Former Centrally-Planned Economies of Central and Eastern Europe
 

Estonia Latvia Belarus Lithuania Moldova Ukraine Georgia Armenia Azerbaijan Turkmenistan Uzbekistan Tajikistan Kyrgyz Republic Kazakhstan Russian Federation	= USSR
Poland East Germany Czech Republic Slovak Republic Hungary Croatia Bosnia & Herzegovina Yugoslavia Bulgaria Romania Albania Slovenia Macedonia

Characteristics of a centrally-planned economy

• government ownership and control
• financial system: monobank system
• egalitarian social welfare network
• no private property rights
• state-owned enterprises
• central planning
• lack of management skills
• ideology of autarky

• mid to late 1980’s
• two new programs: Glasnost: openness in society and Perestroika: restructuring of the Soviet Union
• Overthrowing and/or reforming of governments
• Austerity programs and price increases
• Influx of foreign investment
• Privatization waves
• A free-market orientation
• Help from Foreign nations and groupings
• Help from world organizations (IMF, EBRD)
• Redirection of trade flows

• Inflation
• Weak currencies
• Heavy bureaucracy
• Poorly produced products and poor service
• Unpaid taxes and wages
• Current Account deficits
• Debt crisis
• Intense capital flight
• Infrastructure underdevelopment or aging
• Trade linkages
• Growing black market and crime problems
• Environmental problems

• Need to develop the market for capital goods and technology
• Lack of a private sector. Repressed demand. Slow development of a consumer market
• Low wages. Possible source of low-cost production.

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