The Economies of Eastern Europe
A Multipart Dive into the Intricacies of the Former Eastern Bloc
The Former Soviet Union was one of the most powerful countries in the world. It stretched from what is now Belorussia to Japan, and it dominated international politics for nearly a half century after the end of World War II. It’s impacts are still felt by many to this day, and it’s control over Eastern Europe has defined both the politics and economies of the countries.
This series of articles will focus on the development of these countries. Each one has had an interesting path to independence, and many have struggled significantly with their pasts.
Eastern Europe was, and still is, a melting pot of cultures, ethnicities, and ideologies. From the complex ethnic conflicts of the Balkans, to the vehemently anti-communist beliefs of Poland, the region found itself sandwiched between the NATO and the USSR.
Starting right after the 1917 revolutions that deposed the Tsar, communist revolutions began to spring up in Europe and Asia. As the USSR organized, it first gained control of Belarus, Ukraine, and Russia, though many countries would later come under its control in the next few decades.
Soviet satellite states, as they were known, generally followed soviet organization policies very closely. The countries operated thanks to the demand and production the Soviet Union could provide. Subsidies and aid coming from the USSR helped buoy countries whose economies were unable to function independently, and the close ties that these countries had allowed their industry to continue to run.
The largest contribution, however, that the Soviet Union had, was the rapid industrialization of many of the satellite states, as well as many regions within the country. By forcefully reorganizing, deporting, and allocating lands within their borders, the Soviet Union forced many of its member republics into following its economic policies exactly — oftentimes forcing large scale industrialization projects into some places, and in other cases starving swathes of the population over food production. The system engendered into Eastern Europe unease, even as standards of living increased. There was always the chance that the USSR would change its policy, and rapid industrialization could go to waste.
In non-aligned states, such as Yugoslavia, there were other major issues on the forefront as well. The Soviets had a history of treating ethnic minorities poorly, and the ethnic conflicts of the Balkans were only tentatively smoothed over with then-president Josip Tito’s policies. Soviet Emigration was quickly curtailed, as many within Eastern Europe looked to flee to the West for better opportunities. With the Berlin Wall’s construction, the Soviets had essentially closed the Eastern Bloc off from the West — This was the Soviet’s territory.
Of course, this historical tidbit did not last very long, and the different results that it had on various nations are interesting.
The Baltic States — Estonia, Latvia, Lithuania — were among the first to leave the USSR, and they quickly realigned with the West. Lithuania is the most successful of these three, a so-called “Baltic Tiger” — a nation with significant economic growth. The three countries have invested heavily in their populations, emphasizing post-secondary education, and skilled labor. They’re incredible sources of wealth for investors, and some of the most sought after for financial dealings. Within the EU, Lithuania remains a hotspot for financial technology investments. Estonia is an energy independent state that has invested heavily in research and development, hoping to use the full resources that EU membership has to springboard it’s growth. Latvia, while being forced to take IMF loans in the early years of it’s development, quickly started fast growth, becoming one of the largest processing economies in Eastern Europe. All three Baltic States have been exemplars of post-communist success, and are among the wealthiest nations in the world.
Poland remains devoutly anti-communist, with policy that stands in significant opposition to Russia. The government has worked hard to turn Poland into another European workhorse, hoping to emulate Germany’s successes in the East. Now a major exporter of both industrial and military goods, Poland has also been well funded on it’s path to success, and the liberalization of trade it thrived on has been beneficial to the country at large.
The Balkans, on the other hand, were marred with significant strife. Desires to create a Serbian mega-state were thwarted by resistance from ethnic minorities in the region, and multiple wars were fought over ethnicity. The region has observed significant genocidal acts, as ethnic tensions remain a serious sore on the region’s political stability.
This series of articles, focusing on many of the post-soviet states, will hopefully bring a better understanding of the economies, successes, and failures of Eastern Europe, and it’s transition from centrally planned economies to the liberal democracies that many of them are today.
