The fall of the Soviet Union - Economic weaknesses and the failure of reform

Question 1

Perestroika

Answer 1

Perestroika was a policy of political and economic restructuring implemented in the Soviet Union during the 1980s, aiming to address systemic issues and promote openness and reform

Question 2

Acceleration or Uskorenie

Answer 2

Acceleration or “uskorenie” refers to the policy implemented during the final years of the Soviet Union, emphasizing rapid economic growth and modernization in an attempt to overcome the country’s stagnation, but ultimately contributing to its downfall

Question 3

Acceleration meant a huge increase in…

Answer 3

investment - designed to modernise the Soviet economy and therefore more efficient

Question 4

Gorbachev predicted that the new investment (acceleration or uskorenie) would lead to…

Answer 4

a 20% increase in industrial production in the next fifteen years

Question 5

How did acceleration or “uskorenie” contribute to the downfall of the Soviet Union?

Answer 5

Acceleration or “uskorenie” contributed to the downfall of the Soviet Union by exacerbating economic imbalances, deepening social inequalities, and fuelling nationalist aspirations, which ultimately led to the disintegration of the country

Question 6

A major reason for the failure of “uskorenie”…

Answer 6

was the decline in oil prices globally

Question 7

During the 1970’s, the Soviet economy made a huge amount of money from…

Answer 7

selling oil to the West

Question 8

When oil prices fell from $70-$20 from 1981-1985, Soviet oil revenues fell by more than…

Answer 8

40%

(combined with the drop in alcohol revenues, the Soviet economy made significantly less money from the mid 1980’s)

Question 9

How did Gorbachev finance acceleration?

Answer 9

Gorbachev financed acceleration from borrowing from Western countries

Question 10

Gorbachev financed acceleration from borrowing from Western countries - what happened as a result?

Answer 10

As a result, government debt rose from $18.1 billion in 1981 – $27.2 billion in 1988

Question 11

Increased debt led to …

Answer 11

more government spending on interest payments

(therefore less money to spend on further modernisation or to produce consumer goods)

Question 12

Overall Acceleration/”uskorenie” outcome

Answer 12

Overall, did not lead to economic growth instead, economic crisis

Question 13

Partial market reform laws

Answer 13

Law on Individual Economic Activity of November 1986

1987 Law on State Enterprise

The 1988 Law on Co-operatives

Question 14

Law on Individual Economic Activity of November 1986

Answer 14

Made it legal for families and individuals to make money from small scale work such as private teaching and maintenance jobs

Question 15

1987 Law on State Enterprise

Answer 15

Granted greater autonomy and decision-making power to state-owned enterprises, allowing them to operate with more flexibility and independence in their management and economic activities

Question 16

The 1988 Law on Co-operatives

Answer 16

Made it legal to set up large scale private companies

Question 17

By 1990, how many private companies had been set up across the USSR?

Answer 17

Nearly 200,000

Question 18

Partial market reform created…

Answer 18

economic chaos

Question 19

How did partial market reform create economic chaos?

Answer 19

Reforms undermined the central planning system, while at the same time failing to create an effective market alternative
- No effective way of distributing goods as a result
- Shortages of essential good increased

Question 20

There was no effective way of distributing goods - provide an example

Answer 20

For example during 1990, there were severe food shortages

Although the USSR produced 218 million tons of grain, there was no system of distribution

There were food shortages all across the USSR

Question 21

The price of Beef (kilo) in January 1990 (Roubles) vs the price in April 1990

Answer 21

2.00
7.00

Question 22

Chaos in the economy led to…

Answer 22

political consequences

Question 23

Price rises led to…

Answer 23

dissatisfaction with the government

Question 24

Gorbachev’s approval rating drop

Answer 24

Gorbachev’s approval rating dropped from 52% from 1989 to 21% in 1990

Question 25

The 500 Day Program

Answer 25

The 500 Day Program under Gorbachev aimed to transition the Soviet Union from a centrally planned economy to a market-oriented system through rapid and comprehensive economic reforms (August 1990)

Question 26

Gorbachev and Yeltsin commissioned two Soviet economists, Stanisalv Shatalin and Griorri Iavlinskii, to devise a plan for economic transition. Both economists proposed…

Answer 26

widespread privatisation and marketisation in less than two years

Question 27

Why did the 500 Day Programme fail?

Answer 27

Gorbachev initially supportive of these proposals and eventually backed down

Remained committed to economic transformation but wanted it at a slower pace

Question 28

Oil production fell by…

Answer 28

9%