• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month
  1. 1
  2. 2
  3. 3
  4. 4
  5. 5
  6. 6
  7. 7
  8. 8
  9. 9
  10. 10
  11. 11
  12. 12
  13. 13
  14. 14

The Legacy of COMECON

Extracts from this document...


The end of the Soviet Union as it were and the collapse of the Communist System of governance in Eastern Europe inevitably led to the demise of organizations like the Warsaw Pact and the Council of Mutual Economic Assistance (CMEA or Comecon). What is uncertain is whether or not the demise of the communistic answer to the Marshall Plan, i.e.: the Comecon, was a move that was advantageous to its member states or not. During the course of this essay, I will attempt to argue that it was indeed advantageous to these countries, inspite of the lingering problems that these countries have in adapting to economic reform. I will attempt to illustrate the problems faced by these countries during the Comecon years, how and why these problems have changed in the post Comecon era, what steps they have taken to lessen the impact economic, social and political reformation has on their people, and try to give a possible indication of the direction they are headed. The Nature and "legacy" of Comecon Comecon arose mainly out of Stalin's condemnation of the USA's Marshall plan. Stalin noted the need to formulate an economic organization for the Communist states to mirror that of the capitalist Marshall Plan. By 1949, he had set up the Comecon and besides the USSR, Czechoslovakia, Poland, Hungary, Rumania, Bulgaria, Albania, and the GDF signed up. In 1962, Mongolia joined as well. Cuba joined later on to emphasize the Russians view of Comecon as being a politically fuelled economic organization Within the framework of Comecon, decisions were taken to streamline the Eastern European Economy. Competition, in keeping with the Marxist ideology, was seen as a waste of resources, and the Comecon countries managed to avoid this by allocating certain industries to certain countries, for example, East German and polish shipyards built what was to become the soviets Navy, Hungary was allocated truck production and Slovakia specialized in arms production. ...read more.


Simultaneously it became necessary to create an adequate institutional framework for this new private sector. Another important problem facing the newly decolorized as it were, nations, was the distortion of the real economy in the Comecon days. The main factor here was the almost exclusive geographic orientation to Eastern Markets. Czechoslovakia for example, had 70% of their foreign trade with countries of the Comecon. After the collapse of the Comecon, this heavy dependence had severe consequences for many of the Czech companies. Another problem that the Czechs can relate to is the deformation in the structure of production and trade which was aggravated by the policy of economic self-sufficiency. The Czechs produced almost 1000 kg of steel per capita that made it the top steel producer in the region. The problem was that the Czechs had no comparative advantage in steel production and they built a number of new products and industries aimed at supplying the Soviet market, which inevitably collapsed. The deformation of the real economy was intensified in many of the countries by excessive concentration that resulted from the deliberate creation, through Comecon, of big companies and monopolistic structures that remain a big problem in the transition period because trying to dismantle them causes a lot of social problems. Also, many of the economic problems of transition stem from human factors. The first one being that the structure of education and the mix of skills in a command economy (Comecon days) do not match those of a market economy and hence the need for a huge upheaval The second, as aforementioned, is that there is a need to reform the way people think, many grew up living under socialism and this shaped their qualities and mentality. Public support has to be garnered in order for transition to work and human resources is yet another avenue that needs increased attention. The unique circumstances in which the countries of eastern and Central Europe found themselves in ensured that their approach to reformation is fundamentally different to those applied in Latin America and Asia. ...read more.


Through the expertise of Western investors and marketers these countries can establish solid foundations upon which to build their economic, political and social futures. It would do the West well to remember that the failure of capitalism does not automatically translate as a victory for capitalism for the people of these countries, the West will need to assist them in seeing and reaping the benefits of capitalism. There is an urgent need for a replacement of the Comecon by a market orientated institution that fosters trade in the region and it is the duty of the more advanced nations to present the Eastern and Central Europeans with a blueprint on how to develop, maintain and implement such a plan. Conclusion All in all, the collapse of communism and that of Comecon and its pretenders provides Eastern and Central Europe with a glorious opportunity. Yes it is an opportunity which is riddled with possible conflict and heightened problems but with the cooperation of the Developed world and the education of their own people, the governments in charge of transition and reformation have a task which ultimately will decide the destiny of their people and of the entire region. The countries of Central and Eastern Europe have broken the chains of political connection with their imperialistic ally, Russia, and have committed themselves to market reform and it would therefore be futile to suggest that the collapse of the communistically based Comecon system is detrimental to their existence. Rather, its demise has presented them all with an opportunity to taste the fruits of the other garden and the planting of economic polices and educating the people will no doubt be difficult, but the road they have chosen is ultimately more beneficial to the people of these countries. The demise of Comecon has only sped up the inevitable and will in the end, prove to be advantageous to its former members. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Economy & Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Economy & Economics essays

  1. Causes of the Great Depression

    Because it had been ignored, agriculture, which was still a fairly large segment of the economy, was already in ruin when American industry fell. A last major instability of the American economy had to do with large-scale international wealth distribution problems.

  2. The Quest for Optimal Asset Allocation Strategies in Integrating Europe.

    Ferreira (2003) for example finds a ratio of 1.130 which indicates that country factors still rule over industry and common effects. Brooks & Del Negro (2002a) conclude that the rise of the industry effects is less pronounced when the sectors of the IT bubble (Technology, Media and Telecommunication, TMT afterwards)

  1. The Ohio Pilot Scholarship Program

    is itself a research concern of this project (see Gadamer 1975: 5-39 on the relation between claims to universality and the methods of the human sciences). Thus, tensions raised by claims to universality on the part of citizens of Montreal opposing amalgamation, or residents of Dublin complaining about the encroachment

  2. Free essay

    From an economic perspective should my council do more to recycle a greater proportion ...

    glass, cans, textiles, household batteries, plastic bottles, cardboard, and garden waste recycling centres, home composting, washable nappies, recycling of furniture and bulky items This shows most household waste can be recycled by the kerbside services so this means residents cannot complain of not being able to drive to recycling centres.

  1. Differences between the standards of living in Slovakia and The Hague

    people earn less most of the time, there fore cant support their family as much as people who work full time and earn more money. Once again, the GDP gets increased. What Sector do you belong to? Service 15 Business 16 Manufacturing 4 Agriculture 1 Other 14 I find this

  2. Tax Policy in Europe

    A small business is defined as a property with a rateable value of under �15,000 outside London and under �21,500 within London. Transitional arrangements are based on the change in your rates bill from 2004/05 to the rates bill you received in 2005/06.

  1. Split Votes: A Nation Divided on the Marijuana/Drug Legalization Debate

    Ehrenreich shows that it is an outdated moral stance mimicking the Puritan ancestry this country evolved from. Media personnel use a variety of techniques to promote legalization and/or refute prohibition. They promote institutionalist programs where the government regulates and sells certain illicit drugs, they advocate a moral critical stance that

  2. analyze an organization (ba)

    The airline industry is constrained by the price and excessive promotion of the above substitutes. Heavy promotion of the cheap UK to US calls works against airlines. It could be concluded, that airline industry experiences heavy pressure from substitute products.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work