Economics of Planning

, Volume 36, Issue 3, pp 223–257 | Cite as

Evolution of the Government–Business Relationship and Economic Performance in the Former Soviet States – Order State, Rescue State, Punish State

  • Ichiro Iwasaki


The objective of this paper is to elucidate the relationship between the reform process and economic performance in the states of the former Soviet Union (FSU). There were two strategies used by the former Soviet states to cope with the collapse of the USSR. Some of the FSU countries, in an effort to overcome the institutional vacuum caused by the disintegration of the federal economy, centralized their government authority to manage industry. Others decentralized power in an attempt to regain economic independence for domestic enterprises. To evaluate the essential differences and progress gaps among transition strategies, FSU countries can be divided into three groups, which reflect variations in institutional control of the government-business relationships. The differences in economic performance in FSU countries can be explained to some extent by examining the diversity of institutional patterns that characterize each category. The results of various empirical analyses positively support the validity of such an analytical framework. In this sense, this paper presents a new viewpoint on the transition process in FSU countries that may complement that shown in existing literature.

government-business relationship the former Soviet Union transition 


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Aghion, P. and Tirole, J. (1997), ‘Formal and real authority in organizations’, Journal of Political Economy 105(1), 1-29.CrossRefGoogle Scholar
  2. Aoki, M. (1995), ‘An evolving diversity of organizational mode and its implications for transitional economies’, Journal of the Japanese and International Economies 9(4), 330-353.CrossRefGoogle Scholar
  3. Aoki, M. and Okuno-Fujiwara, M. eds. (1996), Comparative Institutional Analysis: A New Approach to Economic Systems, Tokyo, University of Tokyo Press (in Japanese).Google Scholar
  4. Bartlett, D. (2001), ‘Economic recentralization in Uzbekistan’, Post-Soviet Geography and Economics 42(2), 105-121.Google Scholar
  5. Berg, A., Borensztein, E., Sahay, R. and Zettelmeyer, J. (1999), ‘The evolution of output in transition economies: explaining the differences’, Working Paper No. WP/99/73, Washington, DC, IMF.Google Scholar
  6. Brunetti, A., Kisunko, G. and Weder, B. (1997), ‘Institutions in transition: reliability of rules and economic performance in former socialist countries’, Policy Research Working Paper No. 1809, Washington, DC, World Bank.Google Scholar
  7. Campos, N. (2000), ‘Context is everything: measuring institutional change in transition economies’, Policy Research Working Paper No. 2269, Washington, DC, World Bank.Google Scholar
  8. Campos, N. and Coricelli, F. (2002), ‘Growth in transition: what we know, what we don't, and what we should’, Discussion Paper No. 3246, London, Centre for Economic Policy Research.Google Scholar
  9. Christoffersen, P. and Doyle, P. (1998), ‘From inflation to growth: eight years of transition’, Working Paper No. WP/98/100, Washington, DC, IMF.Google Scholar
  10. Crémer, J. (1990), ‘Common knowledge and the coordination of economic activities’, in Aoki, M., Gustafsson, B. and Williamson, O. eds. The Firm as a Nexus of Treaties, London, SAGE Publications, pp. 53-76.Google Scholar
  11. de Melo, M., Denizer, C. and Gelb, A. (1996), ‘Patterns of transition from plan to market’, World Bank Economic Review 10(3), 1-31.Google Scholar
  12. de Melo, M., Denizer, C., Gelb, A. and Tenev, S. (1997), ‘Circumstance and choice: the role of initial conditions and policies in transition economies’, Policy ResearchWorking Paper No. 1564, Washington, DC, World Bank.Google Scholar
  13. de Melo, M., Denizer, C., Gelb, A. and Tenev, S. (2001), ‘Circumstance and choice: the role of initial conditions and policies in transition economies’, World Bank Economic Review 15(1), 1-31.CrossRefGoogle Scholar
