The Transformation of the
Czechoslovak Economy and
In the European context, Czechoslovakia had a relatively developed economy before World War II. During the postwar period, as a consequence of implementation of the Soviet type of centrally planned system and the distortion of its foreign trade relations due to its incorporation into the Soviet bloc, Czechoslovakia lost its economic efficiency. Even if Czechoslovakia and Eastern Germany had the most efficient centrally planned economies, relative to the Western European market economies, they now have far lower labor productivity and are technologically backward.
The events of November 1989 at last opened the possibility to implement a democratic political system and to start the process of transition from a centrally planned to a market economy. All over Eastern Europe, efforts to transform the existing centrally planned economies into market ones are growing and becoming stronger. Until now, this transformation process has not been successful, and all the East European countries are facing new unresolved problems.
Apart from the former East Germany, which, after the unification of Germany, has rather special conditions, the problems and risks involved in the process of transition are very similar in all of the East European countries, even if their preconditions and relative stages of development are different.
At the very beginning of the transformation process, Czechoslovakia had the advantages that the disequilibria in the economy were not too great and that it has a relatively skilled and cheap labor force. As a latecomer to