The Economics of Russian Transition

Foreword: The Russian Path from Communism Reconsidered xv Stanley Fischer About This Book xxi Contributors xxv Introduction: Economic Reforms and Revolution 1(1) Vladimir Mau Exit from Communism 1(1) Revolution and the State 1(6) Revolutionary Economic Crisis 7(10) I Preconditions for the Postcommunist Transformation 17(46) The Inevitability of Collapse of the Socialist Economy 19(12) Yegor Gaidar Stability of the Socialist Economic System 19(2) Characteristics of the Socialist Model of Economic Development 21(2) Internal Constraints on Long-Term Development of the Economic System 23(2) Several Options for Reforming the Socialist Economy 25(3) Signs of Exhaustion of the Growth Model 28(3) The Logic and Nature of the Soviet Economic Crisis 31(14) Vladimir Mau The Reforms of Late Socialism 31(2) Ideology and the Reform Program 33(3) The Practical Problem of Improving the Economic Mechanism 36(4) Economic Crisis as a Crisis of the State 40(5) The Liberal Market Reform Program 45(18) Sergei Sinelnikov-Murylev Alexei Uluykaev The Range of Opposing Views 45(1) Debates on How to Achieve Financial Stabilization 46(4) The Socioeconomic Situation on the Eve of Reforms 50(3) The Need to Accelerate Reforms 53(2) Russia's Progress Toward Economic Independence 55(3) The Essence of Socioeconomic Reforms in Russia's Transition Period 58(2) Cutting the Budget Deficit 60(3) II Macroeconomic Processes and Economic Policy of Postcommunist Russia---Main Stages 63(330) General Macroeconomic Problems of the Postsocialist Transition in Russia 65(24) Sergei Sinelnikov-Murylev Georgy Trofimov Financial Relations and Their Place in the Analysis of the Transition Economy 65(1) Predeterminacy of Economic Reforms in Russia 66(2) Price Liberalization: A ``Shock'' in the System of Gradual Reforms 68(4) Political Restrictions and Delayed Stabilization 72(2) An Unorthodox Version of Orthodox Stabilization 74(5) The Fiscal Crisis 79(6) Conditions and Factors of Economic Growth 85(4) Macroeconomic Stabilization as a Sociopolitical Problem 89(16) Vladimir Mau Delayed Stabilization 89(3) Consolidation of Opposing Factions: Inflationists versus Anti-inflationists 92(2) The Changing Balance of Forces 94(4) Constitutional Problems of Macroeconomic Stabilization 98(7) Problems of Macroeconomic Stabilization at the Stage of Economic Liberalization (1992) 105(22) Sergei Sinelnikov-Murylev Georgy Trofimov Tight Budgetary Policy and the Liquidation of Monetary Overhang 105(2) The Strengthening of Populism and Weakening of Fiscal Policy 107(4) Monetary Policy and Credit Policy in 1992 111(5) The Attempt to Change Fiscal Strategy in the Absence of Coordinated Government and Central Bank Actions 116(2) Reconstruction of the State's Revenues and Expenditures 118(9) Formation of the Preconditions for Financial Stabilization 127(32) Sergei Sinelnikov-Murylev Georgy Trofimov Influence of Political Factors on State Finances 128(3) Monetary Policy and Credit Policy in 1993 131(4) Reduction of Budget Expenditures After the Constitutional Crisis of 1993 135(3) Reconstruction of the 1993 Budget 138(1) Slowing Fiscal Reforms: A ``Moderately Tight'' Policy 139(6) Some Peculiarities of the Budget Process of 1994 145(4) Reconstruction of the 1994 Budget 149(5) Toward a Tight Fiscal Policy 154(1) Monetary Policy and Credit Policy in 1994 155(4) Financial Stabilization in Russia 159(24) Vladimir Mau Sergei Sinelnikov-Murylev Georgy Trofimov Political Preconditions for Financial Stabilization 159(2) The Monetary Program for 1995 161(2) Budget Policy During Financial Stabilization 163(7) Tightening Monetary Policy and the Inertia of Inflation 170(4) The Role of the Exchange Rate in Achieving Stabilization 174(3) The Strengthening of the Real Ruble Exchange Rate 177(2) The Crisis on the Interbank Market 179(4) Macroeconomic Stabilization and the Political Process: The Year of the Presidential Elections 183(40) Vladimir Mau Sergei Sinelnikov-Murylev Georgy Trofimov Political Uncertainty and the Economy 183(2) Macroeconomic Problems of the 1996 Electoral Contest 185(16) Government Economic Policy in Conditions of Electoral Uncertainty 201(6) Economic Policy After the