A year ago (1) I argued that: i) the crisis zones of Euro-Asia dominated most of the 28 countries of the Former Soviet Union (FSU) and Former Eastern Europe (FEE) and Mongolia which together have a population of 430 million; ii) that the countries of the FSU had faced a serious economic decline of about 40-50% of real GNP in comparison with their 1990 levels, which was a level significantly worse than that experienced in the Great Depression of the 1930s, or during the Second World War; iii) that only a minority of the countries of the FEE were showing any significant signs of recovery; iv) that the largest of the transition countries were continuing to decline or stagnate after six years of major economic decline, and that 'their prospects for recovery are frankly not much greater than the alternative of their dissolving into political unrest and civil war'. I considered the arguments challenging the reliability of these indicators of the levels of GDP and found them largely lacking in substance. I offered a classification of these economies in terms of their ranked order of economic decline and concluded that to continue to refer to these economies as 'economies in transition' rather than as 'economies in crisis' was most misleading.
Such a depressing picture of stagnation and crisis in the FSU differs greatly from the optimistic view that is generally presented in government circles and which is based on recent evaluations of the World Bank, IMF and other international agencies. These claim that transition is on track in all countries, and that the FSU will follow the same transition recovery path as the FEE. (2)
The present article revisits my earlier survey of the Crisis Zones of Euro-Asia in the light of more recent developments, and particularly in the light of recent reports from international agencies and other specialists. Part One begins by describing the most prominent recent optimistic evaluations of the success of transition. It then offers some comments on different aspects of these evaluations, and especially on the correlations between growth and reform progress. It unpacks (or deconstructs) the regressions carried out in these works and suggests that contrary to the developing conventional wisdom these correlations do not indicate that transition is paying off in the FSU. Part Two (to be published in the April edition of the Bulletin) will revisit the separate countries in the crisis zones and will assess their developments since early 1996, and their prospects for the future.
1) Optimistic evaluations of the success of 'transition'
a) The World Bank, World Development Report 1996, June 1996
The latest 1996 World Development Report was devoted to the Transition Economies. Of all the accounts that are reviewed in this article, the World Bank is the most enthusiastic in its evaluation of the 'success' and even of the 'inevitability' of transition. It is also the most complacent as regards its attitude to the problems. James D. Wolfensohn, the President of the World Bank, in his foreword to the Report, wrote:
'This transition . . . has been unavoidable . . . In some of the countries undergoing transition there has been a short-term drop in living standards; in others human welfare has improved dramatically' (3)
He went on to argue that the Development Report:
'drives home the utter necessity of both liberalising economies through opening trade and market opportunities and stabilising them through reducing inflation and practising fiscal discipline - and then of sticking to these policies consistently over time.'
The report argues that the recent history of transition shows that 'sustained and consistent reform pays off', and that this applies not only for the Chinese and Vietnamese economies (which are treated by the World Bank as Economies in Transition), but also for the FEE and the FSU.
'Across CEE [FEE] and the NIS [FSU] liberalization has been positively associated with growth. In countries where liberalization has been strong (as measured by average liberalization scores), output losses have on average been smaller. And the difference increases over time: relatively stronger liberalization boosted average growth during 1989-95, but it boosted average growth in 1994-95 even more.'(4)
b) UN, World Economic and Social Survey, June 1996
The Department for Economic and Social Information and Policy Analysis of the United Nations is also highly optimistic, although it does show a little more concern that this is not inevitable. They do appear to appreciate the scale of economic decline and do not completely rule out the possibility of continued stagnation in the FSU. But they also imply that differences in rates of recovery are exclusively a consequence of policy:
'The depth of the plunge in economic activity that accompanied the collapse of central planning first in Central and Eastern Europe and then in the former Union of Soviet Socialist Republics is hard to grasp and harder to measure. Considering the economies of these countries as a whole, total output measured one third less in 1995 than in 1990. This may well overstate the extent of the decline . . . This year, however, is expected to mark the end of economic contraction and the resumption of economic growth in the transition economies taken as a whole.'(5)
'all the Central and East European transition economies (CEETEs) and the Baltic States had begun growing by 1994. Many - but not all - had strong rates of economic growth in 1995, with further strong growth forecast for 1996. The economic situation has been much more difficult in the countries of the Commonwealth of Independent States (CIS), where output continued to decline in 1995, albeit less rapidly than in the earlier years. Only the barest beginnings of growth are foreseen in 1996 and there is so much uncertainty surrounding that prospect that forecasters would not be surprised if the outcome was, instead, a further contraction of output.
