The collapse in demand for East European armaments led to a shrinking of the defense output in those countries by 1993 to only a fraction of its size in 1987. The process entailed the release of substantial resources from the defense sector. The recession that accompanied the economic transition process depressed the domestic demand for alternative civilian products. As a result, the civilian sector has utilized only some of the resources released from the defense sector, while the rest have been idled. Only future economic growth and market mechanisms of allocation of resources stand to truly "convert" the currently idle resources.
Originally published in: East-Central European Economies in Transition, Study Papers. Joint Economic Committee, U.S. Congress. 1994, pp. 133-146.
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