World Bank Publications

Two decades since the fall of the Berlin wall, Central and Eastern Europe and the former Soviet Union, is experiencing the deepest contraction and is expected to see the weakest recovery in output among all emerging and developing economy regions a result of the global financial and economic crisis. Their commitment to open trade and financial integration as part of the transition from plan to market has brought many gains, but a combination of large global imbalances during this period and policy weaknesses in a number of countries made them vulnerable to the crisis.

The history of debt relief goes back several decades. It reveals that a country’s accumulation of unsustainable debt stems from such factors as deficiencies in macroeconomic management, adverse terms-of-trade shocks, and poor governance. Debt-relief initiatives have provided debt-burdened countries with the opportunity for a fresh start, but whether the benefits of debt relief can be preserved depends on transformations in a country’s policies and institutions.

Southeast Asian tiger economies feel threatened by competition from other countries and worry that their growth momentum might be flagging. Even though their growth rates are above the average for the world and for developing countries, they fall short of yesterday’s economic performance.