  14. Dillon, W. and Goldstein, M. (1984), Multivariate Analysis: Methods and Applications, New York, John Wiley & Sons.Google Scholar
  15. EBRD, Transition Report, London, EBRD (various issues).Google Scholar
  16. Economist Intelligent Unit (EIU), EIU Country Report, London, EIU (various issues).Google Scholar
  17. Falcetti, E., Raiser, M. and Sanfey, P. (2000), ‘Defying the odds: initial conditions, reforms, and growth in the first decade of transition’, Working Paper No. 55, London, EBRD.Google Scholar
  18. Fischer, S., Sahay, R. and Végh, C. (1996), 'Stabilization and growth in transition economies: the early experience,' Journal of Economic Perspectives 10(2), 45-66.Google Scholar
  19. Fischer, S. and Sahay, R. (2000), ‘The transition economies after ten years’, Working Paper No. WP/00/30, Washington, DC, IMF.Google Scholar
  20. Freedom House, Nations in Transit, Freedom House, New York (various issues) (available at Scholar
  21. Garibaldi, P., Ratna Sahay, N.M. and Zettelmeyer, J. (2001), ‘What moves capital to transition economies?’, IMF Staff Papers 48 (Special Issue), 109-145.Google Scholar
  22. Genka, T., ed. (1998), Recommendation on Japan's Technical Assistance for Azerbaijan, Research Report submitted to the Ministry of Foreign Affairs of Japan, Okayama, Okayama University (in Japanese).Google Scholar
  23. Gosudarstvennyi Komitet SSSR po Statistike (Goskomstat SSSR) (1990), Narodnoe Khoziaistvo SSSP v 1989 g.: Statisticheskii Ezhegodnik, Moscow, Financy i Statistika (in Russian).Google Scholar
  24. Grinberg, R. and Vardomskii, L. (2001), ‘Deciatiletie evoliutsii i perspektivy strukturirovaniia postsovetskogo ekonomicheskogo prostranstva’, Rossiiskii Ekonomicheskii Zhrnal (8), 55-67 (in Russian).Google Scholar
  25. Grogan, L. and Mores, L. (2001), ‘Growth empirics with institutional measures for transition countries’, Economic Systems (25), 323-344.CrossRefGoogle Scholar
  26. Havrylyshyn, O. (2001), ‘Recovery and growth in transition: a decade of evidence’, IMF Staff Papers 48 (Special issue), 53-87.Google Scholar
  27. Havrylyshyn, O., Izvorski, I. and van Rooden, R. (1998), ‘Recovery and growth in transition economies 1990-97: a stylized regression analysis’, Working Paper No. WP/98/141, Washington, DC, IMF.Google Scholar
  28. Havrylyshyn, O. and van Rooden, R. (2003), ‘Institutions matter in transition, but so do policies’, Comparative Economic Studies 45, 2-24.CrossRefGoogle Scholar
  29. Havrylyshyn, O. and Wolf, T. (2001), ‘Growth in transition countries, 1990-98: the main lessons’, in Havrylyshyn, O. and Nsouli, S.M. (eds), A Decade of Transition: Achievements and Challenges, Washington, DC, IMF, pp. 83-128.Google Scholar
  30. Heritage Foundation, The Index of Economic Freedom (available at Scholar
  31. Hernández-Catá, E. (1997), ‘Liberalization and the behavior of output during the transition from plan to market’, IMF Staff Papers 44(4), 405-429.Google Scholar
  32. Heybey, B. and Murrell, P. (1999), ‘The relationship between economic growth and the speed of liberalization during transition’, Policy Reform 3(2), 121-137.CrossRefGoogle Scholar
  33. IMF, IMF Country Report, Washington, DC, IMF (various issues).Google Scholar
  34. IMF (2000), World Economic Outlook 2000: Focus on Transition Economies, Washington, DC, IMF.Google Scholar
  35. Isnolnitel'nyi Komitet Sodruzhestva Nezavisimykh Gosudarstv (2001), Ekonomika SNG: 10 Let Reformipobaniia i Integratsionnogo Razvitiia, Moscow, Finstatinform (in Russian).Google Scholar
  36. Iwasaki, I. (2001a), ‘Government-business relationship and economic performance in Central Asia’, Paper submitted to the 41st Annual Congress of the Japan Association for Comparative Economic Studies, Sapporo, Hokkaido University (in Japanese).Google Scholar
  37. Iwasaki, I. (2001b), A Comparative Study on Transition Economies of Central Asia, Doctoral Dissertation, Tokyo, Hitotsubashi University (in Japanese).Google Scholar
  38. Iwasaki, I. (2002a), ‘Government-business relationship and economic performance in Central Asia’, Ajia Keizai (Institute of Developing Economies) 43(3), 29-49 (in Japanese).Google Scholar
