Economic Reasons Why the USSR Collapsed Flashcards
Long term weakness: lack of incentives. Give an example
Faiure to incentivise work as the society was very egalitarian e.g.
in 1970, the richest 10% of Americans were 7 times wealthier than the bottom 10% vs. The richest 10% of Russians being only 3 times as rich as the poorest Russians
Long term weakness: wastage. Give an example
Gosplan rewarded production without considering the quality or the proportion that was used.
In the early 1980s Gosplan demanded the production of 400 000 tractors a yr. Only 20% was actually used.
% of GDP spent on defence spending 1965-1985
1965: 12% vs 1985: 17%
In comparison to US defence spending which averaged 6%
Perestroika and its results
Economic restructuring aimed at stimulating economic growth within the existing system.
Failed to increase economic growth and by 1985, the economy was being overtaken by developing countries in Asia.
Features of the anti alcohol campaign
Reduced alcohol production in factories by 50%
55 000 party members assigned to a new task force to stop illegal production
Failings of the anti alcohol campaign
Although there was a drop in alcohol consumption among moderate drinkers, alcohol consumption in 1987 was double that of 1960.
Soviets over 15 were still consuming 15-16 litres per yr
Gov alcohol revenue dropped by 9% of GDP because people were drinking illegal alcohol
Features of acceleration
Increased investment in energy
20% predicted increase in industrial production
Failings of acceleration
Price of oil dropped from $70 per barrel to $20 1981-5 so oil revenue dropped by 2/3
Financed by borrowing from W. debt rose from $18.1 billion to $27.2 billion
This, combined with the failings of the anti alcohol campaign meant that the gov had less money for further modernisation or CGs
GDP Brezhnev vs Gorby
Brezhnev: 0-2% growth
Gorby: 4% shrink in GDP
What happened to gov debt during acceleration?
Rose from $18.1 bn to $27 bn
