The Effect of the Global Financial Crisis on Transition Economies

This research offers new insights into the effect of the Global Financial Crisis of 2007-2009 on the countries that used to be part of the Soviet bloc by focusing on a cross-regional comparison. Twenty-eight countries are grouped according to different criteria and the corresponding vulnerability of each group is compared. The research links the variability in the groups' responses to the dependence on trade with the European Union, the degree of the transition and economic freedom, and the sectoral composition of GDP. The research finds that what is considered to be an advantage for a transition economy during "normal" times - high degree of economic freedom and trade liberalization, financial system sophistication, and a well-developed service sector - became a disadvantage during the crisis.