  39. Iwasaki, I. (2002b), ‘Observations on economic reform in Tajikistan: legislative and institutional framework’, Eurasian Geography and Economics 43(6), 493-504.CrossRefGoogle Scholar
  40. Japan Association for Trade with Russia & Central-Eastern Europe (ROTOBO), Quarterly ROTOBO Economic Trends (various issues) (in Japanese).Google Scholar
  41. Korhonen, I. (2001), ‘Progress in economic transition in the baltic states’, Post-Soviet Geography and Economics 42(6), 440-463.Google Scholar
  42. Kornai, J. (1994), ‘Transformational recession: the main causes’, Journal of Comparative Economics 19(1), 39-63.CrossRefGoogle Scholar
  43. Korolev, M. (2001), ‘Desiat' let Sodruzhestvu Nezavisimykh Gosudarstv’, Obsheatvo i Ekonomika (11/12) 187-216 (in Russian).Google Scholar
  44. Kuboniwa, M. and Tabata, S. (2002), ‘Russia's demographic and pension crisis in the 1990s: a preliminary observation on inter-generational equity problems in transition countries’, The Economic Review (Hitotsubashi University) 53(3) 247-267 (in Japanese).Google Scholar
  45. Manly, B. (1986), Multivariate Statistical Methods: A Primer, London, Chapman and Hall.Google Scholar
  46. Matsnev, D. (2001), ‘Makroekonomika SNG: deciatiletie reform’, Rossiiskii Ekonomicheskii Zhrnal (5/6) 60-70 (in Russian).Google Scholar
  47. Mezhgosudarstvennyi Statisticheskii Komitet Sodruzhestva Nezavisimykh Gosudarstv (CISSTAT). (2002), Sodruzhestva Nezavisimykh Gosudarstv v 2001 godu: Statisticheskii Sbornik, Moscow: CISSTAT (in Russian).Google Scholar
  48. Michalopoulos, C. and Tarr, D. eds. (1994), ‘Trade in the New Independent States’, Studies of economies in transformation No. 13, Washington, DC, World Bank.Google Scholar
  49. Mores, L. (1999), ‘How important are institutions for growth in transition countries?’, Discussion Paper No. 99-004/2, Amsterdam, Tinbergen Institute.Google Scholar
  50. Nishimura, Y. (1999), ‘Reconsideration on transition policies for the transformation from a socialist planned economy to market economies’, The Economic Review (Hitotsubashi University) 50(4), 299-311 (in Japanese).Google Scholar
  51. Nove, A. (1986), The Soviet Economic System, 3rd edn, Boston, Allen & Unwin.Google Scholar
  52. Pomfret, R. (2000), ‘The Uzbek model of economic development, 1991-99’, Economics of Transition 8(3), 733-748.CrossRefGoogle Scholar
  53. Popov, V. (2002), 'Strong institutions are more important than the speed of reforms,' in Cuddy, M. and Ruvin, G. eds. Institutional Change in Transition Economies, Hampshire, Ashgate, pp. 55-71.Google Scholar
  54. Sachs, J. (1996), ‘The transition at mid decade’, American Economic Review 86(2), 128-133.Google Scholar
  55. Selowsky, M. and Martin, R. (1997), ‘Policy performance and output growth in the transition economies’, American Economic Review 87(2), 349-353.Google Scholar
  56. Siegelbaum, P., Sherif, K., Borish, M. and Clarke, G. (2002), 'Structural adjustment in the transition: case studies of Albania, Azerbaijan, Kyrgyz Republic, and Moldova', World Bank Discussion Paper No. 429, Washington, DC, World Bank.Google Scholar
  57. Weder, B. (2001), 'Institutional reform in transition economies: how far have they come; Working Paper No. WP/01/114, Washington, DC, IMF.Google Scholar
  58. Wolf, H. (1999), ‘Transition strategies: choices and outcomes’, Princeton Studies in International Finance No. 85, New Jersey, Princeton University.Google Scholar
  59. World Bank (1996), World Development Report 1996: From Plan to Market, Washington, DC, Oxford University Press.Google Scholar
  60. World Bank (2002), Transition the First Ten Years: Analysis and Lessons for Eastern Europe and the Former Soviet Union, Washington, DC, World Bank.Google Scholar
  61. Wyplosz, C. (2000), Ten Years of Transformation: Macroeconomic Lessons, Discussion Paper No. 2254, London, Centre for Economic Policy Research.CrossRefGoogle Scholar

Copyright information

© Kluwer Academic Publishers 2004

Authors and Affiliations

  • Ichiro Iwasaki
    • 1
  1. 1.Institute of Economic ResearchHitotsubashi UniversityKunitachi City, TokyoJapan

Personalised recommendations