Ohio Wesleyan University Goran Skosples

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Presentation transcript:

Ohio Wesleyan University Goran Skosples 17a. Transition in Practice

The end of the Soviet Union Gorbachev’s ___________ (restructuring) aimed at reforming the central planning system and not replacing it with the market system Boris Yeltsin was supporting a rapid shift toward a market system ___________: Transition to Market replacement of the centrally planned system with private property and liberalized market prices 1991: the SU broke apart  Commonwealth of Independent States (CIS)

Gaidar reforms (shock therapy) The five pillars: Rehabilitation of the Ruble Market liberalization decontrolling prices (except energy), free entry into all economic activity, reforming the legal system Privatization Constructing social security net Converting the defense sector 18

Institutional Reforms in Russia Privatization (mass privatization) management led voucher privatization (Anatoly Chubais) privatization for cash (from 1995) financial-industrial groups (FIGs) – bank-led the tax system needed to be started from scratch too complex financial sector a large number of private small banks many banks failed in 1998 (financial crisis) securities market not well developed 19

Evaluation rampant corruption (kleptocracy) worsened income distribution heavily reliant on natural resources (exports) high oil prices helped Russia pay off its debt to foreign creditors issues with concentration of political power President Vladimir Putin abolished the election process for regional governors  nomination curtailed power of the oligarchs to a degree regional issues with Chechnya 19