There are economic reforms like this:
- Unrestricted (liberal). In this case, the current technological mode of management and construction is partially or completely destroyed and replaced by a new one, mainly due to the new technological mode. Examples of this type of economic reform are the reforms of the "big leap" and cultural revolution in China, Stalin in the USSR, Yeltsin in Russia, Pinochet in Chile.
- Limited in nature (gradual). This type differs from the previous one in that the current way of management and construction is not destroyed, it undergoes certain changes and a new one is built on its basis. The following reforms can be named as examples of this type: Xiaoping SS reform in China, S.Yu.Vitte, V.I.Lenin's reforms - NEP, V.V.Putin, D.A.Mendeleev's reforms in Russia.
The first type of reform is often called "shock therapy". Thanks to such reforms, it is possible to achieve intensive reforms in the shortest possible time, but there is a high probability that they will have severe social consequences, especially if the ongoing reforms require breaking the current economic system and building a new one in its place.
Limited modernization reforms, which are gradually shifting from the current model of economic management and construction to a new one, slow down social and economic transformations, but do not have as severe social consequences during and after economic reforms as "shock therapy" reforms.
Regardless of which of these types of reforms are implemented, they are not always successful. This is what we can observe in Eastern Europe, Russia and Ukraine during their transition to a market economy. The 26 economies of Eastern Europe and the former Soviet Union lost a total of 25% of their GDP in 1992-1998. This is 1/4 of the total GDP - a rather large figure that has influenced further decisions and development. The situation is also complicated as a result of Boris Yeltsin's reforms in Russia.
The transformations in Russia in the main directions have led to unpredictable consequences. An example of this can be seen in the following: price liberalization, which has led to a much longer and faster growth than most researchers predicted. The desire to stabilize at any cost has led to the formation of non-payment mechanisms and the transition to barter exchanges, in other words, to the formation of a non-monetary economy on a new basis. The attempt to reform the tax system has led to the development of the shadow economy. The relaxation of state control over the flow of resources led to an unprecedented spread of corruption, although the aim of this reform was to create a competitive environment. As a result of shock privatization, instead of the planned creation of effective private owners, an inefficient form of organization called an open joint-stock company, which was owned by employees and did not meet the objectives set. Alas, all these transformations were accompanied by an unexpected decline in production.
Many of the phenomena described above have already been observed in one form or another in large-scale reforms in other countries, including in the reform of some Latin American and South American economies. But the challenges of catching-up have not been met because of the reforms in these countries.
In the 1980s, Latin America and the Caribbean experienced an average annual decline of 0.8 per cent and an increase of only 1.5 per cent per year in the 1990s. The Middle East and North Africa experienced an average decline of 1 per cent in the 1980s and an even smaller increase of 1 per cent in the 1990s than in Latin America. Despite all efforts, the Middle East and North Africa lagged behind developed countries in relative change. As this experience was recorded in the literature as a list of "special cases", it was not taken into account in most cases.
After the Second World War, some difficulties and failures were noticed in China during the reform of the "Big Leaps", as well as the "Cultural Revolution", which were accompanied by a fairly large downturn in the country's economy.
In recent decades, very few of the developing countries that tried to catch up with the world's developed countries have been successful through economic reform. Countries that have been able to do so include Malaysia, South Korea, Hong Kong, Singapore, Taiwan, and Japan.