The U.S.S.R. and the World Economy: Challenges for the Global Integration of Soviet Markets Under Perestroika

[Deb Palmieri on Russia Table of Contents]

The following is a summary of the book The U.S.S.R. and the World Economy: Challenges for the Global Integration of Soviet Markets Under Perestroika, published by Praeger Publishers, Westport CT. in 1992.

The U.S.S.R. and the World Economy:
Challenges for the Global Integration of Soviet Markets Under Perestroika
Introduction

This collection of writings attempts to contribute to the understanding and appreciation of the dynamics of change in the Soviet Union and its evolving role in the global economy and of the kinds of challenges and key issues faced by the Soviet Union in its attempts to integrate into the global economy and to normalize its economic relationship with Western nations. More specifically, this book focuses on particular sets of questions and issues and tries to accomplish a very difficult task in the midst of rapid transformations underway in the U.S.S.R. - to look beyond the daily stream of changing events in order to discuss changes in fundamental political and economic processes and their implications for the present and future.

The first set of issues is concerned with the historical antecedents of Mikhail Gorbachev's foreign economic policy. How does Gorbachev's goal of entering the global economy contrast with the Soviet autarkic policy of the past, and what are the origins of his foreign economic policy? Does it represent a continuity or a departure from previous policy?

The second set of issues rests with understanding the nature and characteristics of Gorbachev's foreign economic strategy and how they fit in with his reform objectives. How is his strategy defined and implemented? What are the major economic problems faced by the Soviet economy with respect to the foreign economic sector, and how has Gorbachev coped with them? What are some of the political effects engendered by the reform process in the foreign economic sector?

The third set of questions involves the republic and their foreign economic activities among themselves and their individual and their individual relationship with the global economy. What are the existing patterns of interrepublican and international trade and how will the republics fare in their direct involvement in the international economy, outside the sheltered and artificial pricing system of the past?

The fourth set of issues centers around how the Soviets prioritized their dealings with the West and who they consider the most important Western actors the integration process. The book then examines how Gorbachev has attempted to implement a foreign economic strategy toward the West and whether that strategy has succeeded or failed.

The fifth set of issues centers around the theoretical concerns in the discipline of international relations pertaining to a nation's relationship to international organizations. The book examines how international relations theories can potentially, explain and deepen our knowledge about Soviet conduct toward multilateral global economic institutions.

The sixth area of concern involves how Soviet economic relations toward a Third World region fit into Gorbachev's strategy and whether relations with less-developed countries will become more or less important as economic ties with the Western world are strengthened.

The final set of issues pertains to the meaning of "integration" in its most practical sense and the challenges contained therein. Toward this end, the Volume provides a case study of joint venture activity.

The questions and issues established above are by no means exhaustive nor will the essays prove all-encompassing or necessarily provide complete answers to the questions raised. But they may help to illuminate and more clearly formulate the major challenges faced by the U.S.S.R. in its drive to a market economy.

Each of the following chapters addresses the issues outlined above. The first chapter, entitled "The Origins of Gorbachev's Foreign Economic Policy," is by Deborah Anne Palmieri. It traces the historical origins of Gorbachev's foreign economic policies by first reviewing Soviet economic isolationism in the postwar period through the 1950s. It then examines Nikita Khrushchev's and Leonid Brezhnev's thinking and behavior and identifies the processes that have over the years cracked open the closed Soviet economic system to global economic involvement. The chapter argues that Gorbachev's policies represent a continuation of the foreign economic policies of Khrushchev, and Brezhnev.

Chapter 2, entitled "Soviet Foreign Trade Reforms under Gorbachev," by William E. Schmickle, details an analytical framework of Gorbachev's foreign economic strategy, which the author divides into five stages of foreign trade reforms since 1985. In the course of his analysis Schmickle examines the interrelationship between state authority in foreign trade reforms and the transition to market relations in the domestic sector. The author explains the economic problems faced by Gorbachev in the foreign economic -sector and how Gorbachev opened up the foreign trade apparatus under perestroika; how the foreign trade monopoly changed; the major kinds of reform legislation on foreign economic policy that was implemented, and the political effects engendered by the reform process.

