The political history of Eastern Europe, not just in the communist but also in the pre-communist era, is a dismal record of authoritarianism, incompetence and corruption. For that reason there is a definite danger of ‘government failure’ in the region, with economic and other policies being pursued ineffectively and incoherently.
In the desire to shun all vestiges of the former regime, there is a real danger of going too far, of privatising and deregulating too much. Given that these countries are some way behind the most advanced countries in their development, it may well be optimal for the state to continue to play a prominent role in promoting growth.
KeywordsBudget Constraint European Nation Soft Budget Constraint Marshall Plan Export Surplus
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