Berlin - Twenty years after the Berlin Wall crashed down, Eastern Europeans are now dealing with a much harder landing - that endured by some of their economies after 20 years of expansion. After several years of high unemployment and declining productivity, many of the region's economies began to recover in the mid-1990s.
According to figures from the Vienna Institute for International Economic Studies (WIIW), gross domestic product per capita in the region soared, doubling or tripling for some countries, between 1991 and 2008.
Thus, GDP per head in the Czech Republic went from 8,800 euros (13,100 dollars) to 20,400. Other countries registered similar gains: from 5,500 euros to 16,300 in Estonia, 4,000 euros to 11,300 in Romania and an eye-popping 8,500 to 22,800 in Slovenia.
But such rapid growth did not mean that every citizen of those countries enjoyed the benefits of the new economy evenly. And the sudden push into a capitalist system meant many people now had to deal with bankruptcies and unemployment, concepts that had been foreign under the Communist systems.
"People had to learn to live with the fact that enterprises entered the market and might leave the market," said Sandor Richter, a senior researcher at the WIIW.
That could create jarring change. Some state industries were exposed as being decrepit. Foreign investment flowed in and credit became available in some of the more progressive economies, but this in turn heated up financial systems unprepared for the flow of money.
And always, there were some losers, those who could not adapt to the new system.
"There is no doubt that the level of economic development of the former Communist countries was clearly catching up to the level of Western Europe," said Richter. "How this development was subjectively perceived by the population is another question."
Every region experienced the changes differently. The Czech Republic managed to morph into an export-oriented country with strong public finances, says Richter. Hungary, he notes, has watched its economy falter thanks to government-level mismanagement.
And then there is East Germany, which had the benefit of latching on to a Western European nation with a strong economy.
But Ulrich Blum, president of the Halle Institute for Economic Research, based in eastern Germany, said there were pros and cons. Yes, eastern Germany received strong economic support from the West. But it also was forced to work within the confines of German bureaucracy, while other nations were free to experiment.
"I think that is part of the problem. We loved our neighbour so much, we abstained from doing proper research," says Blum. "If you have to act fast, you make errors."
Additionally, the close ties with western Germany made it hard for businesses to take wing in the former East Germany. Many West German companies were content to locate factories in the East, but not headquarters. And many East German startups soon found themselves brought out by their western counterparts.
"We lack headquarters, we only have extended workbenches," says Blum. "If we don't set up headquarters structures, we risk falling behind."
There are ongoing efforts to create a separate East German industrial identity, he says, with a focus on biofuels, solar power, life technologies and lighting. But work remains to be done. "We are now at a level of 70 per cent of the West. We have been at that level for 7-8 years and that is unsatisfactory."
Nonetheless, integration into West Germany has provided somewhat of a shield from the ongoing financial crisis. Other nations, like Latvia, Hungary and Serbia have had to turn to the International Monetary Fund for aid.
There was little chance that the financial spasms crisscrossing the world the last two years would have left Eastern Europe unmolested. But Richter says some of the economic practices of the governments there left those countries with weak budgets and unable to combat the economic crash.
Other problems stemmed from consumers playing catch up with the West. Hungarians taking out loans in euros or Swiss francs found themselves heavily indebted when the forint suddenly lost value. Reliance on foreign financing also left some countries high and dry when financial markets locked up and international lenders opted to keep their money at home.
Thus, 20 years on, some Eastern European nations find themselves relearning some of the economic lessons to which they were first introduced back in 1989. Signs of hope abound - Poland never slipped into recession - but for many, the move toward economic recovery in 2009 and 2010 might bring back unwanted memories of 1989.
