What is in economics, what is shock therapy?

In the field of economy, shock therapy refers to a phenomenon that takes place when the adoption of measures that create immediate and rather drastic reforms in the economy. In many cases, governments control shock therapy by suddenly giving up any control of the prices of goods and services on the market or ending government subsidies by a specific industry. The idea of ​​this type of economic strategy is to literally create a widespread change in the economy in a way that is expected to eventually improve the stability of this economy. Business World is likely to identify ways that allow the use of new circumstances as soon as the initial shock has undergone sudden changes.

There are a number of strategies that can be used as shock therapy in the economy. Together with the release of currency and price control, the efforts to privatize certain sectors of the trade world will start to promote the privatization of assets and subneIkas that were once publicly owned. Another approach to shock therapy includes liberalization of trade, effectively issuing with import or export trade. For any of these strategies, the initial reaction is usually in disbelief, followed by ideas how to earn on the new order of things. In the best possible scenario, sudden changes in promoting economic reform and strengthen the economy in a way that would not be possible if the government took any steps to take these serious changes.

While the concept of shock therapy has many supporters, this approach also has detectors. Those who support the idea of ​​this type of rapid and serious changes should be noted that in an economy that is outdated and shows no signs of improvement, these types of intensive changes are sometimes necessary. With this approach of Therapy, it serves to make things to draw enough so that consumers and businesses operating in the country are motivated to create an economic situation that is ultimately better for all involved.

Detractors of shock therapy point to the fact that too many changes in a short period of time have enough potential to move down the economy down, as to move up. As a result, people and businesses can be in a worse state after starting the therapeutic effort. Those opposing the use of shock therapy to cause economic changes prefers methods that include making incremental changes that are measured before further changes.