'The differences in growth rates among transition economies reflect the different nature, extent and consistency of the policies implemented . . .
'In many ways, the Russian Federation has also made remarkable progress: inflation has fallen, foreign-exchange reserves are high, private economic activity is advancing strongly. Yet, little economic growth is forecast for 1996 and that with considerable uncertainty. Continued decline should not be completely ruled out . . . In contrast, the short-term prospects for a resumption of economic growth are small in many other countries of CIS'(6)
c) IMF, World Economic Outlook, October 1996
A more recent IMF publication also insists that there is increasing evidence that 'transition is working' and that there will be a closing of the growth differentials between those transition economies that began the transition earlier (FEE) and the others (FSU) provided there is no slippage in applying liberalisation and stabilisation policies:
'The generally positive outlook for the transition economies in the second half of the 1990s contrasts sharply with the dramatic declines in output that occurred during the first phase of the transformation process. These declines were probably less severe in reality than the almost 50% drop that on average is suggested by official statistics, which have continued to under-report private sector activities especially services.'(7)
'The increasing evidence that the transition is working is particularly important to the extent that it should help overcome resistance to enterprise restructuring, which remains essential to the transformation process.'
In a section entitled 'Growth Lessons of the Transition Process' this report also claims that success is exclusively a consequence of applying correct reform policy at the country level:
'Since the beginning of the reform process, the growth experience of the transition countries has been characterised by substantial divergences between countries that started the reform process early and pursued the boldest and most comprehensive strategies and those that began later and were less consistent in their reform and stabilisation efforts (Table 18). The next five years are expected to see a substantial closing of these growth differentials. It needs to be under-scored, however, that this medium-term baseline scenario is conditional on the steadfast implementation of reform and stabilisation policies in accordance with these countries' stated policy intentions. Since slippage in adjustment policies cannot be ruled out, the scenario should not be interpreted as an assessment of the most likely outcome. Still, based on current trends and the steadily strengthening commitment to continued reform among the transition countries, a degree of optimism is clearly warranted.'(8)
d) Jeffrey Sachs (Harvard) and the IBRD indicators
In his recent review of 'Transition at Mid Decade' for the American Economic Review(9) Jeffrey Sachs declares:
'The first lesson of the past five years is that rapid systemic transformation can work. It is possible to introduce the institutions of a market economy within five years, and to reestablish economic growth in the process.' (p.128)
He apparently reaches this conclusion by taking the IBRD indexes of reform progress, consolidating them into one index and comparing them with the individual country growth rates:
'Simple regression analysis confirms that economic growth is positively correlated with reform progress, whether one considers the average annual growth in GDP during 1989-1995, or the change in GDP in 1995 (as projected by the EBRD as of November 1995).
The two key regression estimates are as follows:
Growth (1995) = -18.80 + 0.77 (IRP)
(4.97) (4.84)
Growth (1989-95) = -23.15 + 0.62 (IRP)
(5.81) (3.74)
with statistics reported in parenthesis
(R2=0.5 and R2=0.38, respectively)
In his conclusions, he again emphasises that everything is dependent on policy:
'The reform experience of the past half decade confirms the ability of the formerly socialist economies in Eastern Europe and the former Soviet Union to convert rapidly to market economies. Several Eastern European economies have pursued rapid reforms and are now experiencing rapid growth. Most of the countries of the former Soviet Union, however, with reforms that have been less coherent and far-reaching, are still mired in stabilisation crises.'
e) IMF Specialists Stanley Fischer, Ratna Sahay and Carlos Vegh(10)
Fischer, Sahay and Vegh (FSV) note the 'rather bleak picture' that emerges when the average picture of the growth and stabilisation of the 26 transition economies of FEE, the FSU and Mongolia is profiled:
'real GDP has fallen uninterruptedly since reforms began, while inflation has been high and rising, fuelled by fiscal deficits averaging more than 6 percent of GDP.'(11)
However they go on to suggest that:
'such profiles in chronological time, . . . . hide a simple but key fact: countries started their inflation stabilisation programs at different points in time. A brighter picture emerges when the data are rearranged in stabilisation time: in the year of stabilisation, inflation falls substantially and continues to fall thereafter, as fiscal deficits are brought under control. More remarkably, output quickly begins to recover and after two years growth is positive.'
