Chapter 2: Down and up the stairs: paradoxes of Russian economic growth
Ksenia Yudaeva, Maria Gorban, Vladimir Popov and Natalya Volchkova 1. INTRODUCTION Russia’s economic performance during the ﬁrst transition decade was one of the worst among transition economies. Output decline was deeper and lasted longer than in the countries of Eastern and Central Europe and in most of the CIS countries not aﬀected by war. What caused such a bad performance? This chapter, following Popov (2000) and Berglof and Bolton (2002), attributes Russian growth failure to the collapse of the government. Early literature on the subject concentrated on the ‘competition’ between reform policies and initial conditions as the main determinants of growth during the ﬁrst transition period. While proponents of the ﬁrst theory claim that faster-reforming countries had stronger growth, their opponents point to the fact that faster-growing countries also had better initial conditions. The emerging consensus of this literature is that initial conditions matter for the depth of initial decline, and depth and speed of the reform progress determines the speed of the recovery (see Berg et al., 1999; Fischer and Sahay, 2000; Campos and Coricelli, 2000 and so on). Some CIS countries, such as Uzbekistan, still do not ﬁt this picture. Zettlemeyer (1998) attributes Uzbekistan success to favourable initial conditions, such as natural resource abundance (cotton, some non-ferrous metals) and self-suﬃciency in energy, but Spechler et al. (Chapter 8, this volume) attribute it to better, though non-conventional policies. Russia has oil, and is self-suﬃcient in energy, so it is not clear, if based on initial conditions...
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