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Structural challenges for SOEs in Belarus : a case study of the machine building sector

Author

Listed:
  • Favaro, Edgardo
  • Smits, Karlis
  • Bakanova, Marina

Abstract

Are Belarus's state owned enterprises positioned to grow in 2011-2015 as successfully as in 1995-2006? State owned enterprises account for 55 percent of Belarus's output and two-thirds of overall employment; economic growth in 1995-2006 was the result of capacity expansion and productivity improvements in state owned enterprises. These sources of economic growth originated in policy decisions that preserved the functioning of the command and control economy and allowed the country to exploit preferential commercial access to the Russian market in several goods and services. Are the same reasons likely to facilitate the performance of state owned enterprises and overall economic growth in 2011-2015? This paper concludes that this is not likely to happen. Times have changed: the slowdown in production and exports in 2009-2010 was unquestionably associated with a transitory decline in demand for durable goods in Russia. But there have also been more permanent market forces at work: a steady increase in competition in Russia and other Commonwealth of Independent States markets resulting from low-price Chinese and Russian-produced capital goods; and a shift in demand from low-quality/low price to high-quality, high-price transport equipment demand in Russia and other Commonwealth of Independent States markets. And these forces are there to stay. This conclusion leads to the following questions: Would state owned enterprises be able to adapt to observed market changes? What reforms would be relevant to facilitate the necessary adaptation?

Suggested Citation

  • Favaro, Edgardo & Smits, Karlis & Bakanova, Marina, 2012. "Structural challenges for SOEs in Belarus : a case study of the machine building sector," Policy Research Working Paper Series 6010, The World Bank.
  • Handle: RePEc:wbk:wbrwps:6010
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    References listed on IDEAS

    as
    1. David Tarr & Natalya Volchkova, 2017. "Russian Trade and Foreign Direct Investment Policy at the Crossroads," World Scientific Book Chapters, in: Trade Policies for Development and Transition, chapter 15, pages 337-360, World Scientific Publishing Co. Pte. Ltd..
    2. Marina Bakanova, & Saul Estrin & Igor Pelipas & Sergei Pukovic, 2006. "Enterprise Restructuring in Belarus," William Davidson Institute Working Papers Series 823, William Davidson Institute at the University of Michigan.
    3. World Bank, 2010. "Belarus - Industrial Performance Before and During the Global Crisis : Belarus Economic Policy Notes : Note No. 2," World Bank Publications - Reports 2908, The World Bank Group.
    4. Bakanova, Marina & Estrin, Saul & Pelipas, Igor & Pukovich, Sergei, 2006. "Enterprise Restructuring in Belarus," IZA Discussion Papers 2148, Institute of Labor Economics (IZA).
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Dzmitry Kruk & Kateryna Bornukova, 2013. "Belarusian Economic Growth Decomposition," BEROC Working Paper Series 24, Belarusian Economic Research and Outreach Center (BEROC).

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    More about this item

    Keywords

    Markets and Market Access; Transport Economics Policy&Planning; Debt Markets; Economic Theory&Research; E-Business;
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