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date: 12 December 2019

Abstract and Keywords

When Mikhail Gorbachev became General Secretary of the Communist Party of the Soviet Union in March 1985, the Soviet economic system was petrified with minimal growth. Gorbachev launched a frenetic attempt at economic revival with a mixture of disciplinary actions, technical improvements, and an attempt at a socialist market economy. Key steps were legalizing private enterprise in the form of cooperatives, liberalizing foreign trade, and passing command over state enterprises to their managers. The actual outcome, however, was a fiscal and systemic collapse of the communist system amid shortages, sharp output fall, competitive money emission, and rising inflation in 1991. In January 1992, Russian President Boris Yeltsin attempted a radical transition to a market economy. Its essence was price and trade liberalization, privatization, and fiscal stabilization. The financial stabilization did not succeed until after the financial crash of 1998, when Russia entered a decade of high and sustained economic growth.

Keywords: Soviet economy, socialist economics, economic transition, deregulation, economic reform, macroeconomic stabilization, financial crisis, privatization

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