Anders Åslund

How capitalism was built : the transformation of Central and Eastern Europe, Russia, and Central Asia

Introduction: a world transformed 1. Communism and its demise 2. Shock therapy vs. gradualism 3. Output: slump and recovery 4. Liberalisation: the creation of a market economy 5. From hyper-inflation to financial stability 6. Privatisation: the establishment of private property rights 7. An inefficient social system 8. Democracy vs. authoritarianism 9. From crime toward law 10. The role of oligarchs 11. The role of international assistance 12. Conclusions: a world transformed.

The Economic Policy of Ukraine after the Orange Revolution

A prominent specialist on economic transition in the former Soviet Union discusses changes in Ukraines economic policy in the aftermath of Viktor Yushchenkos accession to that countrys presidency in January 2005. The author relates his recent (through mid-June 2005) observations as co-chair of the UNs Blue Ribbon Commission for Ukraine. He analyzes the countrys macroeconomic stability and growth since 2000, the regional divide, the winners election program, the impact of the oligarchs, and the unexpected populism of the new government, which prompted re-privatization, price controls, and fiscal excesses. Journal of Economic Literature, Classification Numbers: E60, E63, F13, H20, H60. 1 figure, 6 tables, 62 references.

Getting It Wrong: Regional Cooperation and the Commonwealth of Independent States

On December 8, 1991, even before the Soviet Union was officially dissolved, the leaders of Russia, Belarus, and Ukraine met in the Belovezh Forest outside Minsk to lay the groundwork for the post-Soviet era. There they signed what became known as the Belovezh Accords, creating the Commonwealth of Independent States (CIS). Two weeks later, eight other Soviet republics joined the three founding members. In the void left by the collapse of the USSR, the CIS was to become a superstructure that would coordinate the foreign and security policies of the member states, develop a common economic space, and provide for an orderly transition from the Soviet Union to the post-Soviet phase. In reality, the CIS has failed. For Russia, the CIS has not served as a vehicle for exerting control over its neighbors. As an organization, the CIS has not succeeded at reintegrating the post-Soviet states. The desire of the new nations to assert themselves as independent entities has proven more powerful than their urge to replace the Soviet Union with a new system of collective government. Written by three of the Wests leading experts on the former Soviet Union, this book offers a comprehensive assessment of how and why the CIS has failed.

Russia's Economic Transformation under Putin

A prominent specialist on the Russian economy presents a systematic account and analysis of Russias economic transformation under President Vladimir Putin. The study covers the period from the financial crash of August 1998 through the years of spectacular growth leading to August 2004. The discussion encompasses the financial stabilization in the aftermath of the crash, the work of Putins first economic team, the tax reform, tightened budgetary control, deregulation, land and judicial reforms, trade policies, the economic agenda for Putins second term, and prospects for further economic reform. Journal of Economic Literature, Classification Numbers: E60, E63, F13, H20, H60, P21. 1 figure, 2 tables, 57 references.

Economic transformation in Russia

An assessment of economic transition in Russia, Yegor T. Gaider macroeconomic stabilization, Boris Federov privitization - a progress report, Anatole Chubais and Maria Vishnevskaya problems in foreign trade regulation, Petr Aven the new role of the State, Boris Lvin adjustments of enterprises, Irina Boeva, Tatiana Dolgopyatova and Vyacheslav Shironin external economic relations, Jeffrey D. Sachs and David Lipton the advancement of voucher privitization, Andrei Shleifer and Maxim Boycko social development, Andrei Illarionov, Richard Layard and Peter Orszag payment and finanace problems, Jacek Rostowski macroeconomic stabilization, Stanley Fischer the economic debate, Anders Aslund.

Observations on the Development of Small Private Enterprises in Russia

A prominent Western specialist on the Russian economy presents an up-to-date overview of the countrys small private business enterprises, here defined as registered enterprises employing up to 200 workers. Navigating through the inadequacies of the statistical evidence, the author presents and analyzes new data on size, employment, branch structure, geographical distribution, and related economic indices covering developments through the end of 1996. The paper highlights a number of factors that repress and impede development of small private enterprises, identifying among the principal obstacles arbitrary government regulation and punitive inspections involving extortion. Remedial measures in taxation and crime prevention as well as other forms of assistance are proposed and discussed. Journal of Economic Literature, Classification Numbers: Ml3, P31, P42. 2 tables, 31 references.

