The hidden transformation: the changing role of the state after the collapse of communism in Central and Eastern Europe

This article reviews the state's role in the transition economies of Central and Eastern Europe. Among the countries, Poland is perceived as the leader because it was the first economy to emerge from the decline following the transition, as well the only EU member state to survive the crisis without a recession. This success is often attributed to the high quality of government. However, we show that this popular perception is false and that state malfunctions on numerous fronts may soon impede Polish growth prospects. In Poland, the only bright spot is the quality of the financial supervision, which should serve as a role model for other countries. We attribute the malfunctions to the EU accession period that resulted in an unchecked growth of the government and contributed to the weakening of political and legal institutions. Copyright 2011, Oxford University Press.