Presidential Election 207(13) The Phenomenon of Delayed Growth 220(3) Macroeconomic Stabilization and Fiscal Crisis 223(28) Sergei Arkhipov Said Batkibekov Sergei Drobyshevsky Vladimir Mau Sergei Sinelnikov-Murylev Alexei Uluykaev The Political and Economic Situation: A New Window of Opportunity 223(3) The Main Areas of Government Activity and the Reaction of the Legislature 226(2) Government Finance 228(7) A Breakdown of the 1997 Budget 235(1) Monetary and Credit Policy 235(7) A New Threat to Reforms on the Rise 242(2) The Situation on the Currency and Stock Markets 244(7) The Crisis of the Russian Financial System: Key Factors, Economic Policies, and Initial Results 251(58) Sergei Arkhipov Said Batkibekov Sergei Drobyshevsky Tatiana Drobyshevskaia Vladimir Mau Sergei Sinelnikov-Murylev Ilya Trounin Evolution of the Russian Financial Crisis in 1997--1998 251(11) Principal Factors Behind the 1998 Financial Crisis 262(12) The Economic and Political Fallout of the Financial Crisis 274(35) Financial Policy in 1999 309(66) Sergei Arkhipov Said Batkibekov Tatiana Drobyshevskaia Sergei Drobyshevsky Olga Izryadnova Sergei Sinelnikov-Murylev Ilya Trounin Balance of Payments, Monetary Policy, and Real Ruble Exchange Rate 311(19) Trends in the Real Sector of the Economy: Revival of Export-Generating and Import-Substituting Industries 330(17) The Budget 347(16) Social Effects of the Stabilization Policy 363(3) Medium-Term Limitations of the Economic Policy 366(9) The Fallout of Russia's Financial Crisis on Its Neighbors 375(18) Marek Dabrowski Overview 375(2) Fundamental Flaws of the Transformation Process in CIS Countries 377(3) The Shock in Foreign Trade and the Real Sector 380(3) Contagion Effect on Financial Markets 383(2) The Psychological Factor 385(1) Economic Implications of the Crisis 386(4) Summary and Conclusions 390(3) III Institutional Reforms in the Russian Economy 393(242) Privatization, Ownership Redistribution, and Formation of the Institutional Basis for Economic Reforms 395(66) Alexander Radygin Ownership and Privatization: Preliminary Methodological Notes 395(9) Privatization Models in Transitional Economies: A Comparative Analysis 404(8) The Russian Privatization Model 412(17) Major Stages and Results of the Postprivatization Ownership Redistribution 429(32) Main Corporate Governance Mechanisms and Their Specific Features in Russia 461(50) Alexander Radygin Natalia Shmeleva Corporate Governance in a Transition Economy: Preliminary Methodological Notes 461(3) Internal Mechanisms 464(4) General Legislative Situation 468(3) The Corporate Securities Market 471(7) Bankruptcy Procedures 478(4) The Market of Corporate Control (Takeovers) 482(3) Existing Instruments of Corporate Governance in State-Owned Enterprises and Their Effectiveness 485(6) State-Owned Holdings and Financial-Industrial Groups 491(13) Conclusion: New Institutional Reform for Long-Term Economic Growth 504(7) Russian Banks in the Transition Period 511(32) Igor Doronin Alexander Zakharov The Emergence of the Contemporary Banking System in Russia 511(4) Concentration of Capital in the Banking Sector 515(4) The Functions of Russian Commercial Banks 519(2) Commercial Banks and the Real Sector of the Economy 521(6) Stability of the Russian Banking System 527(6) Monetary and Credit Instruments for Regulating Banks' Liquidity 533(4) The Creation of a System for Regulating and Monitoring Bank Activities 537(6) Institutional Reforms in the Agro-Industrial Complex 543(42) Natalia Karlova Irina Khramova Eugenia Serova Tatiana Tikhonova Reform of the Agricultural Sector and the Fundamental Aims 543(3) Institutional Reforms in Agriculture 546(10) Institutional Reforms in the Downstream Sector 556(7) Formation of an Agricultural Credit System 563(11) The System of State Support for Agriculture 574(7) Reform of Foreign Trade Regulation of the Agro-Industrial Complex 581(2) Conclusions 583(2) Institutional Reforms in the Sociocultural Sphere 585(32) Irina Rozhdestvenskaya Sergei Shishkin The Need for Reform in Sociocultural Fields 585(2) The State and Special Interest Groups in the Sociocultural Sphere 587(2) The Switch from Free Care to Health Insurance: The Ideology and Aims of Health