Why is Eastern Europe So Poor?

Why is Eastern Europe So Poor?

eastern Europe when you hear these two words together what pops into your mind gray concrete commie blocks maybe some gloomy people with hard Slavic accents and a penchant for downing vodka bottles on the daily or a bunch of other stereotypes that would take too long to list them all the term Eastern Europe has been colloially used in many ways serving as a geographical cultural and political as well as economical classification of a bunch of nations and nationalities indeed countries that fall under this umbrella term can seem less economically or industrially developed or straight up poorer compared to the lavish opulence and technological advancement seen in the western half of the European continent but how did this polarization come to be and why were Eastern European economies not able to develop at the same rate as Western European ones was it the fault of former oppressive and exploitive regimes of a bygone era are the corrupt politicians and institutions in charge to blame or are the brutish Eastern Europeans simply genetically predisposed to poverty of course by now you should expect that there is no clear answer or culprit to point your fingers towards but a plethora of internal and external factors spanning over centuries and today I’m here to present to you said factors and paint a bigger picture about the poverty in Eastern Europe so without further ado let’s begin the west rich poor divide is something that has relatively recent origins in regards to the broader history of Europe back in ancient times an initial southnorth European divide would have been more accurate with legendary factions like Macedonium ancient Greece and the Roman Empire all based around the rich commercial hub of the Mediterranean basin while the rich Nordics and Germanics of today were still dancing around fires and uh praying to trees deep in the forest of Scandinavia however the end of the ancient times and the beginning of the Middle Ages completely changed the power dynamics inside Europe the barbaric invasions and their aftermaths resulted in the fall of old empires and the rise of new ones and for hundreds of years Eastern Europe was heavily affected and disturbed by the plenty of enemies and raiders from the Huns Goths and ironically enough the Slavs to the Mongols and Tatars cascading from the vast empty plains of Eurasia which severely started to hinder economic development because as soon as Eastern kingdoms would rebuild their cities a new horde of equestrian nomads would come to burn it down to the ground again to put it simply the medieval history of Eastern Europe was often defined by a persistent vulnerability to incursions from the east shaping the political landscape and societal development of the region in a way distinct from the relative maritime security enjoyed by some of their western counterparts that’s not to say that the West didn’t have conflicts between each other during this time period they did but for the most part it was with the same repeating characters while Eastern Europe had new ones introduced each season in fact the West’s geography the barrier Eastern Europe provided from foreign invaders and most importantly of all access to the Atlantic Ocean would prove to be essential to their success as once they were presumably isolated from the old world they would manage to discover a new one for themselves yes it definitely should be acknowledged that Western European countries benefited significantly from the money duping cheat code of intercontinental colonialism for centuries whereas Eastern Europeans were caught in the constant struggle for their own survival due to near endless incursions from foreign invading empires like Russia Austria and the Ottomans unfortunately for said empires following the pain and strife of World War I they would all implode one by one and new independent countries like the Baltic states Czechoslovakia and Yugoslavia were carved from the carcasses of their dead rulers the introduction of new nations and political players in Eastern Europe presented the opportunity for brand new alliances and trade deals to blossom as these countries were finally left to their own vices and allowed to practice self-determination for the first time in forever but then World War II happened and following that horrific and brutal affair these freshly independent Eastern European countries were once again raised to the ground with millions of their citizens being laid to waste and then stripped of their sovereignity and placed under another empire sphere of influence and pretty much its direct rule first Nazi Germany and then the USSR which again essentially reset development of these countries and backtracked them under Joseph Stalin’s fierce leadership and watchful eye the Soviet Union established communist republics across the entire eastern half of the continent apart from Greece lucky bastards and the Iron Curtain separated the two Europes culturally and economically it really wasn’t an event eastern Europe during the Cold War was heavily marked by the experiment of communism with its implementation of many ideas that sound good in theory but yielded unsatisfactory results in practice chief among them a centrally planned economy a hallmark of communist regimes in Eastern Europe operated under a fundamentally different logic than that of a market economy instead of production and pricing being determined by supply and demand these decisions were made directly by the state governments set production quotas determined prices and allocated resources often prioritizing heavy industry and large-scale projects over the production of consumer goods this system while aiming for social welfare and industrial growth led to significant inefficiencies the absence of market signals resulted in the misallocation of resources with shortages of some goods and surpluses of others this controlled economic system and inefficiency of allocation of resources also spawned an enormous gray market industry which just further stifled economic growth as many vital goods would be traded in secret and allocated to persons based on corruption furthermore the lack of competition stifled innovation and made these economies less responsive to the needs and desires of consumers ultimately hindering long-term economic development another key feature of these communist regimes was the absence of private property rights and the suppression of entrepreneurship the state owned and controlled the means of production factories land and capital which meant that individuals had little to no opportunity to start their own businesses accumulate wealth or invest in their own economic ventures this stifled individual initiative and innovation as people lacked the incentives and the freedom to pursue their own economic interests without the dynamism and competition that entrepreneurs bring to the economy economic growth stagnated and opportunities were missed furthermore technological advancements in Eastern Europe lacked behind the West on average isolation from Western markets and a lack of competitive pressure meant that there was less incentive to innovate and adopt new technologies this resulted in the production of often subpar goods that couldn’t compete on an international level limiting the ability of these countries to participate in and benefit from global trade these economies and technological shortcomings coupled with growing social and political discontent ultimately contribute to the collapse of communism in Eastern Europe in the late 1980s and early 1990s the fall