Transition to a market economy

by Sang Yoon  Kim

“In the last years of the Soviet system, Tajikistan followed the rest of the union in beginning a transition from the conventional Soviet centralized command system to a market economy.”(lcweb) The transition which Tajikistani government performed was to Capitalism because Tajikistan allowed privatization. For instance, “Early in 1991, the Dushanbe government legalized the leasing and privatization of enterprises (excluding industries deemed critical for national security).”(lcweb) 

However, there were many factors that led to the recession of transition. First, the political turmoil and civil war of 1992-1993 not only disturbed the country’s transition to market economy but also did enormous damage to the country’s economy. “According to an official estimate, that damage extended to 80 percent of the republic’s industries. The conflict spurred the departure of large numbers of Russians and Germans who had been key technical personnel in Tajikistan’s industries” (lcweb) 

Second, joining the Russian ruble zone worked against Tajikistani interests therefore, it also obstructed the transition to market economy. “Russia did not send as many rubles as promised, and many of the new rubles that were sent quickly left Tajikistan as inhabitants bought commodities from other Soviet successor states, especially Uzbekistan and Russia. Thus handicapped, the cash economy often gave way to barter and promissory notes.”(lcweb) 

Third, the Tajikistanis government had the plan without specific steps toward privatization. This fact also disturbed the transition. For example, “In November 1995, the legislature approved a reform plan for the period 1995-2000, but the plan included no specific steps toward the general goals of privatization and the fostering of foreign and domestic investment.”(lcweb)

 Fourth, “The transition, from the conventional Soviet centralized command system to the market economy, met resolute resistance from the people who still held positions that gave them economic power and technological know-how; political figures with political figures with ideological objections to market reforms also voiced opposition. Such influential people insisted that the previous system could be made efficient if Tajikistanis were urged to work harder. This view was made popular by the sharp price increases that followed price decontrol in the initial reform stage. Tajikistani citizens’ hardships, fear, and anger resulting from the initial economic shock greatly slowed the transition to a market economy.”(lcweb) 

Tajikistan’s strategy of the transition was a Gradualism. For instance, “In the first year of independence, only four farms were privatized.”(lcweb) However, “The regime of Imomali Rahmonov, who came to power in December 1992, showed little interest in continuing the limited market reforms of 1991,1992. At the same time, the new regime declared its support for private enterprise on a small or moderate scale, expressing the hope that foreign investment would help reviving the country’s shattered economy. By the mid-1990’s, about half of all small businesses, especially those in the service sector were privately owned.”(lcweb)

References

http://lcweb2.loc.gov (US Library of Congress Country Study: Tajikistan)

 

 

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