Turmoil at Twenty: Recession, Recovery, and Reform in Central and Eastern Europe and the Former Soviet Union

This book, written on the eve of the 20th anniversary of the fall of the Berlin wall in 1989, addresses three questions that relate to recession, recovery, and reform, respectively, in Europe and Central Asia (ECA) transition countries. Did the transition from a command to a market economy and the period when it took place, plant the seeds of vulnerability that made transition countries (the region excluding Turkey) more prone to crisis than developing countries generally? Did choices made on the road from plan to market shape the ability of affected countries to recover from the crisis? What structural reforms do transition countries need to undertake to address the most binding constraints to growth in a world where financial markets have become more discriminating and where capital flows to transition and developing countries are likely to be considerably lower than before the crisis? This report is structured as follows: chapter one of the book analyses how countries fell into recession and crisis, why not all of them were equally affected, and whether different policies could have positioned them better to face the crisis. Chapter two discusses rescue and stabilization and the role of international collective action. The next two chapters focus on policies for recovery, chapter three on restructuring bank, corporate and household debt and chapter four on scaling up social safety nets. Chapters five and six focus on reform, examining the binding constraints to growth and the policy agenda in the most important sectors identified by that analysis.