Practicing Success

Target Exam

CUET

Subject

Political Science

Chapter

Contemporary World Politics: End of Bi-Polarity

Question:

The collapse of the second world of the Soviet Union and the socialist systems in eastern Europe had profound consequences for world politics. Three broad kinds of enduring changes that resulted from it. Each of these had a number of effects.

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.

Who became the leaders guiding and controlling the development of the region in the context of the shock therapy model?

Options:

Western capitalist states

Collective farms

The former socialist states

The United Nations

Correct Answer:

Western capitalist states

Explanation:

The correct answer is Option 1 - Western capitalist states

Shock therapy also involved a drastic change in the external orientation of these economies. Development was now envisaged through more trade, and thus a sudden and complete switch to free trade was considered essential. The free trade regime and foreign direct investment (FDI) were to be the main engines of change. This also involved openness to foreign investment, financial opening up or deregulation, and currency convertibility. Finally, the transition also involved a break up of the existing trade alliances among the countries of the Soviet bloc. Each state from this bloc was now linked directly to the West and not to each other in the region. These states were thus to be gradually absorbed into the Western economic system. The Western capitalist states now became the leaders and thus guided and controlled the development of the region through various agencies and organisations.