Question

Read the article “An Autopsy of the Soviet Economy” then find additional articles in the library on the topic to describe the state of the transition. Write a 500 to 750 word paper in APA format responding to the following questions: 1. 1.How would you classify the Soviet economy prior to the break-up of the Soviet Union? Explain your rationale. 2. 2.Why did the Soviet economy fail? 3. 3.How would you classify the Russian economy as it is currently? 4. 4.Is it still a transitional economy, how so?

Answer 1

Soviet Economy before the break up of the Soviet Union, and why did the soviet economy failed.

In the year 1917, Russian Czar was overthrown by the groups of revolutionaries, five years later the Union of Soviet Socialist Republics (USSR) was established, bringing all the nations under the rule of a single communist party. By 1924, Joseph Stalin came into power and a command economy system was adopted. That is a complete state control over economy, politics and on almost everything. The communist party had control over all of the nations social and economic activities.

At first the Union experienced a very high economic growth rate, even though everything was controlled by the government and there were no free markets, the Soviet Union's economy showed high levels of growth rates (5.8% from 1928 to 1940, 5,7% from 1950 to 1960, 5.2% from 1960 to 1970). Such great economic growth was due to multiple factors as it was a underdeveloped economy, it adopted western technology and mobilized resources to use the technology, high amount of attention on industrialization gave the Soviet Union few decades of rapid growth, but as it came close to the level of developments of the western nations, so it now has nothing to borrow, only had an option to invent, productivity reduced as they would not invent themselves by doing Research and Development, they model they used to bring economy growth now became stale and economic stagnation was faced by Soviet Union by 1980s.

New plans to restructure the economy were brought up. This restructuring, referred to as perestroika, encouraged individual private incentive, creating greater openness. Perestroika was in direct opposition to the previously hierarchical nature of the command economy. While perestroika initially appeared to be a success, as Soviet firms took advantage of new freedoms and new investment opportunities, optimism soon faded. A severe economic contraction characterized the late 1980s and early 1990s, which would be the last years of the Soviet Union.

The Russian economy - Current Scenario

As of 2018, the Russian Economy is $4.2 Trillion by GDP(PPP) , It is the twelfth largest economy in the world with nominal GDP of $1.52 trillion

Russia has a mixed economy, Since the breakup of the Soviet Union in 1991, it has come a long way and has steered away from its command economy towards a market economy determined by demand and supply factors. Today the government only controls Oil and Gas industries. Gazprom is Russia's state owned gas company and owns world's largest gas reserves. Russia supplies 30% of Europe’s oil and 24% of its natural gas. It aggressively uses pipeline politics to get its way

“We can speak of sustainable growth when there are sustainable growth drivers such as higher investment, low capacity utilization, rising households’ incomes, which with some delay filters into consumer demand, which drives the economy,” said Andrey Movchan, an economist at the Carnegie Moscow Centre.

“We have none of that,” Movchan said. “We are moving slowly towards a demographic pitfall, we have almost zero non-state investment ... All developments favor GDP contraction rather than growth.”

The GDP has been on the rise but the incomes of the people have been falling recently in Russia and Russia has also been facing a demographic decline which has its effects on the Russian economy.

Yes it is still a transitional economy because Most experts agree that Russia's economy is controlled by a small circle of powerful oligarchs()These wealthy insiders own or manage most important Russian businesses. Contrary to popular opinion, President Vladimir Putin doesn't control the oligarchy. Instead, he mediates their competing interests. (Oligarchy is a form of power structure in which power rests with a small number of people. These people may be distinguished by nobility, wealth, education or corporate, religious, political, or military control.)