Question

The Russian-dominated Soviet Union was the world's largest centrally planned economy until the collapse of the Soviet Union in 1991. What were the key economic factors behind that collapse?

Answer 1

There are different economic factors that played a key role in the collapse of the Soviet Union. The first economic factor was the inability of the government to create new jobs that could help the people manage their livelihoods. In the absence of job and poor livelihood conditions, people went against the central command and different parts (countries) started to pull away from the Soviet Union and it collapsed. The second factor was the forceful equity of resources among the different states (countries) that made powerful states like Ukraine to feel injustice as they were more resourceful and wanted bigger share. So, they pulled away from the Soviet Union. The third economic reason was the forceful acquisition of private property and lack of the government’s initiative to give incentives to the households and firms. These people and firms were looking at the other European nations growing with the freedom and economic might. It acted as motivation to culminate the socialism and become independent of the union. The fourth economic reason was the growing influence of American and European economic power upon those nations who were earlier under the influence of the Soviet Union. The decreasing influence, rising inflation and growing economic isolation combined and acted together negatively to the Soviet Union and the union led to fall consequently.