The First Minister of Economy of the Russian Federation on the Beginning of Radical Economic Reforms in Russia (about Russia is at a Turning Point by Andrey Nechaev)

Abstract

The memoirs of the first Russian Economic Minister of the Russian Federation, Andrey Nechaev, are analyzed from the point of view of the impact the first post-Soviet Russian government made on the current and long-term economic development of Russia. It has been shown that, at the end of 1991, Russia’s economic situation was desperate. The first steps of the Russian government towards surgical treatment were thought to be justified. They made it possible to prevent an economic meltdown by restoring the role of economic instruments and creating conditions for economic competition and business initiatives. However, the strategic decisions were wrong. They were not based on an in-depth analysis of the situation in the economy, according to reliable economic information. The biggest miscalculations were imposing excessive taxes on legal entities and insufficient taxes on individuals. These were inadequate measures to stimulate conversion. The consequence of these mistakes was the long-term reduction of physical and human capital, enormous social differentiation, and a huge capital outflow from Russia.