Disintegration of Ussr

Fall of the Soviet Union

In December of 1991, the mighty Soviet Union disintegrated into numerous small republics. The collapse was seen as proof of the superiority of capitalism over communism and completely changed the world's political situation. The fall was mostly however, the consequence of poor economic coordination. The economy had been declining for decades because the Union was in a trade deficit, the government failed to implement effective reforms and the rigid economy could not cope with the change that was happening in the late 20th century. These problems grew worse over time to culminate in the dissolution of the USSR.

The massive trade deficit that the Soviet Union was in had it's roots in the mid 1950s. (http://www.bbc.co.uk/...). The economy had been keeping up with trade opponents in the production of crude resources such as cement, iron and oil but was severely lagging behind in electronics and chemicals. (http:www.fsmitha.com/...). Meanwhile, The US, Europe and Japan were moving into the computer age. This also meant that it couldn't make use of advanced manufacturing techniques that significantly improved production. (http://www.bbc.co.uk/...). This led to more resource usage compared to other countries.. Eventually what had once been a self-sufficient economy became heavily reliant on foreign exports of food and technology (http://www.coldwar.org/..). This trade deficit greatly hindered economic development and prevented any sort of recovery for the fledgling economy.

The reforms implemented by the government to revitalise the economy were not successful. Instead, they often had adverse effects. One significant policy for change was perestroika, meaning reconstruction. It was an attempt by the government to modernize the economy. Perestroika granted greater freedoms to individuals in business. Although it was on the right track, it ended up creating confusion as managers couldn't take advantage of their new freedoms. They had become "afraid of initiative and risk after 50 years of being told what to do in petty detail" (http://www.fsmitha.com/...). This led to missed growth targets and important projects being unfinished (http://www.fsmitha.com/...). The failure of these reforms created conflict amongst the government along with being useless and they also sped up the fall of the Soviet Union.

The strict command economy created under Joseph Stalin in the early 1900s was simply not suited for the rapid technological progress happening outside the USSR. This was largely due to the absence of free enterprise in the economy. The USSR had no aspiring individuals looking to start up a business with a new idea or in a new industry. Instead a central planning committee was making all of the decisions about issues such as investment and production. But the committee was out of touch with the consumers and had little

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