects economic growth.

Experts note that, despite success in many countries, all post-communist reforms have not yet been completed. You can see a certain "action manual" for reform: quick and massive
implementation of reforms; change of power and the arrival of those who seek reform; the main driver of reforms should be the state, because no international institution can help.

One of the main problems is corruption and rent rip offs. The best remedies for these are absolute openness, competition and maximum state intervention.

Therefore, there is no single correct path. Changes are needed. Only reforms and a clear economic policy of the state can contribute to the well-being of the country and its citizens. However, in order to ease the path of change, it is necessary to focus both on successes and mistakes of countries that have already undergone the main path of reform.

In the following materials, we will look at the path of reform in four post-communist countries. These countries have already made changes and their results can be evaluated and used.

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