(Abstract)

   At present the problems of creation of the general favorable institutional and legal environment as a factor of long-term development of the national model of corporate governance in Russia, and, on the whole, the development of the corporate sector of the Russian economy. Accordingly, the third stage of the study shall be focused on finding out (taking in account the results obtained at its first and second stages) the most important “blank spots” related to the formation of a stable system of ownership rights and the elaboration of an integrated set of legal recommendations for the medium-term perspective.

   Respectively, the achievement of these goals from the point of view of substance presupposes the following avenues of research: an analysis of approaches to the problem of ownership rights in the context of aims of the economic reform (taking into account new approaches developed by the modern theory); an integrated evaluation of principles and aims of the reform in the sphere of ownership rights protection in Russia; a complex review of major avenues of reforms and elaboration of practical recommendations.

   The first section primarily focused on the theoretical problems reviews new approaches to the problem of ownership rights and analyzes respective actual avenues of research of the problem of economic reforms. The authors review both modern concepts of ownership rights and the issue of interrelation of ownership rights and reliable obligations. The theory of ownership is also analyzed in the context of the outcome of mass privatization. The authors conclude the section by reviewing the issue of ownership rights protection in the context of principles and tasks of further economic and legal reforms in Russia.

   The second section of the study in a logical way continues to analyze the general principles and aims of the reform implemented in Russia focusing on concrete problems of protection of ownership rights in the corporate sector. In this relation the authors pay a special attention to the analysis and structuring of major avenues of reform in the sphere of corporate governance and protection of the rights of shareholders (investors). Special subsections review corporate law, reorganization, transparency and insider transactions, the problem of withdrawal of assets, identification of principals (“groups”). While the problem of balance between interests of creditors and enterprises-borrowers (bankruptcy) is based on the economic specifics of the present development of Russian enterprises and financial institutions, the issues of collateral and trust require more further legislative substantiation. Some subsections focus on this problem. The study also presents a brief review of some actual problems related to transfer of property.

   In the third section the authors review a key topic from the point of view of protection of ownership rights in Russia at the present time. This approach is basing on the balance between ownership rights and the public interests. Accordingly, the immediate approval of a law on nationalization is of special importance, since the government is still ambiguous on the settlement of nationalization problem in terms of practice. It seems that this process is impossible in political terms (at the level of ideological approach). However, in practice nationalization processes have been underway since a long time: attempts to reverse the results of investment tenders, court decisions declaring certain privatization transactions null and void, growth of the number of unitary enterprises (after bankruptcies due to debts to regional budgets), debt restructuring processes, blocks of shares returned to or put in pledge with state agencies, sequestration of shares for debts, transfer of blocks of shares to state-owned holdings, etc. All these phenomena require a unified approach and a civilized legal environment. However, the law on nationalization was not approved in year 2000.

   The law shall be a certain declaration of intent stipulating procedures of compensating investors and be an absolute compensation of losses suffered by bona fide purchasers, alongside with possible sanctions for previous offences. It is also necessary to regulate the issue of the limitation of action with regard to privatization transactions.

   The analysis of problems of protection of ownership rights in the context of aims of economic reforms (taking into account new approaches developed by the modern theory) alongside with a complex evaluation of the principles and aims of the reform in the sphere of ownership rights protection in Russia allows to formulate applied recommendations of principal importance (from the point of view of the authors) for the further positive development of the corporate sector in Russia.

   In the sphere of the corporate law, it is necessary to focus on: a broader monitoring of actions of enterprises’ executive bodies and large shareholders on the part of Boards of Directors and small shareholders; prohibition of insider transactions; qualification of transactions with affiliated persons and a broader definition of the term “affiliated person”; broader powers of law and order agencies to prevent transactions involving affiliated persons; tighter requirements concerning the disclosure of information and responsibility for the content of disclosed information; regulation of “watering” of stock capital; limitations on “cross-ownership” of shares; tighter requirements concerning the mandatory invitation of independent appraisers; protection of bona fide purchasers from consequences of the declaration of transactions with shares null and void; introduction of direct responsibility of officers, directors, and controlling shareholders for losses suffered by the joint stock company or its shareholders (dismissal or suspension in case of infringement on norms of corporate governance and possible confiscation of assets and criminal prosecution for large losses).

   In terms of the law, it is important to find a reasonable compromise between, on the one hand, the necessity to ensure legal protection of small and foreign shareholders in case their ownership rights are infringed upon and, on the other hand, to avoid unsubstantiated claims “clogging” the judicial system. In this relation the following decisions are possible: to introduce the procedure of alternative settlement of disputes (at least at the initial stage) – administrative or arbitration hearings by a state regulation authority, develop the system of arbitration courts in the framework of SRO; elaborate provisions protecting boards of directors (management) of companies against abuses on the part of small shareholders by (a) examining the justification of claims, and (b) usage of so called “safe havens” (such means of legal protection as the rule of “business discretion” and the denial of unjustified requests to disclose information).

