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Russia’s Progress and Regress


Fifteen years after the Soviet Union collapsed and split apart, Russia still fits Winston Churchill’s characterization of Stalin’s USSR nearly seven decades ago: “a riddle wrapped in a mystery inside an enigma.”

Throughout the presidencies of Boris Yeltsin in the 1990’s and that of Vladimir Putin, Russia has opened its doors to international trade, investment, tourism, the media, and the Internet. In sharp contrast to the Soviet Union, Russia now publishes voluminous (if not always reliable) economic, social, and demographic information.

Among the many economies labeled “transitional,” Russia’s is the second largest, with a GDP about one‑fifth that of China, but double in per capita terms. But it is unclear where Russia lies on the spectrum of “transition.” Is it headed toward market‑driven, decentralized decision‑making and resource allocation or state‑controlled, centralized decision‑making and resource allocation? Or is it oscillating between the two?

Yegor Gaidar, a distinguished economist in Yeltsin’s administration and postcommunist Russia’s first prime minister, argues that Russia’s full transition to a market‑based economy is likely to take 75 years because of the long “duration of the Socialist period and the distortions connected with it.”