Avatar for kei 1 апреля 2006

does the thing work?

Avatar for kei спустя 8 минут (1 апреля 2006)

What, if anything, went wrong with the economic reform in Russia? In most concise terms, how should things have been done differently?

Indeed, the economic reform of the 1990s and the collapse of the whole economic system in the USSR was a real chance to modernize Russia and overall convert it into economically prosperous democracy. Russia could have followed the Chinese or the Polish economic reform model in order not to conduct a political and economic reform simultaneously as long is the social tension to many extends was undermining the course of the reform. We assume that notorious “shock therapy” conducted by Gaidar was too much shocking, swift and drastic for Russia at the time. First the institutions and the legal basis must be elaborated and only then the reform should be exercised. Gaidar’s neoliberal program didn’t take into account Russian peculiarity with its huge extractive, energy and military sectors of economy really hard to reconstruct; the reform was too spontaneous and presumptuous, neither had it turned Russia into an attractive site for investment. The neoliberal program was not implemented under competitive conditions and didn't engender further long-term rule-based competition and free market.

During the 1990s there was a raging debate over how to conduct the economic reform. Yeltsin;s associate Egor Gaidar proposed a neoliberal model that embodied in setting the prices free in February, 1992 and carrying out a privatization. Since 1992 Russia was a free ground for investments and for starting a business or a production. However, the problem was that at the time of liberalization the Russian economy was full of former state monopoly producers – some of them remain owned by state up to now like railways or post- and some degenerated drastically, considering the spatial arrangement of industry and the fact that transportation networks were in disarray during the early 1990s. Regarding the other population the Gaidar’s liberalization of prices was impoverishing and undermining their trust in free market and liberal values. People associated liberal economy with crime, unemployment and cheating. What also impacted the trust of people dramatically were the scandals surrounding investment funds where thousands of people lost their savings. Most of the investment funds that sprung up in 1992 and 1993 were supposed to be the vehicles that allowed average Russians to invest in the economy. Ultimately, they turned out to be pyramid schemes or otherwise went bankrupt.

The privatization itself turned out to be “managerial feeding” due to the stock market deficiency and the lack of explanation in the media upon what people were supposed to do with their vouchers and where to invest them. Those who certainly gained from the privatization were the sinecure, mostly former communistic directors of the enterprises, who were close to former state-ruled resources – copper, steel, oil, gas, etc. However actually that was a small group of managers, who later on turned into oligarchs.

Still, not only the existing industry had to be transmitted to private hands, but the industry itself had to be restructured by the economic program i.e. the obsolete unprofitable branches like coalmining or tank-building should have been eliminated and replaced by new high-end technologies. This never happened due to the absence of such kind of program and the lack of investment from abroad. The first reason of low investment in Russia was the government's inability to handle macroeconomic policy in a way that would produce an investment climate attractive to capital. The second reason was the lack of legal infrastructure for protecting investment and property rights. Another related impediment to investment was the deficient legal system, which did not protect or support the entry of new competitive firms.

That lawlessness led to a strong capital outflow in the mid-90s from Russia, when people preferred to keep there assets out of Russia to feel their money are safe and secure somewhere in Switzerland. To prevent such an outflow the government was overvaluating the ruble exchange rate, meanwhile digging a grave to itself by hastening the 1998 default.
Hence, state institutional development should have been an intrinsic part of the economic reform process in general and the privatization process in particular. The clarity on the legal basis for privatization should have existed, including shareholder and investor rights.

The Russian Federation's Chamber of Commerce and Industry estimated in 1995 that, in terms of shareholder’s rights, Russia today is the most unattractive market in the world. Similarly, in November 1995, well after privatization of the most enterprises had been completed, the chamber of Commerce claimed that «there are still no reliable legal barriers to machinations with stock registries».Till now the sharp fall in output since 1991 remains one of the strongest indicators of the failure of the economic reform program in Russia, production has come nowhere close to recovery.
Even in the most favorable circumstances, with 5 percent growth every year starting from the year 2000, it would take Russia fifteen years to get back to its 1989 level of GDP.
Russia now has a growing economy substantially due to high oil prices. We are pretty certain that Russia could have done much better if the economic reform was supported by a legal basis, foreign investment incentive and the rule of law. Finally that would not lead to the 1998 default and to the establishment of the odious Putin’s regime.

Avatar for kei спустя 4 минуты (1 апреля 2006)

Liza Vlasova
to me
More options 7:51 pm (11 minutes ago)
PS. вот примеры оформелния ссылок
тут насколько я помню у Кэрол было 2 претензии - не по алфавиту и цифирки.
Так что если всех расположить в должном порядке и убрать цифры будет хороший образец.
Внутри текста в квадратных скобках указывается фамилия автора, год и страница (если есть)

  1. Concept of Foreign Policy of Russian Federation, 28.07.2002 //National Security of Russian Federation. Yekaterinburg: USU, 2003

2. The National Security Strategy of the United States of America . 17.09.2002 Available at: http://www.whitehouse.gov/nsc/nssall.html 17.03.2006

3. Karl T. L., «The Vicious Cycle of Inequality in Latin America,» in Susan Eva Eckstein and Timothy P. Wickham-Crowley, (eds.), What Justice? Whose Justice? Berkeley: University of California Press, 2004.

4. Chumakova M. L. "Society of XXI century. Latin America: Power and Policy in Public Opinion//Latin America, 2005/08

5. Yasin E. Economy and Democracy. 1.11.2005 Available at: http://blog.abakanradio.ru/01.11.2005/3 17.03.2005

6. «Democracy's Low Level Equilibrium,» (Economist one page article on results of Latinbarometer attitudes). 12.08.2004


7. Smith P. Democracy in Latin America: Political Change in Comparative Perspective (Oxford 2005), chapter 10, 263-285.

8. CIA. The World Factbook Available at: http://www.cia.gov/cia/publications/factbook 17.03.2006

9. Diaz-Cayeros A. Example 1: Latin America. IDL-105. Lecture

Avatar for kei спустя 6 минут (1 апреля 2006)

managerial feeding это имелась в виду кормушка для руководства. кто скажет это по-англицки, тому нобелевская премия.

и вообще - режем и исправляем без объяснений, поздно уже - узнавать правила английского языка. первый класс и с ним гора возможностей давно прошли!)

Avatar for lizka спустя 2 часа (1 апреля 2006)

Предложение про то, как это можно было бы сделать лучше: предпринять какие-либо меры, которые бы позволили смягчить инфляцию.
«Например, югославская или бразильская гиперинфляция сопровождались индексацией вкладов населения, оборотных средств предприятий».

Avatar for kei спустя 7 минут (1 апреля 2006)

the Chubays's team could have prevented the capital outflow,strived with the shadow economy and have increased tax proceeds. e