San José State University
Department of Economics
Thayer Watkins
Silicon Valley
& Tornado Alley

The Economic History and
Economy of Russia

The Economy of Russia

Regions of Russia

Russia has had regional policies but of a quite different nature than the regional policies of the West. Russia pursues regional policies for nationalistic and strategic reasons as well as development of economic resources, but never is there a concern for reducing regional disparities in standards of living. With the millions of ethnic minorities included in the territories controlled by the Russian State in its various guises this would be a difficult and controversial objective. Lenin said that the Russian Empire was a "prison-house of nations" and so it was. But so was the Soviet Union and so is the Russian Federation of today. There is a mania in the Russian soul for acquiring and holding onto often desolate pieces of real estate and the peoples who occupy them. This is not only terrible for the peoples acquired but it is costly for the Russian people not only in terms of state funds but also in terms of their children who end up as cannon-fodder for the brutal military campaigns required.

Notes on: "The Russian Road to the Market" by Anders Åslund in Current History October 1995

Anders Åslund is optimistic about Russia. Writing c. 1995 Åslund was conscious of how desperate conditions were in Russia in 1991 and the improvements that had been achieved between 1991 and 1995. Here are some of the conditions of the Russian situation in 1991: Communists in the bureaucracy saw the solution to the shortages as administrative control of production, whereas the market solution was to adjust prices to the new realities. The high inflation could be curbed only if the government stopped pumping up the money supply. But that meant reducing the subsidies to state enterprises which could lead to their collapse and further drops in production and more shortages. However, when the Communist head of the Central Bank, Viktor Gerashchenko, was replaced by Tatyana Paramonova the hyperinflation soon ended.

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