Making Markets: Economic Transformation in Eastern Europe and the Post-Soviet States

By Shafiqul Islam; Michael Mandelbaum | Go to book overview

The net flows to the Soviet Union and Russia were substantially less than the gross flows, because of substantial amortizations during this period. For the Soviet Union as a whole, the IMF records total amortizations of $16.3 billion for 1990 and 1991, with Russia's share amounting to $9.9 billion. Thus, according to IMF data, net flows for 1990 and 1991 were $9.7 billion for the Soviet Union and $5.7 billion for Russia. Subtracting the interest payments on the foreign debt shows that net resource transfers to the Soviet Union and to Russia from foreign creditors were de minimis: $0.6 billion and $0.1 billion, respectively. The calculations for Russia are shown in Table A2.


Notes
1.
Russia should be able to absorb several tens of billions of dollars of increased international debt in the next few years, as long as most of that borrowing is directed toward profitable purposes in the context of overall reforms. The current Russian debt is about $40 billion, which is 61 percent of the total Soviet debt of about $65 billion. While the debt is posing enormous short-term liquidity problems, it represents a long-term manageable burden in an economy of around $300 billion, with excellent prospects for significant export growth. The implied ratio of debt to gross domestic product is around 15 percent, far below Poland's ratio of around 70 percent at the start of its reform program in 1990. (Technically, Russia could find itself responsible for more than $40 billion of the outstanding debt, if some of the other republics default on their debt obligations.)
2.
Transition: the newsletter about reforming economies, published by The World Bank, vol. 2, no. 10, Nov. 1991, p. 10.
3.
The point here is not that Russian conditions today mirror those of Germany in 1948, but that reformers then, as today, had to overcome a deep cloud of unwarranted pessimism. It is common today to say that Germany's conditions were self-evidently more favorable than Russia's, given the previous experience of a market economy. This may be right, but it is surely exaggerated, and was not much believed at the time. After all, a failed Weimar democracy followed by twelve years of Nazi dictatorship is hardly a self-evident basis for democratic capitalist institutions.
4.
See Thomas Alan Schwartz, America's Germany ( Cambridge, Mass.: Harvard University Press, 1991), p. 55.
6.
Ibid., p. 91: "Many Americans in Germany, including McCloy, while sympathizing with Ludwig Erhard's vision of a German economy with more competition, an export orientation, and less government tutelage, considered some forms of planning and control essential in a modern economy, especially when that economy relied on American assistance. Within Adenauer's government, Erhard and the members of the smaller

-178-

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Making Markets: Economic Transformation in Eastern Europe and the Post-Soviet States
Table of contents

Table of contents

  • Title Page iii
  • Council On Foreign Relations Books iv
  • Contents v
  • Foreword vii
  • Acknowledgments ix
  • Introduction 1
  • 1 - From Central Planning to a Market Economy 16
  • Notes 49
  • 2 - Economic Transformation in Central and Eastern Europe 53
  • Notes 97
  • 3 - Economic Reform in the USSR and Its Successor States 99
  • Notes 138
  • 4 - Western Financial Assistance and Russia's Reforms 143
  • Appendix to Chapter 4 - A Note on G-7 Assistance Extended to the Soviet Union 176
  • Notes 178
  • Conclusion - Problems of Planning a Market Economy 182
  • Notes 212
  • Appendix 216
  • Index 218
  • Glossary of Abbreviations and Acronyms 235
  • About the Authors 236
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