   Decisions taken at the level of individual agencies are obviously insufficient to prevent offences in the course of reorganization, therefore it is necessary to amend the base legislation: for instance, the law “On Joint Stock Companies” shall be amended to the effect that in case a JSC is reorganized (split-up of a JSC or separation of a part thereof) all existing shareholders shall receive shares in proportion to their shares in the main JSC and retain their respective rights; it is also necessary to elaborate a separate federal law “On Reorganization of Legal Persons” (“On Reorganization and Liquidation of Commercial Organizations); it is also necessary to introduce amendments and elaborate the federal law “On Amendments to Article 4 of the RF Civil Code “Legal Persons.”

   Infringements on the requirements concerning disclosure of information shall be prevented by both the enforcement of stipulations of laws “On Joint Stock Companies,” “On Protection of Rights and Lawful Interests of Investors,” “On Securities Market,” and the introduction of international accounting standards (with different tax and financial accounting), introduction of criminal charges for denial to disclose information. It is also necessary to introduce provisions allowing audits of financial and economic operations of issuers initiated by a shareholder (a group of shareholders) at the expense of the issuer.

   It is necessary to adopt the law “On Responsibility for Transactions Carried Out with the Use of Confidential Information (On Insider Transactions)” in order to render the persons disposing of confidential information liable for carrying out transactions with the use of such information in their interests (to derive unlawful profits) or those transferring such information to third parties carrying out such transaction. The law shall stipulate the following: (1) norms defining the persons possessing of confidential information; (2) norms prohibiting them to use such information to carry out transactions or transfer such information to third parties carrying out such transactions; (3) norms allowing a federal executive agency carrying out state regulation to penalize the persons defined by the law in case they use such information to carry out transactions or transfer such information to third parties carrying out such transactions, including the auditors of the issuer or professional operators on the securities market concluding a contract with this issuer, as well as state officials of governmental agencies who have access to confidential information due to their control, oversight, or other powers stipulated by the RF legislation or other regulations concerning governmental service. The approval of such a law shall increase responsibility for transactions and eliminate the factors behind unfair competition.

   At the same time the requirements that small and medium-sized issuers shall present detailed reports covering a number of years, including the data on their financial and economic operations, as well as the information concerning the major activities of issuers, sources of their incomes, suppliers of raw materials and sales markets, plans of future business activities, etc. are excessive. Many small and medium-sized issuers encounter difficulties to comply with existing unified procedures governing the registration of securities issuance. It is necessary to apply different approaches to different groups of issuers.

   The problem of withdrawal of assets (“shedding of assets”) and transfer price formation to the detriment of the issuer, shareholders, creditors, and the state shall be settled both in the framework of the law “On Joint Stock Companies,” and by applying stipulations of the Criminal Code (Articles 165, 201, 204), by improving tax legislation and its enforcement (with regard to issuers and individuals – beneficiaries of control over financial flows), by improving financial accounting, by reforming the labor legislation (simplified procedures of dismissal of general managers), tighter requirements concerning the carrying out of large transactions and transactions involving interested parties, dissolution of double taxation treaties with offshore zones (it shall be noted that attempts to dissolute such a treaty with Cyprus in the 1990s encountered tough resistance in Russia), by regulating the contradictions between the stipulations of the law “On Joint Stock Companies” and the Labor Code concerning the dismissal of general managers of joint stock companies.

   The problem of identification of beneficiary owners shall be settled along three avenues: toughening of legislation concerning the transparency of the ownership structure (including end-beneficiaries) aimed to find out the goals and interested parties of such transactions; liberalization of threshold indicators defined by the legislation as requiring the approval by state agencies; defining of owners’ or managers’ (in case it is impossible to identify owners) responsibility for submitting misguiding information, potential damage to parties of transactions and participants in corporate relations, etc.).

   A most important task is to introduce an effective state monitoring (as a way to ensure transparency) of the system of participation in capitals of joint stock companies, procedures governing mergers and takeovers. This is also of principal importance to prevent insider transactions, since the mechanical broadening of the definition of the term “affiliated person” is apparently an insufficient measure to ensure the transparency of corporations. Transparency requires the dynamic identification of all actual (real) owners of corporations purposed to put forward charges against them in case of inflicted damage and the provision of investors (outsiders) with true information about the owners and principals of corporations. The registration (statistical) approach shall base on the detection of all capital relations between concrete enterprises, what allows to identify the whole group as a result. For this it is necessary to toughen regulation of relationships between independent in terms of law, but economically interrelated commercial organizations.

   The law “On Affiliated Persons” is necessary to clearly define the term “affiliated person” and stipulate requirements to and procedures governing transactions involving affiliated persons. It is feasible to define affiliated persons basing on a number of relationships between legal and (or) physical persons, which determine the affiliation. These relationships may be divided into several groups basing on the following criteria: participation in managerial bodies; participation in capital, property relations, family relations, business relations.

   The protection of creditors’ rights is of the principal importance for the recovery of investment activity of Russian enterprises. This problem shall be settled by implementation of an integrated set of measures in the framework of obligation and legal protection (indirect protection of ownership rights), corporate law, bankruptcy procedures, tax regulation, execution proceedings. In this connection, courts shall less widely resort to the practice of applying bankruptcy procedures as a routine method to recover debts in order to protect enterprises from unscrupulous seizure of control over them (or some of their assets). According to Article 10 of the RF Civil Code such practice shall be viewed as abuse of the law. Creditors initiating the bankruptcy procedures shall be obliged to submit sufficient proof of impossibility to recover debts by other means.

