Europe is a divided continent. There are massive differences between east and west. These include cultural, religious, historical and economic differences. Although the continent is increasingly becoming integrated, and attempts have been made to bring these two distinct regions closer together, still there remains significant divergences. In fact, one of the most noticeable, and hardest to address differences is the level of wealth. Eastern Europe is much poorer than Western Europe. But why is this? Well, let us explain…
1. The Legacy Of Communism
A first reason why Eastern Europe is poor is because of the legacy of communism.
In 1917 Vladimir Lenin and his Bolshevik party seized power in Russia. Following the Russian Civil War (1917-22) they established the Soviet Union and set up a communist economic system in the country. After Russia’s victory over Nazi Germany in World War Two, The Soviet Union installed communist dictatorships across Eastern Europe. These lasted until the fall of communism in Europe in 1989 and the final collapse of the Soviet Union in 1991.
Communism has left a massive legacy in Eastern Europe, and it is one reason why it is poor today. The communist economic system failed to bring prosperity. It also failed to develop an efficient economy, adequate investment, an entrepreneurial spirit or a strong civil society. When communism fell in Eastern Europe, efforts were made to install a capitalist economic system across the region. However, the lasting effects of communism have resulted in Eastern Europe failing to become prosperous.
Different countries across Eastern Europe have been more successful at moving away from communism than others. The ones that have moved furthest – Poland, Estonia and the Czech Republic, for example, are beginning to proposer. However, countries such as Albania, that have failed to rectify the economic scarring left my communism, remain stubbornly poor.
2. Mass Emigration
A second reason why Eastern Europe is poor is because of mass emigration.
Since the fall of Iron Curtain and the end of communism in Eastern Europe in 1989, millions of people have migrated from the region. Most have moved to Western Europe to seek better jobs and higher standards of living. Since countries such as Poland, Hungry and the Czech Republic joined the European Union in the 2000s, and received the right to freedom of movement across the bloc, emigration from countries such as these has only increased.
Emigration has kept Eastern Europe poor for a number of reasons. As often young, talented and entrepreneurial people leave the region, they take their skills and expertise with them. As these people begin to prosper, they often keep their wealth in their adopted countries. This starves many countries in Eastern Europe of taxation revenue and investment. Innovation, entrepreneurship and highly qualified staff are all drained from Eastern Europe by mass emigration.
Although some people who left Eastern Europe return home eventually, bringing their wealth, education and knowledge with them, a large proportion never return. This is a major reason why Eastern Europe has remained poor.
3. History Of Conflict
A third reason why Eastern Europe is poor is because of it history of conflict.
Throughout history, many wars have been fought across Eastern Europe. All have left a lasting legacy on the region. Most recently, the Eastern Front of World War Two saw enormous German and Soviet armies, clash across Eastern Europe. The death, devastation and trauma caused by this massive conflict can be felt throughout Eastern Europe, even to this day.
Even more recently, countries in Eastern Europe have seen wars. In the 1990s, the breakup of Yugoslavia saw conflicts across Slovenia, Croatia, Bosnia, Serbia, Kosovo, Montenegro and North Macedonia – some of which have struggled to recover. The 2014, Russia invaded Ukraine. This was followed by the increased incursion in 2022 which has resulted in the largest war in Europe since 1945. This war is likely to keep Ukraine – the largest country in Eastern Europe, poor for decades to come.
Conflict is one of the biggest factors that makes a country poor. It destroys homes, businesses and infrastructure and leaves deep and lasting economic scars. The wars Eastern Europe has seen throughout its history contribute significantly to why it is not a prosperous region.
4. Lack Of Industrialization
Another reason why Eastern Europe is poor is because of a lack of industrialization.
From the late 18th and into the 19th century, Western Europe went through the Industrial Revolution, where technology was used to build economies based on manufacturing. This generated immense wealth. However, this process did not occur, or at least not to the same degree, in Eastern Europe. In fact, Eastern Europe remained mainly unindustrialized way into the 20th century.
When Eastern Europe did adopt industrialization, it was mainly under the communist regimes that governed the region after the Second World War. These governments focused on heavy industries and used centralized economic models to develop their industrial base. This was combined with massive state subsidies. As a result, when communism fell, Eastern Europe entered a period of de-industrialization as inefficient and unsustainable industries collapsed when exposed to market forces.
To this day, Eastern Europe lags behind Western Europe and North America in terms of industrialization. Some countries in the region, such as Poland, Estonia and the Czech Republic, are catching up and especially are adopting computer technology to develop advanced economies. However, much of the region lacks the industrialization needed to be become wealthy.
5. Poor Governance
One of the reasons why Eastern Europe is poor is because of a lack of good governance.
The way a nation is governed plays a vital role in its prosperity. Governance is more than just the political system of a nation – it also includes the checks and balances that prevent the consolidation of power, as well as the mechanisms that ensure accountability within the system. Governance also extends to the attitudes and beliefs of a country’s leaders, as well as their willingness to not abuse their power.
Eastern Europe is poor because many countries in the region lack good governance. Although some nations in Eastern Europe have joined the European Union and therefore met certain governance criteria, still the political and economic systems in Eastern Europe generally lack transparency, accountability and inclusiveness.
Corruption is higher across Eastern Europe than in Western Europe. This shows the lack of good governance in much of the region. It is also an additional reason why it is poor.
6. Inefficient Economies
A further reason why Eastern Europe is poorer is because of its inefficient economies.
For a nation to become prosperous, it needs to have an efficient economy. Economic efficiency means that resources, including people, goods and enterprises can be allocated to where they are needed. Having an efficient economy means the connections needed for an economy to work well can be made. Essentially, economic efficiency is the driver for economic growth – without it a nation will remain poor.
Eastern Europe is plagued with economic inefficiencies. The economies of many countries in the region retain the deep scars caused by the rapid adoption of capitalism following the fall of the Soviet Union. Their economies also lack the dynamism and diversity needed for the region to become wealthy.
As with many factors keeping Eastern Europe poor, there are wide variations between the nations of the region. Countries that have joined the European Union generally have managed to increase their economic efficiency and thus have become wealthier. However, other countries in Eastern Europe, such as Kosovo and North Macedonia, remain poor due to their lackluster economies.
7. Geography
A final reason why Eastern Europe is poor is because of its geography
Geography is another factor that has a significant impact on a country’s ability to generate wealth. For example, extensive arable land is needed to grow food and sustain populations; navigable rivers and access to the see are vital for moving people and goods and developing trade; mountains, rivers and forests provide natural defences and help protect population centres.
Although Eastern Europe has some advantageous geography, it lacks a range of features that might have helped it become prosperous throughout its history.
Much of Eastern Europe, especially Poland, Belarus and Ukraine, is extremely flat. This is great for producing food, but makes it easy for invading armies to attack. This is one reason why Eastern Europe has historically been plagued with conflict. The southern portion of the region, including the Balkans, is mountainous, making building infrastructure difficult. Many parts of Eastern Europe also lack access to the sea, which limits possibilities for international trade.
Eastern Europe has far from the worst geography in the world. However, compounded with other factors, the limitations the region’s geography places on the nations of Eastern Europe adds to the reasons why they are poor.