The Current State Of Russia And It

The Current State Of Russia And It’s Neighbouring Republics Essay, Research Paper In August of 1991, the collapse of the communist system in the USSR and it’s neighboring republics occurred. Out of the smoke emerged fifteen new republics and a union known as the Commonwealth of Independent States. These new regimes faced formidable obstacles. The collapse brought massive inflation which in turn forced the economy into a spiraling decline and a state of almost worthless value. Many people were quick to point the finger at their communist past, and even more eager to lay blame. Traditional communist ideology was to “provide for every individual an equal amount of goods and services, thus creating a state of equality amongst the populous” (Leveler, 16). Many people felt

as if their current hardships could be blamed on the communists and their economic policies, specifically their “Core-Periphery” plan. The communist sponsored “Core-Periphery” economic policy that was evident in Russia was quite simplistic in nature. The theory, traditionally used to describe inter-continental trading and production, was adapted for use in the Russian economic zones. The theory was as follows; Areas which surround the capital (core region), usually rich in one material or another, would be used for the extraction of raw materials. These materials would then be shipped back to the capital in order to be manufactured into goods. From there, the manufactured products would be shipped back to the surrounding regions (periphery region) for resale. The citizens

of Russia were surviving on this system, but barely. The Core-Periphery policy was not efficient, nor effective, for usually a product needed on one side of the federation, was produced at the other end. Factors such as transportation costs and adequate use of human resources was very inefficient and cost-consuming. Strong influences from the world urged Russia to make the transition into the market-oriented economy. This seemed tempting, for the market-oriented economy preached individual wealth and prosperity. Seeing no better solution to their current economic woes, Russian policy-makers took the plunge. By 1995, 4 years since the beginning of the transition into a market-oriented economy, no satisfactory economic improvment had taken form. Productivity in many states such as

Turkmenistan and Belarus continued to fall (Table 2), and inflation was still at high levels. Many new Russian capitalists in the regions chose to exploit what had already been exploited in the past; raw materials. Looking to make a fast income, these new Russian capitalists sold whatever they could get their hands on, for practically no cost at all (Co-Existence, 146). Expropriation of state property, shady deals, and corruption were rampant. Productivity in industries such as agriculture declined as farmers did not want to take care of their land (Co-Existence, 146). Nobody had money to buy their goods, so they questioned as to whether or not they should take the time to produce them. The economy was contracting and in turn, people were actually getting poorer. The newly

separated states were yearning for economic growth and prosperity. This would hopefully bring stability and a much needed improvement in the standard of living as well as individual wealth. This however, has not been the case. Many of the breakaway republics have actually experienced considerable negative growth. Many of the republics made the transition to the market economy hoping to make the individual citizen wealthier. In many of the republics this did not actually take place. In 1995, all but 2 of the 15 countries saw their net exports per capita fall drastically. Lithuania, once with a net export per capita rating of 49.2, was experiencing one of -54.1 in 1995 (Table 1). On average the citizens now had less than before. Many countries began to realize that they were in