They then cite the following figures to indicate similarities in the transition path of the Former Soviet Union countries and Mongolia (FSUM) to that of the East European and Baltic countries (EEB), when measured in 'stabilisation time':
See Figure 1: Growth, Inflation and Fiscal Balance Profiles in Stabilisation Time (Please note: tables and graphs are not accessible in electronic form; please consult hard copy of The Russian and Euro-Asian Bulletin for graphs.)
FSV discuss the possibility that FSUM may not in the future follow the same recovery path as EEB, but state that they doubt that it will differ. They explain the reason for their doubt in the following way:
'For one thing, the Baltics were in most respects deeply integrated into the economy of the former Soviet Union, but they stabilised early and began to grow just as the leading countries of eastern Europe. For another, Albania, one of the least developed countries of eastern Europe, growth revived soon after a radical stabilisation program.'(12)
And then, in a highly unusual move, they propose the use of scientific procedures to test their hypothesis:
'While it is not possible to settle the issue of causation with the data available so far, we venture a prediction that is implied by the hypotheses we are advancing. The prediction is that the profile for countries of the former Soviet Union and Mongolia will follow the pattern seen in Figure 3 in the next few years. In other words, growth in these countries will on average increase in 1995 and will turn positive in most of these countries by 1996 or 1997.'(13)
The following section considers all of these arguments and especially looks at the heroic FSV prediction. Incidentally, it will also explain why Albania has proven not to be the best example of successful transition from a structurally challenged, formerly rigidly centrally planned economy.
2) Comments on the above analyses
There are many problematic features held in common in these analyses, and they will be treated together, but there are also a few important differences. I will begin with the most extreme differences, namely in the coverage of the concept of 'transition'.
a) On including China and Vietnam in the transition category
The reason why the President of the World Bank is able to claim that 'human welfare has improved dramatically' in some 'transition economies', is because the World Bank has now begun treating China and Vietnam as Transition Economies. I do not wish to debate here whether this is an appropriate classification or not; but I do wish to emphasise that it is a very different one to that used by others, including myself in my previous article. The IMF convention, repeated as late as October 1996, is that China, Vietnam, Cambodia and Lao People's Democratic Republic, are included among the developing countries in their classification system.(14)
The inclusion of the success stories of China and Vietnam into the analysis certainly places the concept of transition in a very different perspective, and even though Wolfensohn may claim that the Report does not 'overgeneralise' there is a way in which the crises in other smaller economies get swamped by the successes of China.
b) On different assessments of the costs of transition
Another difference is the emphasis placed on the costs of transition. While none of the international agency reports uses the word crisis, the UN World Economic and Social Survey does describe 'the depth of the plunge' as 'hard to grasp'.(15) Elsewhere, it states quite clearly that 'it is obvious that the social and human costs of the transition have been very high' and discusses the intense debate in the Russian Federation 'on whether these costs were an unavoidable, if painful, component of a long-overdue socio-economic reform that will in the end produce positive results, or rather the unforeseen - at least by the proponents of that reform - outcome of a misguided economic policy.'(16)
The IMF report describes with some feeling 'the initial trauma of the transition'(17), although the authors of the report do not seem to think that the cumulative effect of the decline, inflation, and transformation could also be traumatic.
But it is the President of the World Bank who achieves the award for the most complacent description of the major, and as yet uninterrupted decline in economic production that the world has ever seen, with his truly remarkable understatements:
Necessary as the transition to the market has been, it has not been easy . . . In some of the countries undergoing transition there has been a short-term drop in living standards . . . '(18)
It is surprising to discover that of all the writings of economists surveyed on this topic, Jeffrey Sachs (the author of the Big-Bang) was the only one who used the term crisis. But the crisis that he is talking about is a 'stabilisation crisis' which he believes was caused by the FSU countries carrying out 'less coherent and far-reaching' reforms than the FEE.(19)
There are also some important features of the above-cited analyses which they all share, and which are rapidly becoming the orthodox point of view, but which are highly questionable. Examples of this include the growing presumption that pessimistic official figures can be ignored, that the recent historical record shows that correct policy is all that matters to achieve success, and that economic recovery is strongly positively correlated with introducing and sticking to economic liberalisation and stabilisation reforms in the FSU.
