Entrepreneurial transition in post‐soviet republics: The Estonian path

Abstract

THE FORMER SOVIET REPUBLICS are striving for a common goal-the transition from a planned economy to a market economy-but following quite different paths. These paths have been affected not only by the political decisions but, more fundamentally, by the economic resources as well as various social and cultural factors of each country.1 Although the economic transition is proceeding differently in the former Soviet republics, analogies between them exist and must be borne in mind. First of all, their 'economic heritage' is fairly homogeneous, which means that the application of socialist doctrines to these former republics made their economic structures similar to one another. The Soviet republics were, for instance, mutually interdependent, had non-symmetrical economic structures, restricted markets (visible hand), deficient means of controlling and supporting the markets, and finally, non-existent private entrepreneurship. All these factors form a part of a long list of problems which characterise all the former Soviet republics-including even Soviet Estonia, which acted as the economic laboratory of the Soviet Union (Van Arkadie & Karlson, 1992, pp. 103-104). The role of Soviet Estonia in the Soviet economic reforms was fairly exceptional, because several experimental reforms were tested there from the 1950s onwards, until the disintegration of the Soviet Union. Even though the results of these economic reforms were usually unpleasant for the entire Soviet Union, they seemed to have at least a somewhat positive effect on the economy and entrepreneurship of Soviet Estonia (Sutela, 1991, p. 49; Nove, 1992, pp. 331-419). This 'guinea pig' role in these experiments brought Soviet Estonia and her enterprise sector slightly closer to the market economy mechanism than other Soviet republics. Estonia was chosen as the subject of this study as it has a pioneer role in the transition process. The fact that Estonia paved the way for transition does not necessarily imply that all the other former republics will follow in its footsteps; however, the Estonian experience can still offer an interesting perspective in the study of the economic transition in other post-Soviet republics. The special role of Estonia is further emphasised in the evaluation of entrepreneurial transition, as Estonia can be regarded as the cradle of private entrepreneurship in the Soviet Union (Lugus et al., 1991, pp. 3-6).