Question

Russia pulled out of Afghanistan in 1989 after a 10 year war. What effect did this have on globalization ?

Answer 1

The policy formed to "globalize" Russia was dubbed "shock therapy." Implementation of the strategy began with the abolition of price controls on most goods on January 1, 1992. Its essence, the aim of shock therapy was to build a market economy as quickly as possible its Russia. This was to be done by freeing up markets and liberalizing trade policies, which would increase competition; and by privatization, which would create private property with all its associated corporate behavioral opportunities. At the same time, keeping the ruble convertible was necessary, and making sure its value remained relatively stable.

It meant regulating inflation, and thus maintaining tight control of currency and government spending emissions.

Successful economic reform was to create a new middle class that would become a powerful political force in Russia that would help deepen economic and political change. this would serve wider American interests by promoting peace between Russia and other democracies, and thus strengthening American stability.

Policymakers adhered too closely to neoclassical economic theory and thus paid little attention to the laws and institutions needed for an efficient market economy, principles such as corporate governance or the qualitative effects of their policies on the people of Russia. Russia would have been much better off if it had been encouraged to follow a more incremental, consensus-based, bottom-up reform strategy that established at least some main institutions before large-scale privatization programs were conducted.