c) On challenging the credibility of already corrected official statistics
All the three international agency reports appear to seek to undermine the credibility of the official statistical recording services, by claiming that the official figures continue to understate the level of recovery in certain sectors. For reasons that are explained in my previous article, these arguments are not totally convincing. But the important thing here is to note that all these criticisms refer to the previous uncorrected official figures, ie. to such criticisms as those made by Gavrilenkov and Koen (20) in 1995, prior to the Russian Federation's statistical system accepting these criticisms and inflating their data by about 15%. While I still maintain a certain degree of scepticism as to whether this level of correction was really necessary, it would appear that once these corrections were made, there should have been no basis for further criticism of the revised data. However, all three international reports and other agencies (21) are using the criticisms of Gavrilenkov and Koen as if they were still valid regarding the current official data, and as though no corrections had been made. It needs to be repeated that the work of Gavrilenkov and Koen cannot be cited to support an argument that the revised output figures (that have been revised specifically to cater for the Gavrilenkov and Koen criticisms) be rejected.
d) On claiming that policy is all that matters
Another important point that all the above reports emphasise is that the success of transition is purely conditional on applying and sticking to liberalisation and stabilisation policies; and that similar transitoin processes, but with delays, will have similar consequences in the FSU as in the FEE. Such a line of argumentation underlies all of the attempts to correlate growth rates with reform or liberalisation indices. Frequent statements are made about not 'over-generalising' and paying attention to the unique historical circumstances of the separate economies, but the main thrust of the analysis, using regression techniques, is a complete denial of this.
e) On correlating growth with reform
There are a number of different regression analyses carried out for different years and with different reform or economic liberalisation indices.
The IMF favour the EBRD reform progress indices (22), whilst the World Bank computed its own liberalisation index. Some presented labelled scatter graphs with fitted trends, others presented trends fitted to unlabelled scatter graphs. Sachs favoured the EBRD indices, presented no graph, and is the only author to report the coefficients and regression statistics.
In Figure 2 (see hard copy of Bulletin), the IMF 1996 chart 'Economies in Transition: Index of Reform Progress (IRP) and Real Output Growth', output growth is measured as an average over 1994-1996. While in Figure 3, the World Bank, WDR 1996 chart 'Liberalization and growth of GDP', plots GDP growth per year on average for 1989-95, and for 1994-95 against its liberalisation index.
A common feature of all these analyses is that they fit a trend line to the scattered points on a graph which primarily connects the points of the individual countries of the FEE and Baltic States on the top right of their graphs to the points of the individual countries of the FSU on the bottom left of their graphs. The trends all show a positive slope, which is mostly explicable in terms of comparisons between these very different regions.
For the IMF chart the slope equated a growth of 15 percentage points of GDP between from 1994-1996 with a shift of 20 points (out of a total of 30) on its reform progress index.
For the World Bank chart the 1989-95 trend showed a growth of 5% of GDP 1989-95 with a shift of 4 points out of a maximum 10 on its Liberalization index. The 1994-95 trend had a distinctly sharper rise of 5% of GDP for 2 points of its liberalization. Sachs had a growth coefficient of 0.77IRP for 1995 and 0.621IRP for 1989-1995.
The IMF report argued that:
'The clear positive relationship between progress with structural reforms and growth performance illustrates the crucial importance of policy complementarities'(23)
The World Bank report argued:
'Across CEE [FEE] and the NIS [FSU] liberalization has been positively associated with growth. In countries where liberalization has been strong (as measured by average liberalization scores), output losses have on average been smaller. And the difference increases over time: relatively stronger liberalization boosted average growth during 1989-95, but it boosted average growth in 1994-95 even more.'(24)
Sachs argued:
'Simple regression analysis confirms that economic growth is positively correlated with reform progress.' (25)
f) Challenging the claims that simple regression analysis confirms that economic growth in the FSU is strongly positively correlated with reform progress
Contrary to the above claims this article maintains that it is highly doubtful whether the only factor affecting the economic dynamism in the main groups of the Transition Countries is simply the extent to which they have applied and stuck to economic liberalisation and stabilisation policies. The World Bank readily admits that 'China has been able to reform in a partial, phased manner and still grow rapidly, whereas even vigorous reformers in CEE and the NIS have suffered large declines in output' (26) and that this was because China's initial conditions were different and 'the transition challenge in China . . . were vastly different'.(27) Similar claims could be made for the different initial conditions and the different challenges between FEE and the FSU (and within the FSU between the Baltic States and the other countries which had been incorporated in the USSR from the Revolution).
