Building Capitalism: Lessons of the Postcommunist Experience

Publication Date: December 2001

Publisher: Carnegie Endowment for International Peace

Author(s): Anders Aslund

Research Area: Economics

Type: Brief

Coverage: Former communist countries

Abstract:

One decade of postcommunist transformation has brought widely differing outcomes to the countries of the former Soviet bloc, ranging from fairly normal market economies to state-owned and state-controlled economies.

These economic systems and their performance have directly resulted from the policies the countries pursued. No country has suffered from too radical reforms-liberalization, stabilization, and privatization have driven growth. The main problem limiting growth in countries with gradual or no reforms is the rent seeking caused by transitional market distortions.

Countries with more effective democracies have produced better market reforms, because the voices of liberal market reformers are more likely to be heard in the struggle with the rent-seeking elite who would continue attempting to make money on the very transition.