Reform 589(4) Practical Introduction of the New System to Finance the Health Sector 593(6) Institutional Changes in Education 599(3) Institutional Reforms in Cultural Institutions 602(3) Shadow Privatization in the Social Sphere 605(2) Commercialization of Sociocultural Institutions 607(1) Evolution of the Sociocultural Sectors in the Years of Reform 608(9) Reform in Housing and Public Utilities 617(18) Irina Starodubrovskaya General Characteristics of Housing and Public Utilities in the Soviet Period 617(2) The Concept of Reform in Housing and Public Utilities 619(3) Results of the Reform in Housing and Utilities: 1994--1997 622(6) A New Stage of Reform: 1997--1999 628(7) IV Real Sector of the Economy: Adaptation Problems 635(80) General Trends in the Real Sector in the Reform Period 637(38) Evgeni Gavrilenkov Olga Izryadnova Principal Development Tendencies and Factors of Economic Restructuring 637(8) Production and Use of the GDP 645(11) Restructuring the Real Sector of the Economy 656(8) Investment in the Period of Market Reforms 664(11) Development Specifics of Real Sector Industries 675(12) Yuri Bobylev Eugenia Serova International Business in the Period of Market Reforms 687(28) Natalia Leonova Sergei Prikhodko Nadezhda Volovik Liberalization of Foreign Trade: Results and Prospects 687(11) Consequences of the Policy of Foreign Trade Privileges and Preferences 698(1) Commodity Composition of Russia's Foreign Trade 698(17) V The Social Price of Reforms 715(38) Certain Trends in the Evolution of the Labor Market 717(20) Alexander Smirnov Forecasts That Went Wrong 717(3) Part-Time Employment: Objective Data and Subjective Interpretation 720(2) Registered Labor Market Indicators 722(2) Regional Labor Markets 724(1) Workforce Movement: Sectoral Aspects 725(8) Employment Policy Financing 733(4) Household Income in the Period of Economic Reforms 737(16) Igor Kolosnytsyn Socioeconomic Differentiation of the Population in Russia, 1992 Through 1999 737(5) Poverty Line Changes 742(5) Impact of Inflation on Nominal Assets of Households; Inflation and Poverty 747(3) Postscript 750(3) VI Economic Reform and Public Opinion Dynamics 753(86) Key Trends in the Population's Attitudes Toward Market Reforms 755(34) Tatiana Koval On the Threshold of Reforms 755(1) The First Stage of Economic Transformation 756(5) Privatization and Private Property in Russians' Eyes 761(8) Evolution in Attitudes Toward the Economic Reform and Government (1993--1997) 769(20) Some Conclusions 789(50) Yuri Bobylev Revold Entov Olga Izryadnova Vladimir Mau Sergei Prikhodko Alexander Radygin Eugenia Serova Sergei Sinelnikov-Murylev Sergei Tsukhlo Russia's Economic Policy at the Beginning of the New Phase of Economic Reforms 789(19) Russia's Economic Development in the Year 2000: Major Outcomes 808(31) Appendix I Modeling Inflation Dynamics, 1992 Through 1998 839(16) Sergei Drobyshevsky Appendix II Arrears: A Macroeconomic Analysis 855(26) Oleg Lugovoy II.1. Macroeconomic Model of Arrears 855(3) II.2. Empirical Testing of the Hypotheses 858(5) II.3. Growth Rates of the Money Supply 863(6) II.4. Stability of Coefficients and Forecast Qualities of the Model 869(6) II.5. Elasticities 875(1) II.6. Money Supply and Arrears: An Analysis Using Distributed Lags 876(2) II.7. Conclusions 878(3) Appendix III Modeling Tax Revenues and the Tax Liabilities of Russian Taxpayers, 1992 Through 1998 881(30) Pavel Kadotchnikov Sergei Sinelnikov-Murylev III.1. Key Factors Determining Tax Liability Dynamics 881(22) III.2. Modeling Aggregate Tax Revenues, Taking Into Account the Specifics of Major Tax Payments 903(4) III.3. Conclusions 907(4) Appendix IV Monetary Policy and the Expectations Hypothesis on the Russian Government Bond Market 911(48) Sergei Drobyshevsky IV.1. The Data for the Study 913(3) IV.2. Analyzing the Properties of GKO Rate Time Series 916(12) IV.3. Monetary Policy Shocks and the Term Structure of GKO Yields 928(15) IV.4. Testing Hypotheses About the Term Structure of GKO Rates 943(12) IV.5. Conclusions 955(4) Appendix V Leading Indicators of the Russian Currency Crisis in August 1998 959(14) Sergei Drobyshevsky Statistical Appendix 973(28) Name Index 1001(7) Subject Index 1008