Question
What is meant by ‘Shock Therapy’? Explain any four consequences of Shock Therapy.
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Answer
- Shock Therapy: Means a painful process of transition from an authoritarian socialist system to a democratic capitalist system in Russia, Central Asia and East Europe that was influenced by the World Bank and International Monetary Fund.
- Consequences of Shock Therapy:
- Collapse of the state controlled large Industrial complex.
- 90 percent industries were put up for sale at throwaway prices.
- Value of Ruble declined.
- Inflation was high.
- Gross Domestic Product of Russia declined.
- Withdrawal of government subsidies pushed people into poverty.
- Academic and intellectual manpower disintegrated or migrated.
- Mafia emerged and started controlling economic activities.
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