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Industrial restructuring in Russia: early reactions fo firms to the shock of liberalization1

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  • Esther Duflo
  • Claudia Senik‐Leygonie

Abstract

This paper looks at the reaction of Russian firsm to the shock of liberalization. Firms are exposed to two kinds of shocks. A supply affects their profitability. A demand shock reflects the new expression of consumers and the opening of the country to foreign competition. Econometric tests show that firms adapt to these changes. They react by adjusting their output. They are not able to change their production techniques for lack of fresh capital. Employment is more stable that output: it is preserved by the adjustment of real wages. Therefore, firms with a low share of material inputs are relatively better off.

Suggested Citation

  • Esther Duflo & Claudia Senik‐Leygonie, 1997. "Industrial restructuring in Russia: early reactions fo firms to the shock of liberalization1," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 5(1), pages 45-62, May.
    • Handle: RePEc:bla:etrans:v:5:y:1997:i:1:p:45-62
    DOI: 10.1111/j.1468-0351.1997.tb00003.x
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    References listed on IDEAS

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    1. Brown, A.N. & Ickes, B. & Ryterman, R., 1993. "The Myth of Monopoly: A New View of Industrial Structure in Russia," Papers 10-93-5, Pennsylvania State - Department of Economics.
    2. Damien NEVEN, 1994. "Trade Liberalisation with Eastern Nations. How Sensitive ?," Cahiers de Recherches Economiques du Département d'économie 9407, Université de Lausanne, Faculté des HEC, Département d’économie.
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    Cited by:

    1. Recanatini, Francesca & Ryterman, Randi, 2001. "Disorganization or self-organization : the emergence of business associations in a transition economy," Policy Research Working Paper Series 2539, The World Bank.
    2. Boehlke, Jerzy, 2010. "Major methodological challenges for the economic theory of the firm in the economies of Central and Eastern Europe," Business and Economic Horizons (BEH), Prague Development Center (PRADEC), vol. 2(2), pages 1-8, July.

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