There are several remarkable aspects of the changes in social development during transition
from socialist system to market economies in Central and Eastern Europe (CEE) and the
Former Soviet Union (FSU) (henceforth referred to as “post-socialist countries”)
First, transition had a dramatic effect on poverty and inequality in all of the countries: since
the collapse of the Soviet Union the number of poor people increased from 14 million to
nearly 150 million by the mid-1990. In the same period the countries with very equal income
distribution experienced a dramatic rose in income inequality resulting in inequality levels
similar to Latin American countries. (Milanovic 1998, 67–71.) Second, the changes were
very diverse. When in Slovakia and Poland poverty gap was just half percent of the GDP, in
Kyrgyzstan it was nearly 30 percent (Milanovic 1998, 76–77). In Moldova, the income
inequality almost doubled over the first ten years of transition, whereas Belarus remained the
most equal country in Europe regarding income distribution (IMF 2000, 2.) Third, not only
were there greatly different social adjustments between countries due to inevitable system
change, but especially with the path chosen regarding to institutional reforms and
international and global cooperation. Czech Republic, Hungary, Poland and Slovakia were
eagerly joining OECD, NATO, EU and other international organizations, whereas Russia,
Ukraine and Moldova stayed reluctant to processes of Europeanization and globalization.
These choices made, in political decision making and in institutional reforms, have had a
great impact on the welfare state development in post-socialist countries, and will greatly
affect the development and choices available in the future.