As Grigory Yavlinsky has often stated, the removal of the central planning system from Eastern Europe and the Baltic States could be seen as the removal of a mechanism which had been grafted onto an already formed industrial structure forty years ago. And that such an economy that had had a pre-existence before central planning could conceivably revive and develop without it. But the removal of the central planning system from an economy which had been completely formed by this structure and which had dominated it for 70 years was an entirely different kind of thing, and could only be expected to leave a crippled economy.(28)
Fischer, Sahay and Vegh were more correct when they indicated that it was their belief that the FSU would follow the same path as the FEE and the Baltic States in their recovery, but that ultimately only time would tell. Let us turn to consider what time has in fact shown in this regard.
The regression exercises carried out and repeated in all these different reviews do not by any means prove that the FSU countries in the bottom left hand of the graph could move to the top right hand of the graph where the very different FEE and the Baltic countries are, if only they were more consistent in sticking to the transition policies. It is not easy for Russia to become Poland simply by applying the right policies. And this is a simple truth that is more clear in Moscow than in Harvard.
If we wanted to carry out a regression exercise to establish the likely relationships bewteen reform progress and real output growth, we would be better advised to begin with more comparable groups of countries. The data, graphs and trends prsented in Figure 4 [see hard copy of Bulletin] (29) plot the latest EBRD growth data (1989-1996) against the IBRD Economic Liberalization Indicators (1989-1995) and unpack the FSU Warring States (WS) from the other FSU countries and from the FEE excluding its Warring States. It can readily be shown that the apparent good positive correlation for the entire group FSU, FEE & Mongolia can be decomposed into a slight negative correlation for the WS of FSU, a more distinct negative correlation for the FEE excluding Warring States. Part of the reason for the appearance of the large over-all positive correlation is the effect of making comparisons across groups, while the net effect of comparisons within more comparable groups would be negative (especially if we took into consideration the larger size of the countries in the FSU group).
The evidence convincingly shows that the FSU group of countries are not yet characterised by a positive correlation between economic liberalisation and growth, although the FEE economies are.
It can further be shown that the predictions made by the leading IMF specialists last year, on the hypothesis that the FSU was going to follow a same transition recovery as experienced by FEE, have not come true. Instead of converging on FEE levels, the FSU crisis is still developing and diverging from FEE recovery. And it may be a little unfair, but it is difficult not to pick up on the suggestion of FSV that the case of Albania may be instructive on this matter. Albania was singled out as the most structurally underdeveloped country in the FEE, where we might expect the challenged of transformation to be especially severe. But when they wrote in early 1996 they placed great emphasis that even in disadvantaged Albania 'growth revived soon after a radical stabilisation program'(30) Current developments in Albania and the economic collapse that will undoubtedly follow demonstrate the FSV were a little premature here. My conclusion in February 1996 had been that for such structurally disadvantaged economies 'the prospects for recovery are frankly not much greater than the alternative of their dissolving into political unrest and civil war.'(31) I see no reason to change this conclusion.
History Department
S.Wheatcroft@history.unimelb.edu.au
Endnotes:
1. S. G. Wheatcroft, 'Charting the Crisis Zones of Euro-Asia', Centre for Russian and Euro-Asian Studies, Melbourne University, Russian and Euro-Asian Economics Bulletin, vol. 5, no. 2, February 1996, pp. 1-11
2. While such an optimistic view currently predominates in Western academic circles, there is a growing minority of Western analysts, and a large number of FSU specialists who are less optimistic. Some of these will be briefly mentioned in section 4.
3. Foreword to World Bank, World Development Report 1996: From Plan to Market, Oxford University Press, 1996, iii, henceforth to be referred to as WDR, 1996.
4. WDR, 1996, p.28. The report goes on to note the strong impact of two other factors: output has tended to decrease less in poorer, more agricultural countries; secondly countries suffering adversely from regional tensions have had an increased decline in GDP.
5. Department for Economic and Social Information and Policy Analysis, United Nations: World Economic and Social Survey, 1996: Trends and Policies in the World Economy, New York, 1996, p. 4 (henceforth UN, 1996).
