The Economies of the U.S. & Russia

In general, Russia was hesitant about implementing market reform. Many Russian citizens actively opposed reforms while some politicians saw market reform as a way to fix the inefficiencies of the old system rather than as a new system. From this standpoint, Russian implemented programs on top of the former system rather than creating a separate system. The goal was to increase consumption standards and become more competitive in the international market; this gave considerable support to those who wanted to reduce military expenditures (Gaddy & Ickes, 1999, p. 44).

One of the most significant impediments to reform was the fact that Russia had labored under a centrally planned economy much longer than many other former members of the

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cipation of strong financial returns is now seeking other markets where the returns are likely to be monetary and quantifiable (Hovey, 1999, p. 32). Recently, the government concentrated its efforts on collecting taxes in hard currency rather than in barter, but faced the problem of a greatly devalued ruble. In August 1998, the government defaulted on $40 billion worth of short-term treasury bills and the Russian financial markets collapsed. The shadow economy became even more entrenched as Russians workers did not receive wages, Russian factories did not pay bills, and Russian banks rarely had money. Yet Russian workers continued to procure goods and Russian factories continued to produce those goods. Throughout the economy, IOUs have become commonplace, and are often used to pay obligations to the point that when payment is finally received for an IOU, it may ultimately be paid to someone far removed from the original transaction ("Russia's Economic," 1999, p. 69). In the midst of this unexpected variation on capitalism, corruption and insider deals are rampant. A nonmonetary based system provides ample opportunity to camouflage bribes, money laundering and insider dealings. Middle-level bureaucrats in the government and
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Approximate Word count = 1618
Approximate Pages = 6 (250 words per page)

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