For some, the privatization of Russian industry has been one of the great success stories of Russia’s painful economic transition: quick, firm and radical action was taken to shift the great bulk of Russian industry out of state hands, thereby laying the basis for a radical restructuring of enterprises and improvements in their performance. Others see privatization as a best a failure, at worst a catastrophe. Not surprisingly those opposed to the market and economic reform as a whole share this view. But many commentators who see themselves as supporters of reform find plenty in Russian privatization to criticize: the process led to the transfer of ownership to inappropriate people and as a consequence no beneficial restructuring of enterprises or the economy can be expected.
While this paper will attempt to cover the three key facets of privatization: that enterprises be transferred to private ownership; that the new owners be able de jure and de facto to exercise ownership rights; and, finally and ultimately most importantly, that the new owners exercise their ownership rights in such a way as to bring about improvements in enterprise performance. The key issues to be surveyed, therefore, are: who as a result of privatization obtained ownership of Russian industrial assets, and are they appropriate owners; can new owners, particularly if they are appropriate owners, exercise their ownership rights; and has privatization led to improvements in enterprise performance? The paper will deal with privatization only within the industrial sector; thereby ignoring the highly controversial privatization’s of the last twelve months or so in the energy and utility sectors.
Who are the new owners?
Global data showing about 70% of GNP being produced in the private sector reflects the high levels of privatization of industrial enterprises, with the great bulk of enterprises having been privatized by mid-1994. However privatization does not necessarily mean the complete removal of the state from an equity involvement in enterprises.
State ownership. The state retains shareholdings in a significant number of privatized enterprises on the basis of government decrees declaring the ‘strategic significance for national security’ of the enterprise. Shareholdings range from 20 to 51 per cent or a Golden Share (a single share giving veto rights over certain strategic iss...
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...nagers does not stand up. The indications are that they knew what they were doing and judged that outside owners would eventually assert themselves.
Gradually they are doing so, and gradually they are improving their ability to exercise and enforce their ownership rights. Sometimes they are doing so in ways that are no less reprehensible than the methods of the manager-owners. There are also reasons to be concerned about the long-term consequences of the sort of bank-dominated and highly integrated ownership that many of the outsiders have brought. The best that can be said at this stage is that all modern economies have at their peak a corporate sector dominated by large integrated institutions.
Clearly the private sector, and thereby privatization, has to bear some responsibility for an economy in which it has a 70% share but which is unable to provide in anything like adequate proportions growth or welfare. But in this there are other factors also at work. Indeed there are some small indications, at both macro- and micro-levels, of a positive correlation between private ownership and good performance. With time that correlation could well become stronger and more evident.
Mau, Vladimir. " The road to 'perestrokia': economics in the USSR and the problem of
One of the most significant events in the twentieth century was the dissolution of the United Soviet Socialist Republic (USSR) in 1991. The reason why this event was so significant was because it ended the tension between the Soviet Union and the United States of America, the Cold War, and the reign of one of the greatest world powers at the time. There were many reasons for the collapse, and it has been postulated that the Perestroika reforms had the most significant effect. The reforms, implemented by Mikael Gorbachev, were meant to address the dire financial and economic situation the country was facing as a result of the incompetent Stalin regime. Though these reforms were created with the best intentions, unfortunately they failed, eventually leading to great dissatisfaction with Gorbachev’s leadership. The Communist Party was so displeased with the performance of their leader that they staged a coup d’état to remove him from power (History.com). Thus, by the end of 1991, the Perestroika reforms directly lead to the dissolution of the Soviet Union due to the collapse of the economy, lack of infrastructure of modernization, and failure to move the communist party towards democracy. One of the largest goals of the reforms was to address the broken economy.
Once elected, Gorbachev set out to establish his power in the Soviet Union. Formerly a powerhouse during the early years of rapid economic growth, the Soviet Union was withering away due to the lack of cheap materials available, stagnant population growth, and a lack of trade and mobilization because of previous reforms ratified by Stalin. After years of inert growth during Leonid Brezhnev’s reign, the Soviet Union was in vital need of a new economy, a...
Historically, Russia’s relationship with the West has been shaky at best. From the Crimean War in the 1850’s to alienation following the 1917 Bolshevik Revolution all the way up to the Cold War and the collapse of the Soviet Union, Russia has been “under attack.” This has forced them to adopt a mentality that is based in self sufficiency and autarky. As Western nations attempt to strengthen democracy in Russia in the 21st century, Russia has responded negatively to these perceived “intrusions.” Therefore it is important to ask what role the West should play in Russia’s development and what is hindering this from happening? In her book Russia: Lost in Transition, Lilia Shevtsova outlines two different ways the West can approach development with Russia: let them figure it out themselves or patiently create an international environment that the Russians feel comfortable in. Shevtsova clearly favors the latter. The West’s involvement is hindered however by double standards, ideological differences, and negative perceptions of the West’s motives by the Russian people. These must first be analyzed before showing how a cautious, assertive approach is the best way for the West to assist in Russian development.
