Post-Socialist Transformation of Central and Eastern Europe at the Turn of the Century: Regional Development and Economic Inequality

Abstract

The evolution of socio-economic systems is non-linear, it includes both the periods of smooth changes and subsequent abrupt transformational leaps. The overall structure of new prospects opens as early as at the stage of emerging evolutionary processes, and their forecast requires to analyze the historical premises and risks that are closely associated with the change of public attitudes. With the collapse of the Soviet Union, the newly independent states went through a transformational and evolutionary development stage that led them from a regional economy (since they actually had been the regions) to the national economy, while the countries in Central and Eastern Europe experienced a dramatic drift towards the European Union. This paper examines the results of almost 25-year-long transformation of these countries. The new states that emerged following the collapse of the Soviet Union went through three types of transformation. First, there were transformations on the ideological level. The transformations of the second type were purely economic. The third type can be described as institutional (including structural and financial) transformation. It has been demonstrated that one of the important reasons for modest economic performance in the post-Soviet space was the fact that the new states ignored and did not use the principles of regional policy and regional modernization in their state-building practice. A characteristic feature in the socio-economic evolution of Eastern Europe after 1990 was a sharply emphasized process of stratification and social differentiation occurring against the backdrop of insufficiently strong middle class and the polarization of income levels in different regions. The growing polarization of income levels in different regions represents the dominant trend of rising economic inequality.