Economic Convergence, Inequality and Inclusive Growth: The Paradox of Capitalism in Post-Transition Economies - Economicus

By Fiordi PERNASKA

Abstract
The economies in transition have undergone a dramatic economic transformation as they moved from centrally planned to market-based systems. The economic growth and integration into the global economy that have followed market-oriented reforms has not produced uniform results. In many cases, economic convergence has been accompanied by persistent income inequality and low inclusiveness in the distribution of growth dividends. This tension is a manifestation of what we can call the paradox of capitalism: the very institutional and market processes that lead to economic growth, also generate inequalities in income, opportunities, and social welfare. This article examines the links between economic convergence, inequality and inclusive growth in post-transition economies. The argument is that the market systems of capitalism are structured to promote competition, productivity and efficiency, but the outcomes are heavily dependent on the quality of institutions, governance structures and policy frameworks that shape market behaviour. Without proper regulatory mechanisms and inclusive policies, market forces can also result in wealth concentration, reduced competition and unequal access to economic opportunities. Drawing on the theoretical foundations of classical political economy, especially
the ideas associated with market competition and economic prosperity, the article investigates how the development of capitalism in posttransition settings has produced both growth and structural inequalities. The analysis underscores the importance of institutional development, legal frameworks and economic reforms for productivity dynamics and the capacity of economies to achieve sustainable convergence with more advanced markets. The paper also discusses policy implications for the promotion of productivity-led and inclusive growth in post-transition economies, also proposing a legal innovation. It implies that the enhancement of institutional quality, improving governance and designing policies that facilitate fair competition and broader participation in economic activity are critical to address the paradox of capitalism and ensure that economic convergence is translated into inclusive and sustainable development.