Hughes, James. Stalin, Siberia and the Crisis of the New Economic Policy . Cambridge: Cambridge University Press, 2004.
France has very diverse economic sectors. Big enterprises are partially or completely privatized by the government. Such companies include Thales, Air France, Renault and France Telecom. There are other sectors in which the government retains a strong presence, such as public transport, defense and power. The french leaders of the country are persistent in committing to a free market in which they retain social equity through tax policie...
Poverty is a huge problem facing Russia. In a country with such long traditions of statistical manipulation and hostility to the inquiries of the state, it is not easy to pin down the true extent of poverty in Russia. But there is little doubt that the picture is looking increasingly bleak. United Nations figures suggest that the purchasing power of average income in the USSR in 1987 was about $6,000 or 32 per cent of the level of the US (Andrew, "POVERTY: Bleak future for the poor"). By 1996, it was just $4,531 in adjusted terms, or 17 per cent of the US level (Andrew, "POVERTY: Bleak future for the poor"). Since the collapse of the Sovie...
Since the late 1980’s the Russian people have experienced one of the most drastic transitions seen in the world to date, a transition from an attempt at communism to a workable capitalist system. As one would expect, this transition has not been painless and has been the impetus of many distressing problems for the Russian people. One such problem is organized crime. This paper will explore how organized crime during Soviet rule and the Russian Federation has created obstacles in this transition to a functioning market economy. It will illustrate how organized crime has done this by analyzing its transition from the USSR to the Russian Federation, the reasons behind its existence today, and how its operation impairs Russia’s attempts at a market economy. It will also provide some possible solutions for the crises organized crime has created, which currently plague the Russian people. Organized crime has worked its way through openings provided by the transition economy to become a setback to the Russian society and economy. Its existence disables successful economic reform by influencing important issues such as competition, entrepreneurship, capital flight, the shadow economy, and violence.
Russia, a vast country with a wealth of natural resources, a well, educated population, and diverse industrial base, continues to experience, formidable difficulties in moving from its old centrally planned economy to a modern market economy. President Yeltsin's government has made substantial strides in converting to a market economy since launching its economic reform program in January 1992 by freeing nearly all prices, slashing defense spending, eliminating the old centralized distribution system, completing an ambitious voucher privatization program, establishing private financial institutions, and decentralizing trade. Russia, however, has made little progress in a number of key areas that are needed to provide a solid foundation for the transition to a market economy.
The purpose of this investigation is to assess how significant Mikhail Gorbachev’s Glasnost, and Perestroika polices contribute to the collapse of the USSR. In order to understand how significant of a factor Gorbachev policies were to the collapse of the USSR, we will investigate from how significant were the reforms emplaced by Gorbachev, to how the USSR was doing economically from the time Gorbachev came into power. The main sources for this investigation range from an Excerpt from The cold war: The United States and the Soviet union by Ronald Powaski who states facts about both the economic and political issues of the time. Excerpts from “New political thinking” from perestroika by Gorbachev which states how he believes new political ideas are for the good for the USSR. Finally in The Dissolution of the Soviet Union by Myra Immell who goes over many of the factors of the USSR’s collapse.
at age 26. He no idea what was involved, what to do and went along
In modern context, the term Russian oligarchs refers to extremely wealthy business magnates. Prior to the disintegration of the USSR a relatively small group of influential people had already existed within the borders: the ’nomenklatura’. Many of the former oligarchs held strong positions as Soviet-era functionaries, such as deputy ministers, department heads, who were either working for the Soviet government or supervising several enterprises (Braguinsky 316). After the collapse of the Soviet Union in December 1991, the already influential figures “converted their de facto control into ownership rights” (Guriev and
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Starting 1928, the Stalinist economic policy was characterized by a rupture with Lenin’s quasi-capitalist New Economic Policy. The need to protect the Union from eventual capitalist and imperialist wars necessitated the creation of a self-sufficient industry and agriculture freed from the constraints of the market. The industrial policy resembled that of a war economy focused on heavy industries such as steel, weapons and the industrial centers were relocated in remote areas such as the Urals and Siberia, rich in natural resources. In 1937, the part of small industries had fallen from a third in 1913 to 6 percent (Davies 1989, 1029). This process revealed to be extremely successful on a macroscop...
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