Lesson 2.3

​Students Will Be Able To:

• Identify Reason Why Nations Transition to Capitalism

• Explain the Main Problems for a Nation Transitioning to Capitalism.

• Describe Why is Capitalism Different in Different Countries.

​Former Soviet Union
Russia

​Chile

​Venezuela

​Czech Republic

​Problems of Transition to Capitalism

•The transition of communist and socialist economic systems to capitalism has been the dominant economic trend of our lifetime.

•Privatization is necessary for the conversion of state-owned property to private ownership.

•The ruling party in a communist or socialist economy fears the loss of political power during a transition to capitalism.

•Citizens have to learn to make their own decisions, take initiative, interpret prices, and fend for themselves in free markets.

•Many countries underestimate the costs of converting to capitalism.

​Countries & Regions in Transition

•In Russia, the decades-long transition to capitalism resulted in a move toward a market-based economy, with the exception of government-controlled energy, banking, mineral, and defense-related industries. Under President Vladimir Putin, market reforms stalled.

•After the failure of the Great Leap Forward, China was influenced by successful market economies in Asia and today is undergoing some privatization and other capitalistic endeavors.

•In Latin America, socialism still exists in Venezuela and Argentina, but Chile has made the transition to capitalism.

•After the Soviet Union collapsed, many Eastern European countries transitioned to capitalism, including Poland, Hungary, the Czech Republic, and Slovakia.

​Other Faces of Capitalism

• Compared to the U.S. government, the Japanese government is much more involved in the day-to-day activities of the private sector.

• By opening its markets to world trade, South Korea has progressed from one of the poorest countries in Asia in the mid-1950s to a leading producer of electronics and automobiles today.

• The government in Singapore has focused on a few select industries, pouring money and resources into pharmaceuticals, medical technology, and financial and high-tech industries.

• Taiwan has always depended on economic planning and was one of the early economic powers in Asia, but its centralized planning and looming presence of China may hamper future economic growth.

• Sweden has a mix of high-tech capitalism and liberal welfare benefits