Popov (2007, 2000), Kolodko (2000), and Stiglitz (1999) argue that a shock therapy approach has a negative effect on post-socialist transition. Their benchmark for shock therapy is a speed of market reforms. The authors propose that a more meaningful benchmark is the experience of the Czech Republic, Russia, and other transition economies which have adopted the shock therapy reforms, but have solved political economy problems of credibility and commitment differently. The authors compare the Czech Republic’s economic, political, and social performance to these benchmarks in all other post-socialist countries since they began their transitions. The authors find that the Czech transition is a consistent success because the Havel shock therapy has solved the political economy problems of reform’s credibility and state’s commitment to reform.
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