Main Russian Challengers in the World Economy

Main Russian Challengers in the World Economy

Elena B. Zavialova

CBR, JKS, Kremlin of Russia, next class : debate/ exposés/ QCM 50 questions et moyenne de toutes les notes. 1036

Introduction :

People who make nowadays the decisions, were born during the Soviet Union, and they still remember how it used to be. The drawbacks are still with us, but something very important are still the same.

Economic and political need for reforming

What made the Reforms in the former Soviet Union inevitable: in the late 60s it was more like a war, people were not fighting but it was still a war. No matter what was the reason, we don't need more weapons; we have to find some new ways to win. Americans were the first to understand, the one who controls the world economic. Military competition starts to be an economic one.

Economic reasons :

World energy crisis

The USSR was happy that it was happening. In one night the world economic changes automatically. Western countries were the biggest consumer of energy, they produced metals and stuffs which require a lot of energy. Début de la crise de l'URSS. If you have some extra incomes and you'll invest it in weapons. Cheap oil, it is easier and cheaper for you to buy anything. The living stand, you couldn't afford anything it was cheaper to buy perfume than vodka for example. Russian goods were quite competitive. They did nothing to improve their goods. If everything is expensive, produce by decreasing your energy production, invest in research, energy efficients, 10 years to turn their ideas into the reality Technological revolution. Industry to services. By the end of 70s, a lot of services, you do not produce anything any longer, you consult and you get money from it. The western countries focused into atomic energy, oil prices went down in the end of 70s, we have to sell more and more gas and oil. But nobody wanted to buy some products from Russia, because it was old fashion. Deficit budget, we couldn't find new ways to support military expense's.

Technological revolution

Arms race

New economic goals

Perestroyka (dramatic economic reforms)

Political reasons

Strict ideological discipline

President / Parliament

Civils/

It's like a circle and if you loose one part of it it will work btw,

the communist party leader/ the communist party/ people: if something is happening at the biggest level, it can collapse. Because the leader is the basis, all his mistakes will be multiplied in the other levels. 70s & 80s, Brejnev was very strong and clever and brave. He came to power not very legally, he was afraid of someone who could the same. That's why he tried to be surrounded by people who he would be able to trust.very tired and experience brings. Gorbatchev was the youngest of the party. He was a good speaker. He had to do something to do with the economics.

Significant gap in living standards between soviet and capitalist worlds

The role of political charisma

Stages of gorbatchev : improve the budget : produce something or get some credits/ decrease the expenses : impossible to get credits : RÉDUIRE LES DÉPENSES.

The only way was to cut the military expenses.

New political ideology : for now on, the soviet union is going to be more democratic, we want to be closed to ordinary people. It was a very good argument to stop the arm strike. Gorbachev et Reagan : implement the

Freedom of speech. Two mentalities : western mentality : earn just money for yourself/ eastern : you have to be in a group. Weak the system, everybody talks? Severe economic crisis, no output, productivity equals 0, hudge budget deficit, at that time there wasn't a financial type at all. A lot of industry to support, create a market = he wasn't able to ! Every year, they had to decided how much they have to deliver to a sector. 80% of entreprises = military entreprise, cutting this investment program, means that a lot of people will be jobless. Decreasing production and no profit at all, you can't do it when your budget deficit is too big like Greece . 1985 1990 = Gros trou noir = budget russe. N'investit pas partout, seulement sur quelques inductries, car machinery industry ! Investissement limité, gORBACHEV n'était pas patient, les gens n'étaient pas satisfaits, spring tout le budget dans l'industrie automobile, mais en automne il voulait les résultats ! Vous êtes nuls ! s'est écrié Gorbachev, il a pris tout l'argent qu'il restait, agriculture ! Gorbachev n'avait pas d'expérience, il travaillait dans l'agriculture et est né au sud, le reste du budget fut divisé en deux : automobile, agriculture. NO MONEY LEFT ! Economic disaster ! No money in the budget, how to make the economy more efficient? No inflation, and people really need money, how to increase more if you do not pay more, competition ! augmenter la productivité, two major problems : alcohol

New economic goals

State investments programs

Anti Alcohol policy : how to make people work more and produce more, if they could drink they can do everything, headache = on money the productivity will increase 40%. Gorbachev stop drinking and you will be happy, Réguler la consummation et production de l'alcool, a augmenté la consummation. Buying vodka, increases average consummation. G. a tout stoppé, no oil incomes, no beverage incomes, we hadn't budget at all,

Perestroyka : he had to implement the market, the economic system, the pb with this market system was that, you can't just implement freedom of entreprises, without opening the market, In 1989 he just implemented a law, the Ei were allowed to decide for themselves, but the pb, no freedom of prices, the cost was still high, burden to the market ! In the law, freedom for soviet republics as well, Moscow raised money from the republics and give it to them, but the republics didn't want to give the money to the center, but they got money from the center.

Policy isn't about honesty, it weren't the Baltic states, it was Russia