Question

explain the concept of shock therapy?

Answer 1

The model of transition in Russia, central Asia and east Europe that was influenced by the ‘World Bank‘ and the IMF came to be known as ‘Shock Therapy‘. This was a transition from authoritarian socialist system to a democratic capitalist system. And is a term used by some non-economists to refer to the sudden release of price and currency controls (economic liberalization), withdrawal of state subsidies, and immediatetrade liberalization within a country, usually also including larger scale privatization of previously public-owned assets.