ABSTRACT
The year 1989 was an important turning-point in the trajectory of the European space economy in that it saw the abandonment of a communist project, one of whose goals was to close a deep-seated economic development divide between East and West. The aim of this chapter is to outline the evolution of this divide, to explain why communism failed in the end to close it in a durable manner, and to indicate and explain the impact of transition. The chapter examines two very different cases: that of Russia with its long-established communist order in which an attempt was made to create new capitalist institutions virtually overnight, and that of the former German Democratic Republic (GDR) whose transition involved the wholesale importation of the well-developed institutions of the German social market economy.
