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CPY Document REVIEW DISCOVERING RUSSIA Padma Desai BEYOND RESENTMENT Mykola Riabchuk HARRIMAN COMMERCIAL CONTACT AND CONFLICT PREVENTION: THE GEORGIA-ABKHAZ CASE David L. Phillips THE June 2011 HARRIMAN REVIEW Volume 18, Number 1 June 2011 Padma Desai DISCOVERING RUSSIA 1 Mykola Riabchuk BEYOND RESENTMENT 12 David L. Phillips COMMERCIAL CONTACT AND CONFLICT PREVENTION: THE GEORGIA-ABKHAZ CASE 17 The Harriman Review is published quarterly by the Harriman Institute, Columbia University. Copyright © 2011 by the Trustees of Columbia University in the City of New York. All rights reserved. Harriman Institute 420 West 118th Street, MC 3345 Columbia University New York, New York 10027 http://www.harrimaninstitute.org DISCOVERING RUSSIA Padma Desai ow can one discover a country which is in the mourning. The French and Italian cafes of its cultural process of discovering itself? heyday, which I imagined Pushkin and Tolstoy had My complicated journey to unravel this riddle visited during their stay, had disappeared. When Mark started with a fitful adolescent resolve of wanting to read Twain passed through Odessa in 1869, he wrote: “We saw Dostoevsky in Russian. That rash impulse, however, only America. There was not one thing to remind us that seemed to disqualify me for the larger undertaking of we were in Russia.” understanding Russia in the view of most Russians I have I, on the other hand, realized that I was in the Soviet known over the years. “Why Russia?” asked the young Union. I remember the perennial lines in front of the secretary of Oleg Vyugin, the former Deputy Chairman stores, combined with exquisite orderliness. Beyond of the Central Bank of Russia, as she accompanied me orderliness, I noticed pervasive fear. I also sampled from in a Mercedes to the imposing office of her boss whom visiting Indian students to the consulate that exceptional I interviewed for a book project in 2003. “Because of brand of Russian humor which imparts an impeccable Dostoevsky,” I ventured. “But he is so disturbing,” she intellectual touch to a current event or some aspect of the said, raising her voice.” That is exactly why,” I remember country's political reality. During my stay, Khrushchev saying. What was the point of venturing into a scholarly was still the leader and Valentina Tereshkova, the first endeavor devoid of challenges? woman astronaut, happened to return from outer space. Adam Ulam, the distinguished Harvard historian of This most exciting event in early Soviet space history the former Soviet Union, once remarked that he chose brought momentary jubilation on Soviet TV and creative to study the Soviet Union rather than the British Empire fervor among humorists of the day. In one joke, titled because he wanted to deal with an expanding scene rather Khrushchev's Dilemma, the Soviet leader discovers that than a declining one, Britain having already lost India. Valentina returns home pregnant. He had to either accept History can occasionally prove tricky when it comes to the Biblical notion of Immaculate Conception or the choosing one's area of expertise. Both Adam and I lost alternative that an American astronaut had encountered the Soviet Union along the way but Russia has continued Valentina in outer space. to engage me. While I began my discovery of Russia with love for Having trained as an economist, I opted to study Russian literature and humor, I have deliberately avoided the Soviet Union by deliberately dropping India as converting it into a sentimental journey. From early on, I an academic pursuit. My teenage fascination with the had decided to handle Soviet and Russian policy issues English translations of Russian literature had also led rigorously and empirically by applying appropriate me to study the language from my Harvard days as a models to the available data and tracking the model graduate student in the Economics Department in the late results with the help of the fast advancing computational 1950s. Besides, Wassily Leontief's input-output model procedures. was one of the pioneering empirical exercises of those days. I chose to apply it to Indian data by separating Four Decades of Empirical Modeling: consumption spending from the final bill of goods and From the Post-War Economic Growth introducing it endogenously in the application. The article “A Short-Term Planning Model for the Indian Retardation to the Current Financial Crisis Economy” was published in the Review of Economics From the perspective of more than four decades, the and Statistics (June 1961) in what turned out to be my problems I posed, the empirical models I adopted, and earliest publication in a professional journal, and I felt the computer packages I employed may appear primitive, adequately prepared to deal with the challenges of the but they were the exciting scholarly endeavors of the Soviet planned system. moment calling for answers. Which production function I visited the Soviet Union for the first time in the specification would