Historical overwiev

*Russian economy in transition?

*Topics

*Transitional economy

*Historical review

* If you had the chance, in what sector of the Russian economy would you open your business?

*Fuel and energy

*Metallurgy

*Chemical

*Timber industry

*Machine building industry

*Light industry

*Service industries

*Banking and financial

*IT

*Transition

Traditional

economy

Planned economy

Market economy

?

*Transitional Economy

*Heterogeneous economy:

From natural economy to IT

*Diverse attitude to labor, property and business

*Historical review

*19 c.: heterogeneous economy

Serf’s labor presence (official till 1861)

Estate society

Peasant community

*No internal market

*No financial market

*The only consumer – the state

*Historical review

*Witte’s reforms 1890s

*Stolypin’s reforms 1906

*New economic policy (1921-1928)

*Kosygin’s reforms (1965)

*Gorbachev’s reforms (1985-1991)

* Sergey Julievich Witte(1849-1915)

*Witte served as Russian Director of Railway Affairs within the Finance Ministry from 1889–1891, then he was appointed as a Minister of Ways and Communications in 1892 and at August 1892, Witte was appointed to the post of Minister of Finance, a post which he held for the next 11 years.

*Sergey Witte had for an object speeding up the development of Russians industry

Perusing this object he used traditional methods of government intervention in the economy:

1. Economic policy of protectionism was strengthened in 1894

2. Alcohol monopoly was introduced in 1896, which greatly increased government revenue

3. Foreign loans became one of the most important sources of finance for Witte’s economic policies

4. Increasing indirect taxation and the raising of the commerce tax.

5. One of the most important measures of Witte’s financial policy was the currency reform of 1897. Due to means collected as a result of higher taxes, increased gold mining and purchase of gold, foreign loans it become possible to issue gold coins instead of paper money, which helped to attract foreign capital to Russia and to strengthen the monetary system the country.

* 6. Sergey Jul. Witte significantly accelerated the construction of the Trans-Siberian Railway, which also had a positive impact on the economic situation in the country

because of government investment in the economy.

* Peter Arkadievich Stolypin(1862-1911)

Prime Minister 1906-1911

He aimed to create a moderately wealthy class of peasants, who would be supporters of societal order

*The reforms began with and introduced the unconditional right of individual landownership (Ukas of November 9, 1906). Stolypin's reforms abolished the community system and replaced it with a capitalist-oriented form highlighting private ownership and consolidated modern farmsteads.

*Development of large-scale individual farming (khutors)

*Resettlement to Siberia, Far East, Kazahstan (24% returned)

* New Economic Policy(1921-1928 )

*1921 products fixed tax establishment

*1924-1925 Transition to the village monetary taxation

*Private bank system

Lenin V.I.(1870-1924)

* New Economic Policy(1921-1928 )

*Financial and economic independence of the state-owned enterprises

*Light industry enterprises denationalization

*Tchervonets establishment – Soviet currency fully convertible and backed by the gold standard

*Tchervonets, 1922 г.

*Bolshaya Sukharevskaya Square(Moscow)

*Market

* Kosygin’s reforms (1965)

*Economic reforms tendencies in

1960’s

• Agriculture

• Heavy industry

• Defence industry

The living standards of citizens improving

* Kosygin Alexei NikolaevichChairman of the Council of Ministers

*Reducing the number of directive instructions

*Enterprises self-financing intensification

*The pricing system reconstruction

*Economic independence of kolkhozes (collective farms)

*Reduction of required governmental purchase plan

Economic reforms with market regulators

*Reducing the number of

directive instructions

*The volume of sales

*Main product mix

*Wages fund

*Profit and profitability

*Relations with the budget

*Gorbachev’s reforms (1985-

1991)

*Main features of Russian economy

in 1970-1980’s

*The apparent economic stability

*Development of the resource sectors

*Inefficient production

*Low labor motivation

*The growth of corruption

*The dichotomy between official ideology and life

*Living standards rise*The growth of the population (12 million).*The increase in appartament construction*The growth of production and consumption of electricity

*The pace of economic development*8th five-year plan (1966-1970) -7.5%*9th five-year plan (1971-1975) - 5.8%*10th five-year plan (1976-1980) - 3.8%*Stability is achieved through the rise in oil prices

*The quality of goods issue

*The distribution of computers

*(purchase of technology: air conditioners "Hitachi“; VAZ-2100 -Fiat124 1966)

*«Perestroyka»

Periods:1985-1987 "Acceleration"The anti-alcohol company,The struggle against unearned income, corruption

1987-1989 years. PublicityDemocratizationDecember 1, 1988 the Law on changes and amendments to the Constitution of the USSR

in 1989-1991.

Gorbachev Mikhail Sergeevich

Born in 1931

General Secretary of the CPSU in

1985-1991

The USSR president in 1990-1991

*1986 Team contract law

*1987 State Enterprises law

*1988 Law on Cooperatives

(Taxes for cooperatives reached 40%)

*1989 Law on rent and rent activities 1989

*1990 Laws on small enterprises, joint stock companies, joint ventures, commercial banks

*1992

*removing restrictions on wage growth

*freedom of foreign economic activity

*elimination of centralized pricing (80% of wholesale prices, 90% of retail price)

*free trade permit