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. ., . 6A HC 336.26 .878 1991 V.2 C:4 International Monetary Fund. A Study of the Soviet Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized A Study of the Soviet Economy Volume 2 INTERNATIONAL MONETARY FUND THE WORLD BANK ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT EUROPEAN BANK FOR RECONi;QW{MJ)IltWFund AND DEVELOPMENT Joint library fEB 7 1996 lntflrnat\onal Bank for Reconstruction and Developmef'l1 Washington, D_C 20431 February 1991 This study has been prepared by the staffs of the International Monetary Fund, the World Bank, and the Organisation for Economic Co-operation and Development, and by consultants to the designated President of the European Bank for Reconstruction and Development. The findings, conclusions, and interpretations expressed in this study are those of the staffs concerned and should not be attributed to the International Monetary Fund, the World Bank, the Organisation for Economic Co-operation and Development, or the European Bank for Reconstruction and Development, to the executive boards or council of these organisations, or to their member governments. ©Joint copyright, Paris 1991, by the International Monetary Fund, Washington, DC; International Bank for Reconstruction and Developmentffhe World Bank, Washington, DC; Organisation for Economic Co-operation and Development, Paris; European Bank for Reconstruction and Development London. All rights reserved. Applications for permission to reproduce or translate all oi' part of this publication should be made to: Head of Publications Service, OECD 2, rue Andre-Pascal, 75775 PARIS CEDEX 16, France 11 Table of Contents Volume 2 PART IV.- Systemic Policies Chapter IV.l- Price Reform 0 00 0 o 0 0 0 00 0 00 0 00 0 0 0 0 00 0 0 0 0 0 0 00 0 0 0 0 00 0 I lo Introduction 0 0 0 0 0 0 0 0 00 0 00 00 0 0 00 0 0 o0 0 0 0 o0 0 0 00 0 0 0 0 0 00 0 0 0 0 00 0 0 0 1 20 The present system 0 0 0 0 0o 0 0 00 0 0 0 o0 0 0 00 0 0 00 0 0 0 0 00 0 0 0 0 00 0 0 0 00 0 00 2 30 The options for price reform 0 0 0 0 0 00 0 0 00 0 0 00 0 0 00 0 00 0 0 0 00 0 0 0 00 0 0 0 5 Tables to Chapter IVol 0 0 00 0 0 0 0 00 0 0 0 00 0 00 0 0 0 00 0 0 0 0 00 0 0 0 00 0 0 0 00 0 0 0 14 Chapter IV.2- Enterprise Reform 00 0 0 0 0 00 0 0 00 0 0 00 0 0 0 0 0 00 0 0 00 0 0 0 0 00 15 lo Introduction 0 0 0 0 0 0 0o 0 0 o0 0 o 0o 0 0 o 0 0o 0 0 00 0 00 00 0 0 0 0 0 00 0 0 00 0 0 0 0 00 15 20 Current status and trends 00 0 0 0 0 00 0 0 0 00 0 00 0 0 0 0 00 0 0 0 0 00 0 0 0 0 00 0 0 0 0 15 30 The commercialization and privatization of enterprises 0 00 00 0 0 0 00 0 0 0 0 18 40 Industrial restructuring and demonopolization 0 0 0 00 0 0 0 0 0 00 0 0 0 00 0 0 0 0 28 50 The management of state-owned enterprises 0 00 0 00 0 0 0 0 0 0 0 00 0 0 00 0 0 0 0 31 60 The training of enterprise managers o 0 0 0 00 0 0 00 0 00 00 0 0 0 0 00 0 0 0 0 00 0 0 0 33 Tables to Chapter IV02 0 0 0 00 0 00 0 0 0 0 0 00 0 00 0 0 00 0 0 0 00 0 0 0 0 0 00 0 0 0 00 0 0 0 36 Chapter IV.3- External Trade Reform o 00 0 0 00 0 0 00 0 0 0 0 00 0 0 0 0 00 0 0 0 00 0 0 41 lo Introduction 0 0 0 00 0 0 0 0 00 0 00 0 0 0 0 00 0 0 00 0 0 00 0 0 0 0 00 0 0 0 0 00 00 00 0 0 0 0 41 20 Features of the trade regime and recent reforms 0 0 0 0 00 0 0 0 0 0 00 0 0 00 0 0 0 42 30 Reform