Given below are two statements
Statement (I): The model of transition in Russia, Central Asia and East Europe that was influenced by the World Bank and the IMF, came to be known as the "Shock Therapy"
Statement (II): The Shock Therapy varied in intensity and speed amongst the former second world countries
In the light of the above statements, choose the correct answer from the options given below.
Answer & explanation
Correct answer: option 1
The correct answer is Option 1- Both Statement I and Statement II are correct
The collapse of communism was followed in most of these countries by a painful process of transition from an authoritarian socialist system to a democratic capitalist system. The model of transition in Russia, Central Asia and east Europe that was influenced by the World Bank and the IMF came to be known as ‘shock therapy’. Shock therapy varied in intensity and speed amongst the former second world countries, but its direction and features were quite similar. Each of these countries was required to make a total shift to a capitalist economy, which meant rooting out completely any structures evolved during the Soviet period. Above all, it meant that private ownership was to be the dominant pattern of ownership of property. Privatisation of state assets and corporate ownership patterns were to be immediately brought in. Collective farms were to be replaced by private farming and capitalism in agriculture. This transition ruled out any alternate or ‘third way’, other than state-controlled socialism or capitalism.