Economic transition under the Presidential authority and the new PM since 1993

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Из курса от партнера National Research University Higher School of Economics

Understanding Russian Economy. Problems of Transition

134 оценки

National Research University Higher School of Economics

Understanding Russian Economy. Problems of Transition

134 оценки

The purpose of the course is to bring the basic knowledge on the specific aspects of Russian economy that had significant impact on the latest development trends in Russia. This course will provide you with knowledge on: 1) the basics of economy; 2) understanding the role of market reforms in developing the key features of modern Russian economy; 3) understanding specific aspects of Russian economy; 4) cause-effect relationship of the most significant trends in Russia’s economic development; 5) instruments for analysis of Russian economy; 6) business climate in Russia and skills required for doing business in Russia. Currently, different aspects of economy have some influence on us and our behavior - e.g. currency exchange rates, inflation and other things define the way in which we distribute our income between savings and investments. In order to understand these principles it is required to have the basic knowledge on economics. So it is not only a lecture on Russian economy. Another main objective of the course is to develop knowledge on the basics of economy as such. So the course will disclose universal patterns by analyzing trends in Russian economy. FAQ: Q: What is targeted audience for this course? What are the course prerequisites? A: The course is mainly developed for students pursuing their master’s degree in the field of international economy and for those who have professional interest in Russian economy. It requires basic knowledge of economic terms. Q: What are the minimum requirements to pass the course? A: In order to pass the course and receive a Course Certificate you will need to have at least 80% of correct answers in each quiz. Welcome to the course “Understanding Russian Economy. Problems of Transition”!

Из урока

Lost opportunities of transition

Welcome to the Week 4! Now we are coming to the next period of the Russian economic transition, namely the period since 1993. As usual you will get useful knowledge through video-lectures. However don’t forget to look at the list of recommended literature in case you want to learn more about the topic of this week. Also you will have to pass a short quiz in order to be assessed as a result of the Week 4.

Economic transition under the Presidential authority and the new PM since 19939:37

Познакомьтесь с преподавателями

Vladimir Zuev
Professor
Department of Trade Policy

[SOUND] As you remember in the previous lecture,

we have analyzed the initial years of transition,

namely the year 91 92 where lots of

efforts have been made in the direction

of transition to a market economy.

And a lot of state enterprises were privatized,

a lot of initial reforms have been introduced.

And now we come to the next period of time in

the Russian economy in transition,

namely after the year 1993.

It is undertitled economic transition under presidential authority,

and the new Prime Minister.

As I have already described that a lot of opportunities

were open through the national

economic development within the initial years of reforms.

People started to get used to reforms after shock therapy,

after all of the sudden and brisk changes,

they started to become accustomed to changes.

Some two years from the start of reform, somewhere in the year 93.

Enthusiasm was gradually building up to begin new activities within

the new market environment after decades of absence of private initiative and

massive non responsibility.

You should definitely understand how people were

enthusiastic about opening up new enterprises,

being involved in some kind of business activities.

They never had an experience like that.

So when they started to realize that a new world

was open for them,

for absolutely new life, they started to become part

of that life, to belong to the market economy.

So this period provided for a good opportunity

to really build a new economy for

a new mighty country with a new robust

setup, fundamentals with market

principles that would rule within this economy, that were expectations.

As usual, something

happens which does not let dreams to become reality.

So this time, we entered the period of political

clashes in the year 1993.

It is not the subject of this lecture to

make the analysis on the political situation of that period of time,

but definitely it influenced in a dramatic way

the transition in

Russian economy.

You know the story, that there was a clash between the President and

the Parliament, and the Parliament was sitting in the White House.

And then [COUGH] there was a hard confrontation

between the two major power alliance within the Russian society.

And then as a result of that clash, the President came out as a winner,

although the Constitutional Court took the side of the Parliament.

So the Parliament and the Constitutional Court have

not succeeded in convincing the President that they

were right in making things the way they wanted to make things.

To legalize the victory of the President's concept,

they organized the referendum back in

December 12 of the year 1993.

And during the referendum, the majority of the people

approved the new Constitution, and Russia became the presidential republic.

The role of the president has been upgraded to a great extent,

while the role of the Parliament has been downgraded.

[COUGH] The reason I'm taking just briefly about

those political developments of the time,

because definitely it influenced a lot the future

development of economic transition.

And there was a radical shift in the checks and

balances system, you know that checks and

balances system is a fundamental of any democratic society.

So the pendulum shifted in the President's favor.

For good or for bad, that's not for us to decide.

We will try to make the objective analysis of how it influenced the development,

the economic development.

Definitely, one of the new developments which

influenced to a great extent economic reforms

in Russia was the nomination of the new Prime Minister.

Since December of the year 1993 Victor Chernomyrdin

replaced Egor Gaidar at this key position for the economic transition.

So definitely there was a substantial change

in economic transition priorities.

There were a lot of changes.

There were a lot of nuances.

State required more finance,

to undertake the measures it wanted to undertake.

So that was a period of time when the state policy was focused on heavy

borrowing, both on domestic market and on foreign markets.

Gradually, external debt started to grow,

and you can see here the figure, that the peak,

the external debt of the Russian Federation

reached something like $190 billions,

so that was a huge amount of money.

And at a certain period of time, nobody believed that Russia would be

able to repay it, although with the time being,

we managed to repay all the debts to external lenders.

So, domestic indebtedness at that time was estimated roughly

to a similar extent, and resulted in

something like $200 billion.

So those were huge money available for

the government at that time, roughly $400 billion.

That was, at that period of time,

that was really something worth to do something with.

So the question is, why we always try to ask those questions in order to understand

to which extent the governmental policies were optimal.

Now we ask still another question, how wise the money available was used,

and that we will try to understand in understanding the transition,

because the question of money is always a crucial one.

So the way the money is being used predetermines to a certain

extent the success or nonsuccess of any event, of any policy.

[SOUND]

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