issues 0 o 0 0 00 o 0 0 o0 0 0 00 0 0 0 , 00 0 0 00 0 00 0 0 0 0 0 00 0 0 0 00 0 0 0 00 0 0 51 40 Summary and conclusions 0 0 0 0 00 0 0 0 00 0 0 00 0 0 00 0 0 0 0 0 00 0 0 0 00 0 0 00 0 0 64 Tables to Chapter IV03 0 0 o 00 0 0 o 0 0o 0 0 0 0o 0 0 00 0 0 00 0 0 0 00 0 00 0 00 0 0 0 00 0 0 69 Chapter IV.4- Foreign Direct Investment 00 0 0 0 00 0 0 00 0 0 0 0 00 0 0 0 00 0 0 00 0 75 1. Introduction 00 o 0 0 o 0 o 00 o 0 00 0 0 00 0 0 0 00 0 0 00 0 0 00 0 0 0 0 0 00 0 0 0 0 00 0 0 0 0 75 20 The experience with joint ventures 0 0 0 0 00 0 0 0 00 0 00 0 0 0 0 0 00 0 0 0 00 0 0 0 0 76 30 The regulatory setting 00 0 0 00 0 0 0 0 00 0 0 0 0 00 0 o 00 0 0 00 0 0 0 0 0 00 0 0 0 00 0 0 0 84 40 Summary and recommendations 0 00 0 0 0 0 00 0 0 00 0 0 0 00 0 0 0 0 00 0 0 0 0 0 00 0 93 Tables to Chapter IV.4 0 00 00 0 0 00 0 0 0 00 0 0 0 00 00 0 00 0 0 0 00 0 0 0 0 0 0 00 0 0 0 00 102 Chapter IV.S- Financial Sector Reform 0 00 0 0 0 00 0 0 0 00 0 0 0 0 0 00 0 0 0 00 0 00 107 I 0 The banking system 0 0 0 0 0 0 0 0 0 00 0 0 0 00 0 0 0 0 00 0 0 00 0 0 0 00 0 0 0 0 00 0 00 0 0 I 07 20 The development of securities markets and contractual savings institutions 0 0 0 00 0 0 0 0 00 0 0 00 0 0 00 0 00 0 0 0 00 0 0 0 0 127 Tables to Chapter IV05 0 0 0 0 0o 0 0 0 00 0 o 0 0 o 00 0 0 00 0 0 00 0 0 0 0 0 00 0 0 0 0 00 0 0 0 136 Ill Chapter IV.6- Labor Market, Social Safety Net, Education and Training . 137 1. Introduction . 137 2. The labor market . 138 3. Incomes and living standards . 149 4. Policies to facilitate the transition process . 159 Tables to Chapter IV.6 . 196 Charts to Chapter IV.6 . 215 Appendix IV.6-1- Experience with Incomes Policies in Selected Countries . 219 Chapter IV.7- Legal Reform . 225 1. Introduction . 225 2. State authority and the legal regulation of the economy . 225 3. Legal foundations for market exchanges . 240 4. Regulation of the business sector . 260 5. Selected sectoral and specific issues . 285 6. Summary . 294 List of Tables Chapter IV.l IV. I. I. Relative Prices of Goods on Domestic and World Markets, 1988 14 IV.l.2. Subsidization of Selected Food Products, 1986 . 14 Chapter IV .2 IV.2.1. Number of Industrial Enterprises by Sector, 1970-87 . 36 IV .2.2. Average Size of Industrial Enterprises, 1970-87 . 36 IV.2.3. Size Distribution of Industrial Enterprises as of January 1, 1988 . 37 IV .2.4. Size Distribution of Employment in Industrial Enterprises, Selected Sectors, 1987 . 37 IV .2.5. Distribution of Industrial Enterprises: Selected Sectors, 1987 . 38 IV.2.6. Distribution of Industrial Product Groups by Output Share of Largest Producer, 1988 . 39 IV.2.7. Concentration of Deliveries to State Supply Agency by Product Group, 1988 . 39 IV.2.8. Share of Largest Producers in Output of Selected Products, 1988 40 Chapter IV .3 IV.3.1. Basic Indicators for Soviet Foreign Trade, 1985-89 . 69 IV.3.2. Commodity Structure of Exports, 1980-89 . 70 IV.3.3. Commodity Structure of Imports, 1980-89 . 71 IV.3.4. Proportion of Production Exported by Selected Sectors, 1985 and 1989 . 72 IV.3.5. Import Share of Soviet Domestic Consumption of Selected Products, 1985 and 1989 . 73 iv List of Tables (Continued) Chapter IV.4 IV.4.1. Joint Ventures and Initial Capital, 1987-90 . 102 IV.4.2. Distribution of Operating Joint Ventures by Size, 1990 .