Erik Berglöf - Crisis in Eastern Europe: The People's Perspective (3/4)

The video discusses the evolution of transition economies from communism to market economies and democracies, highlighting the challenges they face due to the Western crisis. It emphasizes the importance of institutional reforms, social safety nets, and financial systems in mitigating the impact of economic shocks. The video also explores survey findings on the weakening support for democracy and markets, particularly in Central and Eastern Europe.

What significant change have transition economies experienced in the last 20 years?

• An increase in communism

• A decline in market effectiveness

• A comprehensive institutional reform process

• A shift from democracy to dictatorship

What is one reason for the weakening support for democracy in transition countries?

• Increased economic prosperity

• Anti-incumbency sentiments

• Strong government policies

• Improved social safety nets

Why are countries in the former Soviet Union particularly affected by the crisis?

• They have developed strong markets

• They have not developed enough democracy

• They have a surplus of social safety nets

• They have a stable financial system

What was a major oversight in Eastern Europe's transition process?

• Too much reliance on Western Europe

• Lack of focus on the social dimension

• Overemphasis on social safety nets

• Excessive financial regulation

How did the financial system contribute to the crisis in Eastern Europe?

• By stabilizing real estate prices

• By reducing market volatility

• By increasing social safety nets

• By feeding asset bubbles

What role does the financial system play during economic shocks?

• It only affects Western Europe

• It protects people against shocks

• It exacerbates the shocks

• It has no significant role

What is a common alternative for financial support in the absence of a functioning financial system?

• Friends and relatives

• Corporate sponsorships

• International loans

• Government aid