Flag: red with the yellow silhouette of a crossed hammer and sickle below a yellow-edged five-pointed red star in the upper hoist-side corner
- Economy Overview: The first five years of perestroyka (economic restructuring) have undermined the institutions and processes of the Soviet command economy without replacing them with efficiently functioning markets. The initial reforms featured greater authority for enterprise managers over prices, wages, product mix, investment, sources of supply, and customers. But in the absence of effective market discipline, the result was the disappearance of low-price goods, excessive wage increases, an even larger volume of unfinished construction projects, and, in general, continued economic stagnation. The Gorbachev regime has made at least four serious errors in economic policy in these five years: the unpopular and short-lived anti-alcohol campaign; the initial cutback in imports of consumer goods; the failure to act decisively for the privatization of agriculture; and the buildup of a massive overhang of unspent rubles in the hands of households and enterprises. In October 1989, a top economic adviser, Leonid Abalkin presented an ambitious but reasonable timetable for the conversion to a partially privatized market system in the 1990s. In December 1989, however, Premier Ryzhkov's conservative approach prevailed, namely, the contention that a period of retrenchment was necessary to provide a stable financial and legislative base for launching further reforms. Accordingly, the new strategy was to put the reform process on hold in 1990-92 by recentralizing economic authority and to placate the rank-and-file through sharp increases in consumer goods output. In still another policy twist, the leadership in early 1990 was considering a marked speedup in the marketization process. Because the economy is caught in between two systems, there was in 1989 an even greater mismatch between what was produced and what would serve the best interests of enterprises and households. Meanwhile, the seething nationality problems have been dislocating regional patterns of economic specialization and pose a further major threat to growth prospects over the next few years.
GNP: $2,659.5 billion, per capita $9,211; real growth rate 1.4% (1989 est. based on Soviet statistics; cutbacks in Soviet reporting on products included in sample make the estimate subject to greater uncertainty than in earlier years)
Inflation rate (consumer prices): 6% (1989 est.)
Unemployment rate: officially, no unemployment
Budget: revenues $622 billion; expenditures $781 billion, including capital expenditures of $119 billion (1989 est.)
Exports: $110.7 billion (f.o.b., 1988); commodities—petroleum and petroleum products, natural gas, metals, wood, agricultural products, and a wide variety of manufactured goods (primarily capital goods and arms); partners—Eastern Europe 49%, EC 14%, Cuba 5%, US, Afghanistan (1988)
Imports: $107.3 billion (c.i.f., 1988); commodities—grain and other agricultural products, machinery and equipment, steel products (including large-diameter pipe), consumer manufactures; partners—Eastern Europe 54%, EC 11%, Cuba, China, US (1988)
External debt: $27.3 billion (1988)
Industrial production: growth rate 0.2% (1989 est.)