Turmoil at Twenty

The transition economies of Central and Eastern Europe and the former Soviet Union, among all emerging- and developing-economy regions, have been hardest hit by the global economic crisis of 2008-09. This is partly due to the region’s deep integration into the global economy across many dimensions—trade, financial, and labor flows. Attempts by countries that came later to the transition to catch up rapidly to Western European living standards at a time when global liquidity was unusually abundant, together with some policy weaknesses, made them vulnerable to reversals in market sentiment.

Written on the eve of the twentieth anniversary of the fall of the Berlin Wall, 'Turmoil at Twenty' analyzes the run-up to the current crisis and addresses a number of key questions related to vulnerability to the recession, expected recovery, and necessary reforms in the region:
• Did the transition from command to market economies, and the period during which this took place, plant the seeds of vulnerability that made transition countries more prone to crisis than other developing countries?
• Did the choices made on the road from plan to market shape the ability of crisis-hit countries to recover? What combination of domestic policy reform and international collective action is needed to bring about a recovery and minimize the humanitarian cost of the crisis?
• What structural reforms are needed today to address the most binding constraints on growth in a world where capital fl ows to transition and developing countries are expected to be considerably lower than before the crisis?

'Turmoil at Twenty' will be of interest to policy makers and their advisers, researchers, and students of economics who seek lessons from the current economic crisis, as well as scholars of the transition.