Question

What was the effect of shock therapy on the political system, democratic institutions and constitutions and judiciary of the post communist republics? What helped in the revival of these countries? Explain​

Answer 1

Explanation:

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Answer 2

Answer:

Shock Therapy was a painful process of transition from an authoritarian socialist system to a democratic capitalist system. This transformation system was influenced by the world bank and the IMF in Russia, Central Asia and East Europe. Though it varies in intensity and speed amongst the former second world countries but its direction and features were quite similar.

This was not the best way to make a transition from communism to capitalism due to following drawbacks:

1. Russia, the large state controlled industrial complex lost about 90 per cent of its industries through sales to private individuals and companies

2. It created “the largest garage sale in history” which led virtual disappearance of entire industries for the restructuring was carried out by market forces in place of government owned policies.

Hence, industries were undervalued and sold at throwaway prices.

3. It systematically destroyed old system of social welfare.

4. The value of ‘ruble’, the Russian currency, declined dramatically due to high rate of inflation and real GDP of Russia also declined between 1989 to 1999.

5. The withdrawal of government subsidies pushed large sections of society into poverty and it emerged mafia to start controlling many economic activities.

6. Privatisation led to new disparities which divided Russia between rich and poor people creating economic inequality.

7. Hence, Shock Therapy brought ruin to economies and disaster upon the people of entire region.