A book by Vladimir Popov (in Russian with a preface by Jomo K.S.) will be presented at the Rhodes Forum Ninth Annual Session on October 6 - 10, 2011
The book by Vladimir Popov published in Russian elaborates National Development Strategies for the so-called transition economies of the former Soviet Union and Eastern Europe and considers how Russia and other post-communist states could have benefited from the experiences of developing countries with alternative approaches to macroeconomics, growth, finance, trade, industrial policy (investment and technology promotion), state owned enterprise (SOE) reform and social policy. It is also argued that lessons of international significance can be derived from the Russian transition experience, which in many senses became the extreme experiment with wide scale deregulation, privatization, government downsizing and abrupt opening up a previously closed economy.
On the cover – the fragment of composition by Diego Rivera “Man at the crossroads” created in 1933 for the Rockefeller Center in New York.
Higher School of Economics Publishing House, Moscow, 2011
Foreword by Jomo K. S.
Introduction. Economic Performance During the Transition to the Market: Circumstances Versus Choice
Chapter 1. Goals of Macroeconomic Policy: Fiscal and Monetary Policy
Chapter 2. International Aspects of Macroeconomic Policy – Exchange Rate, Balance of Payments,
External Debt, Capital Flows
Chapter 3. Industrial Policy – Import Substitution and Export Orientation
Chapter 4. Industrial Policy Tools
Chapter 5. State-Owned Enterprise Reform
Chapter 6. Finance Policy
Chapter 7. Social Policy
Instead of Conclusions: The Secret of Success
The failure of the Washington Consensus policies in the 1980s and the 1990s in developing and transition economies has led to the search for alternative economic strategies. An attempt to summarize the results of theoretical debates and successes and failures of actual development experience was done by the United Nations Department of Economic and Social Affairs (UN DESA) that published National Development Strategies: Policy Notes (2008, New York, http://esa.un.org/techcoop/policyNotes.asp).
Overall, the book defends a progressive economic program for the future of the post-Soviet economies. It raises questions of when, where and under what circumstances particular measures are justified.
- What macroeconomic strategy can promote growth without accelerating inflation?
- How do we maintain economic stability beyond limiting inflation?
- How do we create cushions to trade and financial shocks from world markets?
- How do we control capital flows to attract those which will accelerate capital accumulation while keeping out disruptive speculative inflows?
- What exchange rate policy is reasonable and how much foreign exchange reserves should be held?
- What are the areas of economic activity with greatest externalities, where the social returns are much greater than the private returns appropriated by private investors? What kind of industrial policy, or investment and technology policy, should transitional economies pursue?
- What industries should we support, and if so, what are the most appropriate instruments for such support at different stages of development?
- How can resource-rich countries avoid “Dutch disease” and ensure their natural resources are a blessing, rather than a curse?
- What is the optimal size of the state sector, and when is it appropriate to nationalize or to privatize enterprises?
- How to regulate financial institutions to improve access of households and businesses to financial services, but avoid the destabilizing effects of volatile financial markets?
- How to ensure the benefits of economic growth are not appropriated by a few “oligarchs”, but instead improve the wellbeing of all, including the poorest in society?
It is argued that all successful cases of economic and social catch-up development have always been associated with state led transformation, not with excessive economic liberalization. However, there are many spectacular failures of state-driven modernization projects. So, the leading role of the state is a necessary, but not a sufficient condition of success. This book seeks to identify the other necessary ingredients for successful growth.
Vladimir Popov is the author and editor of 11 books and numerous articles on transition and development. He is professor at the New Economics School in Moscow and Carleton University in Canada, and currently Adviser at the United Nations Department of Economic and Social Affairs (UN-DESA).