Chapter 3, by Jonathan R Schiffer, "Soviet Interrepublican Trade: Domestic Patterns and International Possibilities," examines the trading activities of the 15 Soviet republics and provides a sectoral analysis of their international export and import opportunities. Schiffer reviews the terms upon which the republics operate in the international marketplace; which republics have the highest and lowest degree of interaction on world markets; and how the republics are likely to fare on world markets after independence. In the Course of his analysis the author addresses several questions: How will the introduction of world market prices favorably or unfavorably affect republican trade balances? What problems will republics face as they "go it alone" onto World markets, and what factors will affect how they will formulate their own trade and investment policies? Who wins and who loses as a result of world market pricing?

In Chapter 4, "Gorbachev's 'Common European Home' and the Politics of Reform," Peter J. Stavrakis examines Gorbachev's foreign economic strategy toward the West by focusing on the notion of a "common European home" and analyzing the political and economic reasons for Western Europe's importance to Gorbachev's attempts to integrate the U.S.S.R. successfully into the global economy. The chapter seeks to provide answers to a number of questions: How and why did Gorbachev hope to open the Soviet Union to European cooperation? What was the relationship between domestic reform and the "common home" strategy? Stavrakis concludes that the strategy evolved so rapidly that the Soviet leadership was unable to implement radically new policies, even as the U.S.S.R. disintegrated.

Chapter 5, "International Relations Theory and Soviet Conduct Toward the Multilateral Global-Economic Organizations," by Robert M. Cutler, focuses on international economic themes in the discipline of international relations. He examines the explanatory power of neorealism, neomerchantilism, and regime theory and their robustness or lack thereof in addressing the issue of Soviet integration into the "multilateral global-economic regimes." He also seeks to determine how well these theories explain the motivations and behavior of the Soviet Union and Eastern bloc countries. Cutler synthesizes these theories into a broader construct to better explain Soviet conduct and evaluates what this analysis in turn tells us about Western theories of international relations. In the course of his chapter, the author studies the Soviet and Eastern European experience with the General Agreement on Tariffs and Trade (GATT), International Monetary Fund (IMF), and International Bank for Reconstruction and Development (IBRD)) and examines the major political and economic developments in the Soviet Union with respect to those international economic organizations.

Chapter 6, by Sharyl Cross, entitled "'New Thinking' and Soviet Economic Involvement in Latin America: Mexico, Brazil and Argentina," is a case example of Soviet foreign economic relations toward a Third World region and how such a region fits into Gorbachev's overall strategy. Cross begins by analyzing shifts in Soviet perceptions of Latin America and the elements of "new thinking" relevant to Soviet policy in the region. She then analyzes changes and developments in Soviet foreign economic policy toward Mexico, Brazil, and Argentina on such issues is the structure of their trading relationship, types of joint venture activities, import-export agreements, licensing and technology transfers, and commercial credit arrangements. Cross's study suggests that Gorbachev will cultivate relations with the most economically, developed, regionally powerful developing nations and will move away from aid- and subsidy-based relationships with poorer nations and toward commercial exchange relationships with wealthier Third World countries, to provide insight into the concept of Soviet "integration" in practice, this book presents a case study of a Soviet-American joint venture, SOVAMINCO, the seventh U.S. company licensed by the Soviet Ministry of Finance to do business in the Soviet Union.

Chapter 7, "SOVAMINCO: joint Venture Case Study," written by Suzanne L. Hugger-DeCesare, provides unusual insight into the structure and inner workings of a joint venture project, its various operating segments, and the different types of activities undertaken by the joint venture. Hugger-DeCesare reviews the financial, marketing, and operations strategies employed by executives in the joint venture and details the types of day-to-day management issues faced by the various business operations. Among the many issues covered in the chapter are the ownership structure of the joint venture and pricing, value, and licensing concerns. For the reader's reference, the volume includes an appendix containing a chronology of major Soviet decrees and developments pertaining to foreign economic relations and a selected bibliography.

As with most collections of essays, this book cannot cover every important topic of interest on the subject. Many vital issues, such as the Soviet role in the international banking system or comprehensive research on changes in the legal infrastructure of the foreign economic system under Gorbachev, are not included. it is likely this book will raise more questions than it answers. But if the contributions deepen the reader's overall awareness of both the complexities and key issues surrounding Soviet global economic involvement and spark further interest and more research in these areas, the book will have served its purpose.

Deborah Anne Palmieri
The U.S.S.R. and the World Economy: Challenges for the Global Integration of Soviet Markets Under Perestroika
Westport, CT: Praeger Publishers, 1992