Russia's Virtual Economy [Paperback]

Clifford G. Gaddy (Author), Barry W. Ickes (Author)

Book Description

Publication Date: June 1, 2002

Clifford Gaddy's and Barry Ickes's paradigm of the "virtual economy" has forced broad recognition of the inadequacies of the intended market reform policies in Russia. Their thesis - that Russia's economy is based on illusion or pretence about nearly every important economic yardstick, including prices, sales, wages and budgets - also sought to provide a framework for understanding how and why so much of Russia's economy has resisted reform. Gaddy and Ickes now use the virtual economy concept to project the near- and middle-term future of the Russian economy and suggest possible policy responses. Drawing on new empirical material from published and unpublished sources and from their own field of work in Russia, the authors examine critical aspects of the virtual economy: manufacturing enterprises, households and the public sectors, both local and federal. They also integrate the financial and agricultural sectors into their model.

Editorial Reviews

From the Inside Flap

Economic reform in Russia has been anything but the smooth process envisioned by many in 1991. A full decade after Russia officially embarked on what were described as "radical market reforms," there is no consensus about whether the economic transition has been a success or failure.

The Russian transition has turned out to be vastly more complicated in practice than theory. Some attribute the problems to a series of bad policy choices. Others assert that the path to market economics is inconsistent with Russian history and culture.

Neither of these explanations is sufficient to capture the difficulties of implementing a market economy within an economic structure bequeathed by central planning, according to Clifford G. Gaddy and Barry W. Ickes. In this book they examine how the Russian economy has evolved into a mutant form that combines elements of the market with institutions and behaviors that have a distinct, nonmarket character.

Gaddy and Ickes put special focus on Russia's "virtual economy." Rooted in Russia's vast sector of hopelessly noncompetitive industrial enterprises and their struggle to survive in the hostile market enviornment, this mutant system is characterized by a set of informal institutions that permits the production and exchange of goods that are worth less than the value of the inputs used to produce them. Buyers and sellers collude to hide the fictitious nature of the pricing through the use of barter and other forms of nonmonetary exchange. Those who try to play by the normal market rules are penalized relative to those who play by the virtual economy's rules.

By developing a method by which Russia's virtual economy can be analyzed, Gaddy and Ickes seek to restore a sense of logic and consistency to our understanding of the Russian economy and to provide a framework for thinking about the future. --This text refers to the Hardcover edition.

About the Author

Clifford G. Gaddy is a fellow in the Governance Studies and Foreign Policy Studies programs at the Brookings Institution.

Barry W. Ickes is professor of economics at Pennsylvania State University and financial director at the New Economic School in Moscow.

Product Details

• Paperback: 306 pages
• Publisher: Brookings Inst Pr (June 1, 2002)
• Language: English
• ISBN-10: 0815731116
• ISBN-13: 978-0815731115
• Product Dimensions: 9.2 x 6 x 0.9 inches
• Shipping Weight: 15.2 ounces (View shipping rates and policies)
• Amazon Best Sellers Rank: #2,527,854 in Books (See Top 100 in Books)

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