Why the Economy declined

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  • Created by: Ananna
  • Created on: 04-05-13 17:08
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  • Reasons why the economy Declined
    • use of outdated technology / still relied on a labour intensive workforce
      • conservative leader, more focus on the defense side, not much focus anywhere else
        • the central planning system which has been in place for the past 25 years was severely flawed
          • Gorbachev was completely crazy in that he wanted the rewards and outcomes of a free market economy with the system of a central planning one
          • use of outdated technology / still relied on a labour intensive workforce
            • conservative leader, more focus on the defense side, not much focus anywhere else
              • the central planning system which has been in place for the past 25 years was severely flawed
                • Gorbachev was completely crazy in that he wanted the rewards and outcomes of a free market economy with the system of a central planning one
    • none of the leaders which made reforms were economists so they didn't know what they were doing
      • when leaders were given some form of advice they just ignored it and went about whatever it was they did
    • Inflation and collapse of the Rouble
    • There were several economic policy making bodies and each were competing with eachother
      • Reforms caused major confusion the administration
      • arbitrary decisions were made really suddenly without consulting others first
        • January 1991  PM Pavlov  suddenly withdrew all high denomination banknotes from circulation; people weren't given enough time to convert their money and  savings became worthless overnight
    • Impact of  perestroika
      • Reforms caused major confusion the administration
      • the lack of co-ordination enabled enterprises to ignore demand
        • this confusion further allowed enterprises to take the piss in what they were doing and lied about their production, number of people on their payroll etc
      • the party lost much of its power
    • Reforms over the years were not well throught out
      • EG THE VIIRGIN LAND SCHEME WAS REALLY BADLY THOUGHT OUT
    • Their was increasing unrest in the workforce
      • The Republics started to get fiesty and indulged in protectionism and created Customs barriers against each other which disrupted trade
        • Ukrainian  mines could no longer get supplies of timber needed
    • Gorbachev inherited rather costly projects
      • Afgahinstan war
    • Commitmrnt tyo match US defence spending
      • Gorbachev inherited rather costly projects
        • Afgahinstan war

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