Business Article Analysis Essay:
Being an integral part of developing civilization, economics became an inevitable condition of interaction between people. One of its most significant branches is macroeconomics, a field that studies economy as a whole system on a national and global level. This subject plays a key role in the most serious processes within any country’s economic life, both domestic and foreign. Let us investigate some of the most crucial subjects of macroeconomics using an example of business article concerning economic reform in Russia. The article “A puzzling transition – Russia’s economic reform” was written by Yuri Levada, Russian economist and observer. It was published in The UNESCO Courier magazine in 1996, in the acute period for post-Soviet countries, hence is a good subject for analysis from the standpoint of 10-years’ experience.
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The background of phenomena described in the text is very helpful in understanding the issue; hence let us summarize the history and the article content together. The title of the article “A puzzling transition – Russia’s economic reform” rather clearly conveys a thesis statement of this writing. Indeed, the changes in Russia of middle nineties of last century were something that probably every person in the world has heard of. Post-Soviet era became a critical period for national economies of fifteen new-born countries. Being the largest, the strongest, and the most developed among other ex-Soviet republics, Russia undertook its first hesitating steps towards free market in the 1990-ies trying to adjust to new economic conditions. Obviously, the state of economy in the country was not clear, considering communist views on various economic aspects. In particular, one of the most challenging factors in the process of molding Russia’s new economic system was privatization. This major subject of macroeconomics became a cornerstone for country’s economy. Being unaware of ordinary economic mechanisms of free market, Russia had to undergo through serious changes and numerous mistakes before the valid plan of economic reform appeared. Therefore, by the 1996 almost half of Russian population felt the need to head the economy to the free market focusing on private property. However, most of Russians considered it impossible to adjust to rapidly changing economic conditions. Nevertheless, everybody in Russia hoped that political changes of that period would bring the country to gain its individual economic face and appropriate experience. To sum up, the author of this article focused on economic reform of Russia in 1996, when the new president Boris Yeltsin was elected. Describing a contradictive period in the country, Yuri Levada emphasized the key role of privatization in this process.
At the present moment it is easier to analyze this writing after eleven years. Indeed, the period described by Yuri Levada was a crucial era of economic development in Russia, when the time came to sum up major mistakes and make serious decisions. Yeltsin became the one who started the economic reform emphasizing the key role of denationalization in this process. Of no doubt economic reform was a necessary step for post-Soviet Russia. However, Russian economic collapse of 1998 has showed that something went wrong. Obviously the series of mistakes were committed while realizing this reform in Russia. In order to analyze them we should take a look at some features of privatization, one of the most important aspects of macroeconomics.
Privatization is the process opposite to nationalization, involving the transition of property from public to private sector. This process may be conducted through different methods, including share issue, asset sale, or voucher. Various approaches make privatization rather efficient tool in national economic growth. However, besides some obvious advantages there exist certain negative aspects that disinvestment brings with it. Such phenomena like corruption, anti-democratic profit distribution, decrease of social obligation, and many other consequences of privatization may bring major problems. Unfortunately, Russia with its desire to adjust to world free market faced these consequences very soon. Moreover, voucher-type privatization that was the key method in Russia appeared to be inefficient approach due to very little revenue it brings to the state. The government should have concentrated on stabilization of macroeconomics and property rights rather than speedily transferring banks and essential service companies to the private ownership. Of no doubt restructuring and privatization were important steps, still they should have been taken consistently in accurate combination with other necessary stages, like liberalization and creating valid financial sector.
Yuri Levada’s article “A puzzling transition – Russia’s economic reform” describes a painful process of economic transition of particular country from planned economy to market economy. A great number of other countries had to undergo the similar transition, such as former socialist European states. However, for Russia it was probably the most acute period among other socialist countries, including post-Soviet republics. Vast territory, numerous natural recourses, multiple nationalities and sub-cultures, developed industrial and agricultural areas, and rather convenient location made the process of economic reform much more complex and serious.
As far as we may judge for now, the present article is a good resource describing the state of economic reform in Russia as of 1996. Indicating major economic problems, it focuses on privatization process, the most acute aspect of that period. Although we have analyzed certain mistakes that Russia committed while transition from communism to free market, it is possible to say now that Russian economy is finally rather stable. Yuri Levada’s article “A puzzling transition – Russia’s economic reform” was a useful tool that helped analyze some important aspects of macroeconomics.
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