Did Markets Fail in Post-Soviet Economies?

According to Prof. Pavel Yakovlev, several post-Soviet economies have struggled to obtain prosperity since the breakup of the Soviet Union. Many argue that this is a failure of capitalism. To Prof. Yakovlev, this has not been a failure of capitalism, but rather, has been a failure to create the conditions necessary for capitalism.

To see whether or not this is true, Prof. Yakovlev looks for differences in GDP growth rates between post-Soviet countries. He finds that Azerbaijan and Poland have performed well, with average GDP growth rates of over 4% per year. These countries, in comparison to the other post-Soviet countries, have more economic and political freedoms, lower levels of corruption and inflation, and more transparent institutions. They also happen to be located on the outer edge of the soviet bloc, where corrupt Soviet style institutions did not take root.
Other post-Soviet countries like Russia, Ukraine, Belarus, Uzbekistan, and Turkmenistan have experienced dismal economic performance because they have failed to create a market friendly environment. They also, in comparison to the top performing post-Soviet economies, have high rates of corruption and inflation, low economic and political freedoms, and poorly defined and enforced property rights.
Markets did not fail in poorly performing post-Soviet economies, but rather, were never actually given a chance to succeed.


  1. Matt Wavle

    We should create a more "market friendly environment" in our own country.  Learn from the mistakes of others, and don’t insist on making the same mistakes ourselves.

  2. Ryan Boyd

    I do find it funny that people are so quick to condemn systems like the Free Market and Communism simply because of Russia or the Soviet Union’s failures. The sad fact is that Russia and the Soviet Union never have experienced either market system nor come close to it. There has consistently been crony capitalism either in the form of the oligarchy or the disguise of the state capitalist system. It’s quite sad that Russia has suffered for so long in trying to find the best economic system for their people.

  3. Anderson Chaves

    I would like to see some numbers if possible. But it is still very good and instructive.

  4. Nick Miller

    How can markets be encouraged in these poorly performing post-Soviet countries?

  5. taschrant

    Separating state from economy is a good thing.  The more separation, the better (at least in my opinion).  What do you think?

  6. Lukas Koube

    its a dream…you wont ever separate the economy and politics…its just too tied together…this is why old economists called it “political economy”….the only hope is to beat politics into as small a corner as possible and hope it dies. 

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