Deindustrialisation: lessons from the structural outcomes of post-Communist transition

Theoretical and empirical studies show that deindustrialisation, broadly observed in developed countries, is an inherent part of the economic development pattern. However, post-communist countries, while being only middle-income economies, have also experienced deindustrialisation. Building on the model developed by Rowthorn and Wells (1987) we explain this phenomenon and show that there is a strong negative relationship between the magnitude of deindustrialisation and the efficiency and consistency of market reforms. We also demonstrate that reforms of the agricultural sector play a significant role in placing a transition country on a development path that guarantees convergence to EU employment structures.