Transitional Economy Report

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Transitional Economy Report Definition: A transition economy is an economy which changes from a centrally planned economy to a free market economy. The country I have chosen to report on is the USSR (Now Modern Russia). The USSR was a strong Communist country and was responsible for creating the modern world's first centrally planned economy. In 1921, the GOELRO plan was introduced it aimed to produce hundreds of electric/ hydro-electric power plants to boost the USSR's industry. The plan was ultimately fufilled in 1931 but more importantly it served as a prototype to the first of many subsequent five year plans. up from 1928-1991. Within this time the nation evolved from being mainly an agrarian society to one of the world's three top manufacturers of a large number of capital goods. However, heavy industry goods were given too much priority and little effort was given to producing consumer goods (food, clothing, household items etc.) due to the inability of central planners to predict the demand for such products (Know as 'Economies of shortage') . After this, it was realized that the complex demands of the modern economy and the inability of the administration overwhelmed the central planners and this, topped by the military expenditures during the Afghan war, led to a period of economic standstill during the years 1979-1985. Later, with new economic reforms introduced, The Soviet GDP started to rise slowly again during the years 1985-1989 and look poised for a rise to stability. However, this was shortlived and the GDP collapsed along with the USSR in 1991. During the Post- USSR restructuring of the Russian administration the government decided to implement a transition into a market economy. They used the 'shock program' to aid this restructuring and market economists believed that this would raise GDP and living standards by allocating resources more
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