accurately capture Soviet growth summer of 1964, lived for the most part in the Indian retardation which began from 1950? What contribution, consulate in Odessa, traveled, and gathered firsthand if any, did total factor productivity make to the growth impressions of Soviet arrangements. In the tsarist days, process? These inquiries, which were being sorted out for Odessa was known as the “Pearl of Russia” and as “Little the U.S. economy, awaited the models and the empirical Paris.” During my stay under Soviet rule, it appeared exercises which were applied for the very first time to morose and preoccupied as if it was in permanent the Soviet case. And I wanted to move further. Suppose the Soviet planned economy had worked according to I would like to thank Edmond Horsey for creating the detailed artwork for this essay, without which it would have remained an uninviting piece.—PD THE HARRIMAN REVIEW earnings raise farm productivity in terms of per acre grain AN UPDATED PAPERBACK EDITION yield? Would the new contract system, which assigned a piece of land to the farm household and linked its earnings to its contribution to the collective farm output, create incentives in Soviet agriculture? But then it would be necessary to separate the impact of weather from yield variability. That was a formidable challenge. The arable land constituted only 7.17 percent of Russia's enormous territory of 6,387,319 square miles. However, the high latitude and the extreme continentality of an eleven THE DESIGN AND DILEMMAS time zone land mass with severe winters, short growing OF SOVIET REFORM seasons and fluctuating temperatures complicated my task of selecting a representative sample and constructing appropriate weather variables. When Boris Yeltsin and his band of reformers, led by his young prime minister, the late Yegor Gaidar, began liberalizing prices and privatizing assets in early 1992, the process unsettled enterprise prices, costs and revenues on a massive scale. Millions of workers in privatized industry and the state sector (which failed to receive tax revenues from failing businesses) were deprived of wages and pensions from 1994 to 1998. My coauthor Todd Idson and I employed the multivariate maximum likelihood probit estimation for assessing the PADMA DESAI partial impact of specific attributes which affected the the rules of the American free market system, how much likelihood of the sample employee's experience of wage more productive would it have been? If the gains turned denial. Among these attributes were the respondent's out to be significant, one could make a solid case against residence, occupation, education, and gender. We used Stalin's adoption of the Marxist-Leninist system. a substantial household data set for answering these With Mikhail Gorbachev's appearance in March questions. 1985 as Soviet leader, the changing Soviet scene created But the Russian economy was set to revive. Under new research opportunities for me. I analyzed the design Vladimir Putin's two-term presidency from 2000 to and dilemmas of his perestroika reforms even as they mid-2008, it registered an annual real GDP growth of 7 were unfolding in Perestroika in Perspective (Princeton percent, the result of high oil prices which hit an eye­ University Press, 1989). I also sought to figure out the popping $147 a barrel in July 2008. The impressive impact of Gorbachev's very limited liberalization policies growth did collapse toward the end of 2008 when the in Soviet agriculture. Would the opportunity which he global financial crisis hit Russia as oil prices tumbled gave to collective farm households for retaining their to $30 a barrel. Foreign portfolio investors fled from 2 THE HARRIMAN REVIEW Russia. The ruble declined sharply. Rather than restrict project, the methodological soundness of the output and my analysis to the crisis impact on the Russian economy, input data was critical. Of immense value for this purpose I began formulating a computable model with data were the Central Intelligence Agency's successive for about 60 countries. The model will estimate the rounds of estimates of outputs at the economy, industry impact of the crisis in 2009 and the recovery prospects and industrial branch levels in terms of the standard in 2010 for the sample, both in terms of GDP growth market economy practice. I developed alternative output rates. The explanatory variables will consist of sample series in two articles published in the Bulletin of the country export dependence; banking sector balance sheet Oxford Institute of Economics and Statistics (summer health; pre-crisis budget situation; and inflation rate 1973, February 1978) with the intention of correcting the during crisis onset which would inhibit policy makers' inadequacy. It was not possible to convert Soviet capital stimulus adoption capability. Russia, it would seem, had stock data, which were inflated, despite official claims everything going against it in terms of these variables.
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