The socio-economic dimensions of the global economic crisis in Europe and the Commonwealth of Independent States (CIS) are the focus of this issue of Development and Transition. Where does the crisis leave the ‘good governance’ agenda that has been the dominant paradigm for development since the 1990s?

Anders Åslund leads off by arguing that, while governments and international institutions have managed to control the contagion effects, the eurozone should be expanded to include Estonia, Latvia, Lithuania, and Bulgaria, as well as Denmark. Marek Dabrowski suggests that, in the longer term, a return to the ‘governance’ agenda of economic and institutional reforms, both nationally and internationally, will increase global growth. Saul Estrin strikes a similar note in arguing that transition processes in the region are not yet spent, and the crisis is unlikely to fundamentally alter regional and global economic integration (the principal drivers of transition). However, these processes seem likely to be accompanied by greater elements of state direction and regulation going forward. For example, Anja Shortland argues that bank nationalization can help retain savings, particularly when the regulation of private banks is of poor quality.



                                          © Martin Roemers/Panos pictures


The Baltic states–formerly poster children for rapid reform and fiscal rectitude–have been among the most severely affected in the region. In comparing the Baltic economies’ post-1990 development patterns to those of the Nordic economies during 1945-1970, Rainer Kattel argues that the Nordics’ macroeconomic policies helped pave the way for long-term innovation, and growth, financed by domestic savings. By contrast, the Baltic states’ macroeconomic policies seem to have produced a case of ‘globalization gone astray’. Kattel suggests that the Baltic economies after the crisis will continue to have an unstable character, as small domestic savings pools will combine with fixed exchange rates to create ‘Ponzi scheme’ risks in external finance.

Balázs Horváth calls for policies that address the crisis’s individual components–and their links to such longer-term development challenges as climate change, demographics, and migration. Nick Maddock and Lovita Ramguttee point out that, whereas remittances globally may decline by 5-8 percent in 2009, the drop in Europe and Central Asia could be twice this magnitude. Louise Sperl suggests that such shocks could exacerbate the gender-specific effects of the crisis, in such areas as employment, social protection, health, and education, as well as migration. Aikan Mukanbetova outlines some of these threats in the case of low-income Kyrgyzstan. Andrey Ivanov therefore calls for a response to the crisis that would remove incentives for excessive consumption and financial leverage, while emphasizing health, education, and social protection as per the human development paradigm.

The global economic crisis has led to predictions of mass mobilization and protest in Central and Eastern Europe, as well as other regions (e.g., Latin America). Previous studies have focused on the persistence of protest in the latter region and patience in the former. In comparing recent protests in the two regions, Olga Onuch concludes that, although economic crises can be triggers, other socio-political factors are critically important determinants of mass mobilization.