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Risks of Russian Economic Reforms: Lack of Theoretical Economic Knowledge

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Title: Risks of Russian Economic Reforms: Lack of Theoretical Economic Knowledge


1
Risks of Russian Economic ReformsLack of
Theoretical Economic Knowledge
  • Svetlana Kirdina
  • Institute of Economics, Russian Academy of
    Science,
  • Russia, Moscow

2
Main idea of presentation
  • to show that the theoretical basis of the
    reforms conducted in the society is of paramount
    importance
  • Russia as an example.

3
Presentation structure
  1. The situation in the field of theoretical
    economic knowledge in our country during the
    disintegration of the Soviet Union (1980-1990)
  2. Which economic theories did our reform-makers
    address to and why.
  3. Neo-institutional program of economic reforms in
    Russia
  4. Neo-institutional program performance unexpected
    risks
  5. The development of Russian institutionalism
  6. Russian institutionalism on economic reforms
    program alternative project
  7. Reforms results
  8. Conclusion

4
The situation in the field of theoretical
economic knowledge during the disintegration of
the Soviet Union
  • Political economy of socialism, as the dominant
    domestic economic theory, failed to foresee
    economical and political crisis in the USSR in
    the 1990th
  • The trust to domestic economic theoretical
    knowledge was compromised
  • Foreign economic theories, neo-institutionalism
    especially, became the theoretical basis for
    Russian reforms

5
Why did Russian reform-makers address to
neo-institutional economic theory
(neo-institutionalism)?
  • The creation of new market institutions became
    the essence of the reformation process (economic
    institutions are the main subject of
    neo-institutionalism)
  • Neo-institutional theories pay a special
    attention to formal contracts between economic
    actors. The task of Russian reform was to
    formulate clearly vague property rights and
    economic duties of actors
  • Neo-institutional theories consider the
    transaction costs minimization as a criteria for
    creation of new institutions. Russian economy
    needed efficient new rules in order to decrease
    total economic expenses
  • Young economists (Yegor Gaydar, Anatholy Tchubays
    and others) were at the head of the reforms. They
    all had negative attitudes to political economy
    of socialism but they knew foreign economic
    theories. At that time neo-institutionalism was
    popular. Thus Nobel Prize winners for economics
    in early 1990th were neo-institutionalists, e.g.
    Douglass C. North, Ronald H. Coase.

6
Neo-institutional (liberal) program of economic
reforms in Russia
  • The support of market privatization/ That means
  • - the separation and further merger of
    property among responsible economic actors,
  • - the spread of competition and contract
    relations with profit motivation as the main
    economic criteria
  • The transparency of financial flows in economic
    activity, because otherwise it is impossible
    to define the responsibilities and duties of
    economic actors
  • The development of the economic legislation
    basis
  • Broad participation of citizens and all
    hierarchic levels actors in the reform process.

7
Neo-institutional program performance unexpected
risks
  • political end economic efforts and expenses of
    reforming process are extremely high.
    Nevertheless the declared targets were not
    achieved
  • reproduction processes are broken, branch and
    regional structure of production is distorted,
    which leads to the decries of economic safety of
    Russia
  • economic reforms provoke long-term and permanent
    reduction of social development parameters
    including degradation of human potential, the
    deepening of income inequality, criminalization
    and corruption.

8
The development of Russian institutionalism
  • the institutional theory of Russian economic
    evolution (by O. Bessonova)
  • the theory on institutional basis for different
    economic forms (by N.Lebedeva and N.Drozdova)
  • the institutional matrices theory (by S.
    Kirdina).
  • Using some modern ideas of neo-institutionalism,
    these concepts creatively developed the
    traditions of political economy of socialism and
    Marxist sociology.

9
The institutional matrices theory (one of Russian
institutionalism example) was already being
presented
  • The first workshop of the ESA Social Theory
    Research Network, Copenhagen, 2000 (Main
    provisions of the institutional matrices
    theory)
  • The 5th Conference of the ESA "Visions and
    Divisions Challenges to European Sociology",
    Helsinki, 2001 (The Institutional Matrices
    Theory in the Context of Modern Sociology)
  • XVth World Congress of Sociology, Brisbane, 2002
    (The institutional matrices of society) etc.

10
Main differences between Russian
institutionalism and neo-institutionalism
  • interpretation of the term institution. Russian
    institutionalism pays more attention to
    historical components of institutions and their
    dependence on the environment and cultural
    context, where socium is being developed. That
    is material and technological conditions,
    geography and other parameters
  • Russian institutionalism studies some non-market
    institutions neither the deviation from normal
    reproduction process nor as institutional traps
    but as some separate natural and rational
    phenomena.

11
Russian institutionalism on economic reform
program alternative project
  • Modernization rather than revolutionary change of
    institutional structure
  • Market transformation doesnt mean the
    replacement of existing institutions by the new
    ones, but it means that these new market
    institutions fill in the gapes in institutional
    structure typical for Russia
  • The specifics of external limits of economic
    development such as natural, geographical and
    technological is also taken into account.

12
How does neo-institutionalism interpret the
results of Russian reforms?
  • revolutionary process of economic structure
    change is going on in Russian society
  • traditional paternalistic values of Russian
    population prevent the in-depth development of
    market economy.

13
How do the theories of Russian institutionalism
explain the results of Russian reform?
  • There is the modernization of inherent economic,
    political and ideological institutions into new
    forms
  • The institutional structure complemented with new
    institutions so that to ensure the necessary
    variety of political, economic and social life.
    The lack of such institutions in the former USSR
    contributed to its collapse.

14
Conclusions (1)
  • The same trends which were typical for the
    Russian society development at that transition
    period were reflected in the development of
    theoretical economic knowledge.
  • On the one hand, foreign institutions were
    actively implemented, such as market economy,
    federal state structure and new values of
    personal rights and freedom.
  • The same process was observed in the economic
    theory. New methodology was developed on the
    basis of American and west-European
    neo-institutionalism.

15
Conclusions (2)
  • On the other hand, in 1990-2000th there was
    modernization of inherent Russian institutions
    and their adjustment to the global world
    challenges. That is why, state regulation and
    entrepreneurship were renewed hierarchic
    vertical of power in Russian unitary state was
    modernized and became stronger traditional
    communitarian values expressed themselves in new
    ideological forms.
  • The same process took place in the economic
    theory. The Russian institutionalism based on
    domestic achievements in political economy and
    Marx sociology, starts to develop rapidly.

16
Conclusions (3)
  • At present the balance of trust between external
    and internal innovations both in economy,
    politics, ideology and social science as well
    starts to shift from foreign to Russian ones.
    In practice, it means that domestic theoretical
    works are in more demand.
  • That is why risks and expenses of Russian reforms
    can be reduced. And we will see that there is
    nothing more practical than a good theory.
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