Financial Crisis in Central and Eastern Europe – Development Differentiation in the Regions (original) (raw)
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2011
The 2008 crisis shows that the dominant economies were not as dominant as they thought" says Dominique Strauss-Kahn, the French former head of the IMF (The Economist, vol. 401, no 8759, 2011). By extension, we can say that Central and Eastern Europe countries were not as weak as we could think. Such a conclusion has been reached by the authors of the volume "Financial Crisis in Central and Eastern Europe: From Similarity to Diversity", co-edited by Grzegorz Gorzelak, Chor-Ching Goh. The book is the result of an international seminar organized in September 2009 by the Centre for European Regional and Local Studies, University of Warsaw (EUROREG) and the World Bank and gathers different contributions of outstanding experts from new and old Europe, providing a distinctive perspective on the current economic and financial crisis. The book includes three sections covering 19 chapters. In the first section, four authors, W.Orlawski, M.Lennert, I.Gill and B.Quillin, provide a general view on the crisis, its main causes and evolutions. Orlawski (p.10-15) identifies 10 factors which led to the current crisis, from robust changes in the distribution of the global economic and financial power, globalization process, demographic changes, development of derivatives market, development of the whole financial market, inability to correctly assess the risk connected with investment in various financial instruments, the wave of "irrational exuberance", recklessness of financial institutions, serious financial institutions management errors and fatal errors of the economic policy, all of them located first in the USA. He concluded that "the combination of the 10 factors proved to be deadly for the global finance" and that "only a serious, coordinated effort on a global scale may secure that the crisis of 2008-2009 does not recur in the years to come". At the moment of writing this book review (November 2011), the euro zone found itself in a very difficult and complicated situation, revealing that coordinated efforts are still waiting to be carried out. Lennert (p.17-25) tried to find some patterns in the crisis' evolution, a crisis which he considers to be a structural one. According to