Tag: Russia

General Characteristics of the New Russian Economy

General Characteristics of the New Russian Economy

After the collapse of the USSR, it was easy to predict that a prolonged economic crisis would hit its successor states. First of all because the productive system of the USSR, whose bankruptcy management had worsened in the spiral of the arms race, was already in crisis – even if certain statistical devices, combined with the scarce power of control on the part of public opinion, limited the evidence of such a crisis – to the point of generating the need for perestroika (restructuring) in the last and most enlightened leader Gorbachev Soviet (1985). Secondly, because the transition from one system to another made a transition phase inevitable, in which the “plan” ceased to function before the “market” came into operation.

The latest data, or rather the latest evaluations, on the consistency of the gross national product per capita in Russia speak of 3,220 US dollars in 1991, a figure that would place the country in a slightly higher position than that of the major Latin countries. Americans (Brazil, Mexico and Argentina were around 2800-2900), but very far from that of Western European countries (mostly between 16,000 and 24,000 dollars per capita). The external debt would amount to 80 billion dollars in 1993, which is the fourth most important in the world after Mexico, Brazil and Indonesia. The composition of the active population (1992) is now close to that typical of Western countries, having greatly reduced the rate of agricultural workers (less than 15%) and also that of industry (formerly dominant and now slightly higher than 40%), and that of the tertiary sector (45%) is relatively inflated. But if from 1991-92, the last few years valid for reasonable international comparisons, we turn to internal data compared over time precisely in the years of transition, we find: negative growth rates starting from 1990; a decline in net material product (aggregate comparable to our gross domestic product) of order of 50% between 1991 and 1994 (with a downward stroke especially in 1992); a decline in industrial production of almost the same extent over the same period. At the same time, very strong inflation occurred, which devalued the purchasing power of the ruble by about 300 times between 1990 and early 1993, mainly due to the large public deficit and the carefree use of currency issuance and easy-to-credit credit. part of the Central Bank; this financial crisis continued in 1994 with a sharp surge in October. There is also the unprecedented phenomenon of the flight of Russian capital abroad. The only reassuring fact is that relating to the unemployment rate, which would not have exceeded 2% (1992).

Against the backdrop of this economic situation, a process of economic reforms developed in the early 1990s clearly aimed at transforming the planned and command economy into a market economy, but equally clearly uncertain and contradictory as to methods, times and methods. limits of this transformation. The process began in the years 1989-90, therefore still in the Soviet age, but the “ long march towards the market ”, as it is officially defined, developed above all from 1991 onwards, between strokes of the accelerator (e.g. liberalization of trade, which has greatly reduced the traditional shortage of goods in shops, and opening up to foreign capital) and slowdowns, particularly frequent after the elections at the end of 1993 (freezing of some prices, subsidies and credits to state-owned enterprises). The privatization of small enterprises, especially commercial ones, does not encounter particular obstacles, while that of large enterprises, substantially transformed into joint stock companies (1992-93), is slowly being achieved through traditional systems, of a corporate nature (facilitated sale to cooperatives of managers and employees), but also with courageously innovative methods (free distribution to all citizens of vouchers – worth 10,000 rubles 1992 per person – that can be used for the purchase of shares). There was no lack of deep distrust on the part of citizens; and strong resistance, especially in the broad environment of managers and officials of the public economy, particularly robust in the sector of collective and state agricultural enterprises; despite this, by mid-1993 there were already 200,000 farms and 60. 000 companies (commercial, artisanal and industrial) passed from the public sector to that of cooperatives and private individuals. The employment figures confirm this: public sector employees, who were 91% of the total in 1985, represented 68% of the workforce employed in 1992.

On a more strictly territorial level, the new Russian economy seems to develop in a promising way especially where free economic zones have been established, such as in St. Petersburg, a city close to the West in many senses (another could arise in Kaliningrad also on the Baltic) and on the island of Sahalin, which benefits from the proximity of Japan. Western countries, individually (especially Germany) or through international economic organizations, have in effect openly encouraged the process of transformation of the Russian economy, stimulating it with financial aid conditional on the implementation of reforms; the appropriateness and effectiveness of such aids are also under discussion.

New Russian Economy