SERGEY DROBYSHEVSKY: “THE ECONOMIES OF THE FORMER SOCIALIST BLOC COUNTRIES HAVE DRAMATICALLY CHANGED OVER 30 YEARS”

Sergey Drobyshevsky, Scientific Director of the Gaidar Institute, talked to “AiF” Publishing House on how the economies of these countries have changed after the collapse of the socialist bloc.

All countries that abandoned socialism experienced difficult times. However, the crisis associated with the breakdown of the old model was of varying lengths and depths. In Poland, the economic recovery began already in 1992 while in the Czech Republic, Hungary, Baltic countries it happened 2-4 years later. Belarus, Russia, Kazakhstan and Ukraine were declining until 1998-2000. Moreover, if the decline did not exceed 20% in the post-socialist non-CIS-countries, it was much stronger in the former USSR including Baltic States. Russian per capita GDP, calculated by PPP, collapsed by 40% and Ukrainian fell by almost 60%, while the collapse in Georgia and Tajikistan exceeded 70%.

Further speed of economic development depended on how well countries were able to use their resources and geopolitical opportunities.

Poland became a real standout, having outstripped most other countries in terms of growth rates. The secret to success is the combination of the benefits of affiliation with the European Union and economic independence. Warsaw receives huge subsidies from EU funds, and they send these funds not only to develop the Internet and the roadway network, but also for instance, to support agriculture, which Brussels does not allow everyone.

Sergey Drobyshevsky highlighted: “Small and medium-sized businesses are actively developing in Poland with the consumer demand constantly growing. At the same time, they retained theit national currency, which allows the government to adapt the economy to external shocks. The Polish economy grew even during the crisis of 2008-2009, and today, it is one of the most attractive countries for investors.”

Russia's success is modest. According to the per capita GDP calculated according to the same methodology of the World Bank, it returned to the Soviet level only in 2006 and added only 20% by 2018. This is worse than the world average growth since 1990, exceeding 70%. Meanwhile, Ukraine and Tajikistan are among the ten most economically unsuccessful countries on the planet.

Sergey Drobyshevsky concluded: “Russian and Ukrainian challenges dated to the 1990s were associated in many respects with a high share of the defense industry which reduced the production to almost zero. Nevertheless, Russia then regained growth due to an increase in its commodity exports, government investment in the military-industrial sector and agricultural support. The rise of the economies of the former USSR countries was also due primarily to oil and gas, as it was the case in Azerbaijan, Kazakhstan and Turkmenistan, or due to agriculture, i.e. in Armenia and Uzbekistan”.

Monday, 06.07.2020