Poverty and the Economic Transition in the Russian Federation

Abstract

In what some describe as one of the great natural experiments of our time, the Russian Federation has introduced a series of sweeping economic reforms over a very short period of time, beginning in January 1992. These include the elimination of most food subsidies; the reduction of other food subsidies and subsidies for fuel and most other basic commodities; the use of freely fluctuating market prices; the privatization of selected state enterprises; the creation of conditions for the establishment of a private sector in many areas of economic activity; and the initiation of a process that will ultimately transfer much property and land into private ownership. The result is rapid economic and social change. Western observers agree that this transformation will produce significant dislocations and affect many people adversely. Most expect that the worst dislocations will be in the short term, with the transformation leading to substantial long-term benefits. The Russians involved in the design and implementation of this transition, as well as Russian politicians, have been and continue to be deeply concerned about the impacts of the reforms on poverty levels.