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Free Fall or Restructuring. An Empirical Analysis of Economic Performance of Russian Industries and Regions


  • Obersteiner, Michael

    (Institute for Advanced Studies and International Institute for Applied Systems Analysis)


Improvements in economic efficiency and productivity are the most important sources for economic growth, however, have yet to occur in Russia. The Soviet Union left an institutional vacuum and large economic distortions behind, which set the stage for an established elite to systematically exploit factors of production for their personal benefit lacking the incentives to restructure. This paper generates some empirical highlights of the outcomes of industrial transformation from 1987 to 1997. The following results are worth mentioning: (1) Early steps of liberalization, the attempts to macro-stabilization and the launch of the privatization package did not bring about improved economic efficiency in industrial production; (2) Less concentrated and highly localized industries performed better, which can mainly be explained by the performance of the resource extracting industries; (3) Price liberalization revealed increasing returns in industrial production and the contribution of capital to output declined rapidly, while the contribution of labor increased.

Suggested Citation

  • Obersteiner, Michael, 2000. "Free Fall or Restructuring. An Empirical Analysis of Economic Performance of Russian Industries and Regions," Transition Economics Series 16, Institute for Advanced Studies.
  • Handle: RePEc:ihs:ihstep:16

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    More about this item


    Russian regions; Industrial development; Relocation; Economies of scale;

    JEL classification:

    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • P27 - Economic Systems - - Socialist Systems and Transition Economies - - - Performance and Prospects
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)


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