The East European Financial Crisis

This paper discusses the global financial crisis of 2008/9 in thirteen countries, the ten new EU members that previously were communist and the three countries of Western former Soviet Union. Their problems were excessive current account deficits and private foreign debt, currency mismatches, and high inflation, while public finances were in good shape. The dominant cause was fixed exchange rates. Many lessons can be drawn from this crisis. A dollar peg makes no sense in this part of the world. The five currency boards in the region have lacked credibility. By contrast, inflation targeting has worked eminently. The euro has proven credible both in the countries that officially adopted it and in the countries that adopted it unilaterally. With the exception of Hungary, all the countries in the region have displayed decent fiscal policies. No government should accept large domestic loans in foreign currency and they can be regulated away. The IMF has successfully returned to the original Washington consensus with relatively few conditions: a reasonable budget balance and a realistic exchange rate policy, while focusing more on bank restructuring. The most controversial issue is the role of the ECB. The ECB should facilitate the accession of willing EU members to the euro by relaxing the ERM II conditions.

Ukraine's Return to Economic Growth

An authority on the post-Soviet economies examines the factors underlying Ukraines unanticipated return to economic growth in 2000. A preliminary, qualitative analysis of Ukraines sudden recovery provides an opportunity to test alternative theories of transition and reconsider causes of economic growth in postcommunist countries. The paper first considers why common explanations of economic growth have not proven relevant in the case of Ukraine, identifies specific policy measures that appear to have promoted growth, and then examines the political environment in which such measures were implemented. Journal of Economic Literature, Classification Numbers: E20, O40, O50. 4 figures, 2 tables, 44 references. Until 1999, Ukraine stood out as the only postcommunist country that had failed to achieve a single year of economic growth for an entire decade, and had sustained the greatest recorded cumulative decline of all postcommunist countries not involved in war. The latter distinction may have been due to statistical error, but the absence of economic growth was for real (Aslund, 2001a). Most features of economic malaise were apparent. Market reforms had generally been tardy and implemented only partially. The budget deficit remained larger than the available financing, with annual deficits persistently being slightly bigger than planned. Nonpayments and arrears were notorious, and barter increased until 1998. While the foreign debt was not very large, much of it was caused by nonpayments, especially for natural gas imported from Russia, and Ukraine lingered on the verge of default from 1998, with currency reserves usually covering less than one month of imports. Ukraines export performance remained poor as well. The International Monetary Fund concluded repeated agreements with Ukraine on economic stabilization, but the government invariably violated their terms, prompting the IMF to stop disbursements. The social situation was serious, with income differentiation approaching Latin American heights (Milanovic, 1998; Aslund, 2000). Ukraine had become an oligarchic economy, with a few tycoons or oligarchs dominating both the economy and politics, notably the parliament and the presidential administration, which provided the oligarchs with plenty of tax rebates, subsidies, and regulatory privileges. This was an archetypal rent-seeking society (Hellman, 1998), and Ukraine appeared stuck in a severe under-reform trap (Aslund et al., forthcoming). But suddenly Ukraine registered a substantial growth of 6 percent in 2000, primarily driven by a 13 percent increase in industrial output, 9 percent growth in agricultural •Senior Associate, Carnegie Endowment for International Peace, 1779 Massachusetts, Ave., NW, Washington, DC 20036. Caroline McGregor kindly compiled the statistics and prepared the graphs. Ukraine had a particularly large unregistered economy (Johnson et al., 1997).

Russia's Accession to the World Trade Organization

A prominent specialist on the Russian economy presents a timely assessment of Russias accession to the World Trade Organization. The author discusses the reasons that prompted Russia to seek membership and scrutinizes the major obstacles, such as complexities of the accession process and the countrys institutional malaise. An analysis of the effects of possible membership on the Russian economy is followed by a focus on Putins first term (2000-2003) when he supported entry, and the second (2004-2007) when he lost interest. Also presented are two scenarios projecting reinvigorated pursuit of Russian membership, or abandonment of the goal. Journal of Economic Literature, Classification Numbers: F13, F40, O19. 1 table, 46 references.

Capacity Building in Economics: Education and Research in Transition Economies

The development of the institutional capacity to create and evaluate economic policies remains a critical need-and constraint-in most transition economies if they are to complete the successful passage to fully functioning market economies. To take an active role in the transition process, economic policymakers, business leaders, government officials, and others need a thorough grounding in market-based economics. This requires strengthening economics education and providing support for qualified economists to teach economics at all levels and to carry out high-quality research and policy analysis. Although the education systems in a handful of countries have already risen to the challenge, in many other transition countries, the structure of educational and research institutes remains grounded in the Communist model. This paper presents findings from a comprehensive study assessing the state of economics education and research in 24 countries in East-Central Europe and the former Soviet Union. While 20 countries were initially included because preliminary assessments showed that they lacked the capability to offer high-quality economics education, four additional countries-the Czech Republic, Hungary, Russia, and Ukraine-were included to highlight five centers of excellence that they already host. Based on the experience of these successful centers, the studys findings, and information gathered from a series of donor meetings in Berlin, New York, and Washington, D.C., this paper presents an approach to building new indigenous capacity for teaching and research on market-based economics in regions where the need is particularly critical-the Caucasus, Central Asia, and Southeast Europe.