Why did Neoliberalism Triumph and Endure in the Post-Communist World?

Post-Communist countries have been among the most fervent adopters of free market reforms. Not only did they adopt most of the policies of the Washington Consensus and achieve the same levels of liberalization as other advanced industrialized economies according to standard measures, but they also exceeded other countries in adopting avant-garde neoliberal reforms like the flat tax and pension privatization. Time and again, Eastern European and Eurasian governments overcame expected obstacles to liberalization. This article argues that the post-Communist countries' protracted adoption of neoliberal policies must be seen through the lens of international economic integration and the need to compete with other developing countries for capital, most of which began to liberalize their economies a decade before 1989. Through a process of "competitive signaling," numerous Eastern European and Eurasian countries used the adoption of sometimes extreme neoliberal economic reforms to attract attention from investors.