Lessons from the fall of the Wall for Turkey

If you fell into a coma in East Germany in October 1989 and woke up a few months later - like the protagonist’s mother in the German movie “Good Bye Lenin!” - you would find yourself in a completely different country.

The fall of the Berlin Wall 25 years ago yesterday started the rapid transition from communism and central planning to democracy and market-based economies, not only in Germany but all of Central and Eastern Europe as well as Russia.

At first look, the economic transition does not seem to have been a complete success: The region has grown just 1 percent annually. But that number is misleading: All these countries went through a deep recession early on because of the painful initial adjustments. Besides, there has been a huge divergence in growth performance. Poland’s GDP more than doubled, and whereas the rest of Central Europe did reasonably well, ex-Soviet states lagged behind.

In a recent research note, analysts at economics research firm Capital Economics try to explain this divergence. They argue that, other than different starting points of countries, the speed of reforms and degree of entrenchment of the old system were important. But they suspect that much of the difference in economic performance could be explained by the degree of institutional reform.

There may be lessons for Turkey from the Iron Curtain’s transformation. Prime Minister Ahmet Davutoğlu unveiled nine of the 25 transformation programs of the government’s ambitious structural reform strategy on Nov. 6. There are some things to like about the program, such as the main principles guiding it: The relationship between political stability and economic predictability, human-focused development, adjusting to and leading changes...