Irina Sinitsina

The Impact of the Global Financial Crisis on Public Expenditures on Education and Health in the Economies of the Former Soviet Union

This paper provides an overview of public expenditures on education and healthcare in Belarus, Georgia, Kyrgyzstan, Moldova, Russia, Ukraine and some other countries of the former Soviet Union before and during the global financial crisis. Before the crisis, the governments of these countries were substantially increasing spending on education and health. The crisis adversely affected the FSU countries and worsened their fiscal situation. The analysis indicates that during the crisis, despite the fiscal constraints, public education and health expenditures have mostly been maintained or increased in almost all of these countries. However, the crisis situation was not taken as an opportunity to address these countries’ key education and healthcare problems related to demographic changes, insufficient per capita expenditure levels, the low efficiency of public spending and the insufficient quality of services. These issues form an ambitious reform agenda for these countries in the medium- and long-term.

Post-Adaptation Growth Recovery in Poland and Russia - Similarities and Differences

The purpose of this paper is to analyze the sources, economic and social characteristics, of growth recovery, which followed the first period of output decline in two transition countries – Poland and Russia. They represent two different groups of transition countries (new EU member states vs. CIS) in terms of adopted transition strategy and accomplished results. Generally, fast reformers succeeded and slow reformers experienced a lot of troubles. Although eventually all former communist countries entered the path of economic growth, those which moved slowly lost sometimes the whole decade. Social costs of slow reforms were also dramatic: income degradation and rising inequalities, high level of poverty and corruption, various social and institutional distortions and pathologies, violation of human rights and civil and economic liberties, attempts of authoritarian restoration, etc. The period of ‘adaptation’ output decline was much more severe and longer in Russia than in Poland, and recovery came later. Unlike in the leading transition countries, the role of new private firms and FDI in Russia has been very limited what can be explained by administrative barriers, widespread corruption, lack of transparency, instability and contradictions in economic legislation, reflecting poor business climate. In the absence of FDI and with limited role of SME Russian economy is dominated by large domestic corporations, many of them having an ‘oligarchic’ characteristic. This additionally complicates the political economy of market reforms and weakens constituency of favor of open democratic society and liberal economic policies. The high oil prices helped in economic recovery and fiscal adjustment in Russia in early 2000s. However, Russian economy has become increasingly oil-dependent. While major obstacles to future Russia’s growth can origin from its structural monoculture dominated by the oil and energy sector, and poor business climate, the excessive welfare state can be considered as the main development burden in the case of Poland. In both analyzed countries poverty and inequality increased substantially during 1990s, to much bigger extent in Russia compared to Poland. While part of the income polarization was inevitably connected with departure from communist egalitarianism and part of poverty phenomenon reflected transition adaptation costs, other factors such as continuous structural distortions, incomplete liberalization, high inflation, insufficient competition, barriers to entrepreneurship, institutional weaknesses of the state captured by oligarchs, corruption, etc.,played a significant role here.