THEORY AND REGIME CHANGE:RUSSIA FROM

GORBACHEV TO PUTIN

Mikhail Gorbachev

Vladimir Putin

What is Command Economy ?

Acommand economyis a system where the

government, rather than the free market, determines
what goods should be produced, how much should be
produced and the price at which the goods are offered
for sale.

Communism is a type of government system that would

use a command economy. Countries with command
economies includeBurma,Cuba ,Iran ,Liberia,
andNorth Korea. Formerly, theSoviet
UnionandChina were command economies, and are
now mixed economies where the government still has a
major influence.

 The main theme of this system from 1917-1990 was

command economy
Bureaucrats making most of the decisions about
investment, pricing, incomes and trade.
It includes inefficient industrialization processes and
consumer rationing.
The administrative means used include Planned
economy- state-owned enterprises, private enterprises
by the state, or a combination of both.
Gorbachev officially ended the regime on 25
December 1991

Post Soviet Regime

Boris Yeltsin

Government favored Neo-liberalism which means minimal

interference by government in the economy.

Shock therapy refers to the sudden release of price and

currency controls, withdrawal of state subsidies, and immediate
trade liberalization within a country.

Policies of Stabilization, Privatization and Liberalization were

chosen to implement shock therapy

The IMF provided loans but also exerted strong control over
budgetary and monetary policies

Effects of Shock Therapy

Mid 1990s were a period of extreme
inflation and fiscal deficits
The government let most prices float,
interest rates were raised to record highs,
and raised heavy new taxes
Russian GDP declined by roughly 50% as
the economy restructured
An artificially high fixed exchange rate
between the ruble and foreign currencies to
avoid public turmoil

Changes in Russias
Economy
Eliminated many distortions found in the old economy by converting to a market economy

Joined WTO in 2012

Mercantilist attitude in many parts of the government
Putin wielded Russian power by exercising state control over national energy giants such as Gazprom
and Lukoil
Foreign MNEs like BP and Shell were convinced to sell their stakes in local stakes
Russias unique endowment in natural resources such as gas, coal, and minerals
Russia had a surplus of $92.5 billion, interbank lending rate was down to 3.3% and GDP had an annual
rise averaging around 6%

Current Economic Status of Russia

GDP is at $1.178 trillion(Nominal),$3.493
trillion(PPP).
Exports stand at $82.1 billion, Imports stand at
$53.0 billion.
External debt is $538 billion, Public debt is 14%
of GDP.
Foreign Reserves amount to $396 billion.
Current account stands at $29.1 billion.

Thank You