of the iron curtain exposed the east to the global western market and drastic changes were necessary in order to compete and coales with the much richer and more developed rest of the continent the collapse of communism in Eastern Europe beyond sparking external tensions between former socialist allies created an unprecedented economic challenge how to transition rapidly and safely from centrally planned economies to market-based systems in response some countries notably Poland and later Russia adopted a set of radical reforms known as shock therapy this approach aimed to dismantle the old economic order swiftly and create the conditions for capitalism to flourish the core tenets of shock therapy involved the rapid liberalization of prices which had been artificially suppressed for decades the swift privatization of stateowned enterprises and the implementation of tight fiscal and monetary policies if it wasn’t obvious enough this sudden transition was not smooth sailing at all but rather a very bumpy ride actually bumpier than the average Bulgarian road trip the implementation of shock therapy varied from country to country but its effects were generally profound all across Eastern Europe price liberalization led to immediate and often dramatic increases in the cost of goods triggering hyperinflation in some cases and severely impacting living standards privatization while intended to create a dynamic private sector often occurred at breakneck speed leading to concerns about corruption and the undervaluation of assets while proponents argue that these measures were necessary to break with the past and pave the path for long-term growth the short-term consequences included widespread economic disruption rising unemployment and social unrest setting the stage for further economic and political challenges in the years that followed this chaotic environment marked by rapid change and a lack of established regulatory checks and balances created fertile ground for corruption naturally in many instances these assets and industries were sold off dirt cheap often to individuals with close ties to the former regimes or to politically connected businessmen this process facilitated the emergence of a new class of extremely wealthy individuals you know them you love them oligarchs who amassed vast fortunes and consolidated significant economic and in many cases political power these individuals often use their influence to further enrich themselves at the expense of the broader population and the development of fair and transparent market institutions more crucially these oligarchs had and in a sense still have a major political sway either by buying out easily corruptible government officials to do their bidding or simply becoming part of the parliament themselves and passing laws to further increase their massive wealth or bail themselves out of legal troubles yes it’s not too far of a stretch to assume that Eastern Europe might have a problem with government corruption i know how can I say something so controversially hip so brave throughout decades public officials have used their positions to siphon off state funds award lucrative contracts to themselves or their allies and families and manipulate the system to inflate their personal wealth and networks while ordinary citizens struggled with the harsh realities of economic transition facing rising taxes stagnant or falling wages and limited social safety nets these corrupt politicians amassed fortunes further exacerbating the gap between the rich ruling class and the poor and undermining public trust in the new democratic systems but if they were so hated and couldn’t be trusted how did these spineless officials manage to hold on to their cushy parliamentary seats for so long it’s simple really populism a cheap lastminute projects like adding stop lightss to an intersection before the elections and promises to raise the pension funds for the elderly thus securing the votes of their most loyal and none the wiser aging followers this often justified nationwide distrust towards the ruling elite has been expressed through astonishingly low voter turnouts slowmoving economies and more importantly a significant brain drain as many of the most educated and skilled workers particularly young people sought better opportunities in Western Europe and North America this outflow of human capital deprived Eastern European economies of the talent and expertise needed to drive innovation modernize industries and compete efficiently in the global market hindering long-term economic development and perpetuating a cycle of economic hardship in some areas it’s no surprise therefore that in such dire conditions and due to their lack of financial education some people become extremely reckless with their money and possessions and get easily blinded by tempting promises of get-rich quick schemes of course I’m talking about gambling and betting houses being extremely prevalent in Eastern Europe and exploiting povertystricken people with an endless downward spiral of dopamine and despair to those affected by gambling addiction pawning your fridge to bet on a chef cluge game or betting it all on the Lucky Fruits to form a line isn’t just a game but rather a fight for survival and sadly some government officials see rampant gambling not as a societal disease but rather as yet another business endeavor to further fill their pockets however if we were to analyze the premise of Eastern European poverty we would immediately realize that it’s not really poor at all i mean sure the East is only seen as poor when compared to the West but compared to other countries and continents across the world Eastern European countries are quite rich all things considered boasting fast growing economies and enjoying great standards of living it is true that there are some persisting issues to be resolved regarding government inefficiency or corruption demographic shifts and class divides the catastrophic brain drain and dwindling supply of manpower as well as looming tensions and threats of conflict nobody asked for yet despite these hurdles the overall trajectory points towards continued development and increasing prosperity many Eastern European nations either have successfully joined or are seeking integration into the European Union benefiting from access to larger markets and structural investment funds furthermore a burgeoning tech sector a strong emphasis on education in many countries and broader horizons with new trade partners are all contributing to a brighter economic future so while the historic shadows and western centric comparisons might linger the reality on the ground in Eastern Europe today is one of dynamic growth and far cry from the simplistic label of poor as always I hope you enjoyed this video if you did give it a like and smash that subscribe button and if you really did become a member like these wonderful people my name is Yianos and you’ve watched Living Aronic in Europe usa it is not the place to stay hey sh my glass for me don’t tell me that you are gay

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We often joke about how Eastern Europe is poor and behind every conceivable statistic compared to Western Europe. But why is that? In this video we’ll explore just that, and how it actually reaches back centuries.

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Sources

https://www.un.org/esa/desa/papers/2006/wp17_2006.pdf

https://documents.worldbank.org/en/publication/documents-reports/documentdetail/750511468295836867/growth-poverty-and-inequality-eastern-europe-and-the-former-soviet-union