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Soviet Union [USSR] GORBACHEV'S ECONOMIC REFORMS
When Gorbachev delivered his report on the CPSU's economic
policy on June 12, 1985, he noted that growth in exports,
particularly machinery and equipment, was slow because the poor
quality of Soviet goods prohibited them from being competitive on
the world market. In the next three years, Gorbachev introduced
many changes that would enable the foreign trade complex to better
support his economic policy of acceleration. By May 1988, the
structure of the Soviet foreign trade complex had been changed, and
operations had been dramatically overhauled
(see Soviet Union USSR - Structural Reforms, 1986 to Mid-1988
, this ch.).
The price reform called for by the Twenty-Seventh Party
Congress was an important step in improving Soviet international
economic involvement. Soviet officials admitted that pricing was
""economically unsubstantiated"" and ""unrealistic."" They
understood that although a fully convertible ruble would not be
possible for some time, prices that more accurately reflected
production costs, supply and demand, and world market prices were
essential for developing a convertible currency. The nonconvertible
ruble and the Soviet pricing system discouraged Western businessmen
who could not accurately project production costs nor easily
convert their ruble profits.
The new joint venture law, passed on January 13, 1987, opened
up the Soviet economy to foreign participation, particularly in
manufacturing. It was believed that the experience gained in such
ventures would facilitate integration into the world economy.
Specifically, through upgraded production processes, the Soviet
Union could export more competitive manufactured goods and decrease
its dependency on energy and raw materials to earn hard currency.
In August 1987, the Soviet Union formally requested observer
status in the General Agreement on Tariffs and Trade
(
GATT--see Glossary). The Soviet Union also expressed its
desire to join other
international economic organizations and establish contacts with
other regional groups. A major step in this direction occurred in
1988 when the Soviet Union signed a normalization agreement with
the EEC. The Soviet government, however, professed no interest in
joining the
World Bank (see Glossary) or the International Monetary Fund
(
IMF--see Glossary). Although Soviet officials claimed that
the international monetary system ""was not managed properly,"" it
is more likely that IMF and World Bank regulations were the
obstacles: both institutions required that members' currencies be
freely convertible and that members provide accurate information
concerning gold sales and economic performance.
Gorbachev transformed the role of foreign trade in the Soviet
economy. Whereas imports previously were regarded exclusively as a
vehicle to compensate for difficulties in the short term, Soviet
economists under Gorbachev declared that imports should be regarded
as alternatives to domestic investment and that exports should
serve to gauge the technical level of domestic production. Foreign
economic ties were to support growth in production beyond the
capacities of the domestic economy. The Soviet Union could thus
take a place in the world market that was commensurate with its
scientific and technical progress and political weight.
* * *
Numerous English-language sources cover aspects of Soviet
foreign trade. The foreign economic relations section of volume two
of the report submitted to the United States Congress Joint
Economic Committee in November 1987 entitled Gorbachev's
Economic Plans is particularly informative on Soviet-American
trade, the Soviet Union's debt situation, and Soviet economic
involvement in the Third World. H. Stephen Gardner's Soviet
Foreign Trade very clearly lays out the institutional and
political foundations for Soviet foreign economic decision making
through 1980. Two chapters, one by Wilfried Czerniejewicz and
another by Kazuo Ogawa, in Siberia and the Soviet Far East
describe trade relations between the Soviet Union and Western
Europe and the Soviet Union and Japan. Although it is dated,
Soviet Foreign Trade by Glen Alden Smith is one of the best
references covering all aspects of Soviet trade.
An accurate source of Soviet trade data is the Central
Intelligence Agency's Handbook of Economic Statistics,
published in September of each year. Jerry F. Hough's Opening Up
the Soviet Economy devotes one chapter to Gorbachev's foreign
trade reforms and another to the way American businessmen and
government officials should view these changes. (For further
information and complete citations,
see Soviet Union USSR -
Bibliography.)
Data as of May 1989
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