The Russian Far East: Economic Conditions and Prospects for Cooperation in Northeast Asia

Abstract

The decline of the economy of the Russian Far East began in 1991. The slump in winter output was somewhat mitigated by subsequent price increases. Under the pressure of trade unions’ and strikers’ demands, the government finally attempted to match price increases with wages. By the beginning of 1991, the prices of commodities and services in the Far East had risen 190 to 210 percent, paralleling the growth in the population’s monetary income. The level of credit granted in the region was even higher—270 to 300 percent. This, in turn, triggered a process of latent hyperinflation in the middle of 1991. The rapid rise of prices occurred at the same time as production fell steadily. The rising cost of products in virtually the entire industrial sector of the Far East (with the exception of fisheries and nonferrous metallurgy) was accompanied by a decrease in the availability of manufactured goods.