SHOCK THERAPY AND GRADUALISM - EAST AND C ENTRAL-EUROPE 1990-94

Two economic reforms, shock therapy and gradualism, were introduced af ter 1989 in the changing East and Central European societies. The diff erence in political and economic behaviour and logic, together with th e overall democratic change, create an ideal environment to study peop le's economic expectations in reference to overall satisfaction with t he development of democracy in the area. A high level of positive expe ctations is believed to be crucial in order to realize an effective ma rket economy. Data from Poland, the Czech Republic, Bulgaria (shock th erapy countries); Romania, Hungary and Slovakia (gradualist countries) show a notable difference between the two reform groups. Overall, sho ck therapy countries have a higher level of positive economic expectat ions than gradualist countries, even though the social costs are perce ived by the population to be hasher than in gradualist countries. The population in shock therapy countries also has a higher satisfaction l evel with the way democracy is developing than populations in graduali st countries. These developments seem to be caused by peoples' psychol ogical sentiments and political convictions.