Reforms in Eastern Europe and the Former Soviet Union in Light of the East Asian Experiences

During the past five years, there has been an important debate over the differing styles of market reforms in the formerly planned economies in East Asia versus Eastern Europe and the former Soviet Union (EEFSU). This paper puts forward three related propositions. First, the rapid growth of East Asia, compared with economic contraction in EEFSU, reflects differences in economic structure and initial conditions, rather than differences in economic policymaking. Second, East Asian gradualism could not, and did not, work in EEFSU. Third, EEFSU continues to face serious problems with an overextended welfare state inherited from the socialist period.