A Paper by Vladimir Popov (Russia), Advisor at United Nations, Department of Economic and Social Affairs (UN DESA), delivered at the 10th Rhodes Forum on October 6, 2012
While developing countries as a group did better than developed countries in 2008-09 recession, transition economies – former communist countries – experienced the largest reduction of output. The hypothesis is that the special feature of the recent recession was the collapse of the overextended financial sector in developed countries, which caused the outflow of capital from developing and transition economies. The latter, being the newcomers to the capitalist world, suffered extremely large outflows. Besides, they did not manage this outflow particularly well, i.e. they allowed the foreign exchange reserves to decline instead of devaluing their currencies.