Financial Regulation in the Initial Phase of Market Reforms in Russia and Its Impact on Subsequent Economic Development

摘要

This article discusses the results of the retrospective analysis of market transition processes in Russia and shows how state financial regulation shaped the country's socio-economic development in the subsequent periods. The article provides an overview of the approaches to this problem proposed by the leading international and Russian economists. The authors believe that the market reforms made Russian economy vulnerable to external macroeconomic challenges in the following stages of development. This vulnerability becomes especially pronounced in the periods of cyclical decline. The dynamic comparison of volumes and sources of fixed capital investment in the main sectors of Russian economy and analysis of the key phases in its cycles have led these authors to the conclusion that in the periods of decline the internal economic environment becomes highly sensitive to the changes in the external environment. These results are supplemented with the results of a comprehensive analysis of changes in gross value added across the key sectors of economy. The aim of this study is to analyze the outcomes of the privatization campaign in Russia and to demonstrate that the current situation in Russian economy largely stems from the market reforms of the transition period. Research findings: it was shown that the key characteristics of the evolving Russian financial system mainly resulted from the 'shock therapy' privatization scenario, which was chosen for political reasons and which determined the investment trends and the increasing state influence on economy in the following periods.