Abstract

In former socialist countries, neoliberal reform promised to replace stagnation with growth and development. Many places, however, experienced a decade of economic decline, accompanied by rising poverty. Although even the worst performing economies managed positive growth rates by 1999-2000, this growth starts from levels as low as 36 percent of 1989 levels. Less recognized than the problem of rising poverty is the erosion of development gains in countries once characterized by high human development. This article distinguishes de-development from the widely recognized issue of poverty. The authors find that transition outcomes are mixed but that de-development can be seen in parts of Central and Eastern Europe and most of the former Soviet Union. One important question is how to use renewed growth to prevent further erosion of development and to recapture lost gains.