6. UN, 1996, pp. 4-5. My emphasis, SGW.
7. IMF, World Economic Outlook: October 1996, Washington DC, 1996, p. 78, henceforth IMF, 1996. Reference is made here to E. Gavrilenkov and V. Koen, 'How large was the output collapse in Russia? Alternative estimates and welfare implications', in Staff Studies for the World Economic Outlook, IMF, Washington, D.C., September 1995, pp. 106-119. See discussion on this below.
8. IMF, 1996, p. 79.
9. J. D. Sachs, 'The Transition at Mid Decade', American Economic Review, vol. 86, no. 2, 1996, pp. 128-133.
10. S. Fischer, R. Sahay and C. Vegh, 'Stabilization and Growth in Transition Economies: The Early Experience', Journal of Economic Perspectives, Spring 1996, vol. 10, no. 2, pp. 45-66, henceforth referred to as FSV. Stanley Fischer, who is on leave from MIT is First Deputy Managing Director of the IMF and a Research Associate of the NBER. Ratna Sahay is an Economist in the Research Department of the IMF, and Carlos Vegh, who is on leave from UCLA, is a Senior Economist in the Research Department of the IMF.
11. FSV, p. 47
12. FSV, p. 64
13. FSV, p. 64
14. See IMF, 1996, footnote 37, p. 78
15. UN, 1996, p. 4
16. UN, 1996, pp. 29-30
17. IMF, 1996, p. 79
18. WDR, 1996, iii.
19. See J. D. Sachs, 'The Transition at Mid Decade', AER, vol. 86, no. 2, 1996, p. 133
20. See E. Gavrilenkov and V. Koen, 'How large was the output collapse in Russia? Alternative estimates and welfare implications', in Staff Studies for the World Economic Outlook, IMF, Washington, D.C., September 1995, pp. 106-119. The government of the Russian Federation approved the revised estimate of Russian GDP in the same month that the Gavrilenkov and Koen article was published.
21. It seems unfair to exclude the EBRD from such criticism; their analyst Kaspet Bartholdy certainly engages in the same activity. See his 'Statistical Review: Assessing Progress in Economies in Transition', in Economies of Transition, vol. 4, no. 1, 1996, p. 271, where he states that 'It is widely recognised that official GDP-estimates for many countries overstate the output decline that took place in the early years of systemic transition and understate the subsequent recovery.' The statistical tables on p. 282 then present the correct real GDP growth rates for the Russian Federation.
22. See IMF, 1996, p. 80, citing EBRD, Transition Report 1995: Investment and Corporate Governance, London 1995.
23. IMF, 1996, p. 80
24. WDR, 1996, p. 28
25. J. D. Sachs, ibid., p. 128
26. WDR, 1996, p. 19
27. WDR, 1996, p. 19
28. Yavlinsky has frequently made such statements. Here reference is made to a lecture he gave in Melbourne in 1993, available on video from CRE-AS, University of Melbourne,.
29. See appendix.
30. FSV, p. 64. See where this is cited above.
31. S. G. Wheatcroft, CRE-AS, University of Melbourne, 'Charting the Crisis Zones of Euro-Asia', Russian and Euro-Asian Economics Bulletin, February 1996, vol. 5, no. 2, p. 6. Although most analysts and regional politicians of a liberal disposition appeared to be captured by the IBRD/EBRD/IMF image of a radiant transitioned success, there are a few individuals who are beginning to express the kind of doubts and concerns expressed in my previous and current articles.
Recently in Melbourne we were fortunate to have a visit from Mikhail Zadornov, the Chairman of the House Committee on Budget, Taxes, Banks and Finance of the Russian Duma (video available from CRE-AS), who argued that unless something serious was done to change the taxation system in Russia in order to provide greater incentives for domestic investment, then the future scenario could easily be continued economic stagnation, rather than the recovery that is presumed by so many international agencies.
Such a point of view has also appeared in the leading EBRD publications, eg. P. Havlick, 'Uncertain Recovery Prospects in Russia', Economics of Transition, vol. 4, no. 2, October 1996, which concludes on p. 468:
After contracting by about half since 1990, the Russian economy is more likely to stagnate than to grow strongly in the near future.'
Part Two of this article - 'The Crisis Zones in 1997'
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