What do you mean by shock therapy? Explain any four consequences of shock therapy?
Answers
Explanation:
Shock Therapy was a process of transformation of an authoritarian socialist system to a democratic capitalist system.
1. The transition was inspired by the World Bank and International Monetary fund in Russia, central Asia, and Eastern Europe.
2. The therapy was a sudden change that transformed the state-controlled economy into a free market economy.
The consequences of the Shock therapy were:
1. In Russia, the state-controlled industrial sector lost 90% of its industries. The industries were sold to private individuals and companies.
2. Restructuring of industries took place on a large scale. Hence, industries were undervalued and sold at a minimum rate.
3. The value of Russian currency declined and hence the economy of Russia too declined.
4. Privatization divided the society into rich and poor.
Answer:
After the disintegration of the Soviet Union, the model of economic transition in Russia, Central Asia and east Europe which was influenced by the WB and IMF came to be known as 'shock therapy. The shock therapy ruined the economies of Russia and east European countries.
Explanation:
For a meaning of Shock therapy, The dissolution of the USSR was correlated with the downfall of communism in the countries which were members of the socialist bloc. These post-Soviet countries underwent a process of transition from an authoritarian socialist system to a democratic capitalist system