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Economic Reform in Russia

Published online by Cambridge University Press:  26 March 2020

J.S. Flemming  and
R.C.O. Matthews
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Extract

The rest of this article is organised under the following six headings:

  1. (1) the broadly macroeconomic developments of the Russian economy;

  2. (2) its international experience relating to trade both with the nearer (that is, former Soviet Union (FSU)) and further abroad and capital movements both legal and illegal on market and concessionary terms.

  3. (3) The microeconomic or institutional reform section ranges widely among many aspects of market liberalisation and enterprise reform including specific sectors, finance, taxation, non-compliance and other criminal activity; this leads on to

  4. (4) developments in the labour market, the social sector and the distribution of income and wealth,

  5. (5) followed by political considerations and

  6. (6) a final conclusion relating as much to western policies as that of Russia itself.

Type
Articles
Information
National Institute Economic Review , Volume 149 , August 1994 , pp. 65 - 82
Copyright
Copyright © 1994 National Institute of Economic and Social Research

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Footnotes

∗

We are grateful for comments from other members of the Group and especially to Peter Oppenheimer for sharing insights gained from his continuing work in Russia. Though previously employed by the European Bank for Reconstruction and Development, John Flemming writes in a personal capacity.

The Review is pleased to give hospitality to CLARE group articles, but is not necessarily in agreement with the views expressed; responsibility for these rests with the authors. Members of the CLARE Group are MJ Artis, AJC Britton, WA Brown, WJ Carlin, JS Flemming, CAE Goodhart, JA Kay, RCO Matthews, D Miles, MH Miller, PM Oppenheimer, MV Posner, WB Reddaway, JR Sargent, MF Scott, ZA Silberston, JHB Tew, S Wadhwani and M Weale.

In August 1992 the Group published an article on Russian reform written by Peter Oppenheimer drawing inter alia on his personal experiences there. This article represents a desk-bound sequel. Our periods overlap to a modest extent. 1992 marked the beginning of a new chapter in the Russian reform process. On the first of January that year prices and trade were liberalised by a recently formed government led by Yegor Gaidar who had earlier been Minister of Finance and was a professional economist and analyst o f the Russian economy. Our focus is almost exclusively on the Russian Federation with only passing references to other parts of the former Soviet Union.

Gaidar never expressed confidence in the durability of his tenure or, therefore, of his policies and suffered a number of setbacks in his relations with Mr Yeltsin, with the parliament, and the central bank. After a year he was replaced as Prime Minister, reemerged as a Presidential adviser, and then as a Deputy Prime Minister, under Mr Chernomyrdin, responsible for the economy. He left this last position when the Chernomyrdin government was reconstructed after the disappointment, from Gaidar's point of view, of the general election and the constitutional referendum of October 1993.

Cbernomyrdin promised greater pragmatism and an end to what he called ‘market romanticism’ (in an appeal to sceptics). So far, however, his government's economic policies have shown less change than expected, at least on the macro side. The purpose of this article is to review the new chapter that began in 1992.

References

Notes

(1) See K Bartholdy, Economies of Transition, (forthcoming).

(2) IMF, World Economic Outlook, October 1993.

(3) For a sensible discussion of western lending policy see Hertz, Noreena T, ‘Higher risk is greater safety’ European Brief, July/August 1994.

(4) Medish, Mark ‘Russia: lost and found’, Daedalus, Summer 1994, p 82.

(5) See Q Fan and M Schaffer ‘Government financial transfers and enterprise adjustment in Russia’, LSE Centre for Economic Performance Discussion Paper, No. 191, February 1994.

(6) Simon Commander, Oliver Blanchard, Franco Coricelli, World Bank mimeo.

(7) Fan and Schaffer op. cit.

(8) ibid.

(9) See eg Paul G Hare and Gordon Hughes ‘Industrial policy and restructuring in Eastern Europe’, Oxford Review of Economic Policy, Vol. 8, February 1992.

(10) Leila Webster and Joshua Charap, EBRD Working paper No. 5 July 1993.

(11) Mozhina, MA, ‘Sotsial'naya technologia’, mimeo 1994; see also Mozhina, MA, ed, ‘Izmeneniya v urovne zhizni i sotsial'nye problemy adaptatsii naseleniya k rynku’, Moscow; Russian Academy of Sciences, 1994.

(12) EF Denison, Trends in American Economic Growth 1929-82, Washington DC, Brookings, 1985 p 25.

(13) Feinstein, CH ‘Historical precedents for economic change in Central Europe and the USSR’, Oxford, Credit Suisse First Boston and Oxford Analytica, 1990. The same has been true of other systemic changes which, in principle, should have been for the better, A century or so was needed after the abolition of slavery before the West Indies and the southern states of the US ceased to be depressed. How many decades were needed after 1861 before the emancipation of the serfs led to its hoped-for results in rural Russia?

(14) Snyder, Jack, ‘Russian backwardness and the future of Europe’, Daedalus, Spring 1994 pp 174-201.

(15) Little, IMD; Scitovsky T and Scott M FG, Industry and Trade in Some Developing Countries, Oxford University Press.