   The corporate law shall include stipulations preventing the creation of ephemerid joint stock companies, announcement of bogus capitals of companies thus providing the real base for indemnification of creditors suffered losses because of reliance on the authorized capital of a joint stock company and increasing the protection of interests of creditors. For instance, it is necessary to prohibit joint stock companies to carry out any transactions not related to their establishment until the founder provide the total amount of their authorized capitals; to toughen procedures related to the payment for shares – the shares shall be fully paid for within three months after the state registration of the joint stock company, additionally issued shares shall be fully paid for at the moment of floatation; to introduce stipulations rendering the participation of an independent appraiser mandatory in case shares were paid for in kind, and to stipulate the responsibility of founders, members of the board of directors, and independent appraisers for overestimation of the value of property transferred as the payment for shares.

   It would be appropriate to include in the new law on bankruptcy provisions stipulating the right to appeal against court decisions on bankruptcy and actions of arbitration managers (who remain uncontrolled at present) and to ensure equal priority of all creditors’ claims notwithstanding the time they were submitted (the introduction of collegial principle for claims concerning bankruptcy, participation of all interested parties).

   The current contraposition of trust property (trust) and management on trust in Russia is of somewhat artificial nature. The natural way of development of the legal concept of trust in Russia (and, accordingly, of the effective protection of ownership rights of all participants of trust relations) shall be the approval of the concept of split ownership right and the analysis of mutual positions of the trustee and the agent with regard to each concrete trust agreement and the situation envisaged by a concrete legislative act. It also requires the adoption of certain elements of the British and American legal tradition.

   In the future it will be necessary to settle several key problems of principal importance for the development of this institution in Russia: the direct contradiction between trust and the corporate law (for instance, the laws prohibiting voting based on collusion), the Tax Code, laws on bankruptcy, etc., the use of trust in order to circumvent the anti-monopoly legislation, fictitious trust transactions, the use of trust for fraudulent transfer of property, trust management of state-owned assets.

   The state shall play a more important role in the protection of bona fide purchasers of securities, real estate, other property. Concrete steps shall be made towards: improvement of the legal mechanism of state registration of ownership rights, introduction of the full property responsibility of the state in case a transaction involving a bona fide purchaser of property is declared null and void; improvement of legislation and related infrastructure in order to exclude the opportunities for fraud in the process of transfer of ownership rights; creation of reliable and effective systems of registration of transfer of ownership rights; indefinite access to information on transactions and subjects of ownership.

   Transparency and standardization of technical procedures, elimination of opportunities for corruption, regional and national restrictions related to the turnover of property are the necessary prerequisites for the creation of such systems. These factors will objectively result in lower cost of transfer of ownership rights and positively affect the development of civilized turnover of property at the same time facilitating the broadening of the tax base.

   In the sphere of nationalization it is necessary to adopt at least two decisions in order to alleviate this problem: first, a tough and substantiated declaration of intent on the part of the government (for the short-term perspective), and, second, in legal terms the approval of the law “On Nationalization in the RF” stipulating the principal procedures and measures aimed to protect investors - bona fide purchasers (procedures compensating investors and protecting the interests of bona fide purchasers, which would take into account the prior multiple re-sales). It is also necessary to settle in legal terms the issue of the statute of limitations with respect to privatization transactions (it shall be fixed and shortened).

   The practical application of the results of the project may be related to the elaboration of recommendations concerning the conceptual avenues of development and the working out of new normative and legal acts regulating the protection of the rights of shareholders (investors) in Russia. The potential users of the results obtained in the course of the project may include the RF Government, the State Duma of the RF Federal Assembly, the Federal Commission on the Security Market, the Ministry for Economic Development and Trade, The RF Anti-Monopoly Ministry, The RF Ministry of State Property.

   Economic Policy Recommendations

   The analysis of approaches to the problem of ownership rights in the context of aims of the economic reform (taking into account new approaches developed by the modern theory) and the integrated evaluation of principles and aims of the reform in the sphere of ownership rights protection in Russia permits to elaborate practical recommendations being of principal importance (from the authors’ point of view) for further positive development of the corporate sector in Russia. In the sphere of the corporate law, it is necessary to focus on: a broader monitoring of actions of enterprises’ executive bodies and large shareholders on the part of Boards of Directors and small shareholders; prohibition of insider transactions; qualification of transactions with affiliated persons and a broader definition of the term “affiliated person,” etc. In terms of the law, it is important to find a reasonable compromise between, on the one hand, the necessity to ensure legal protection of small and foreign shareholders in case their ownership rights are infringed upon and, on the other hand, to avoid unsubstantiated claims “clogging” the judicial system.

   Decisions taken at the level of individual agencies are obviously insufficient to prevent offences in the course of reorganization, therefore it is necessary to amend the base legislation and elaborate a separate federal law “On Reorganization of Legal Persons” (“On Reorganization and Liquidation of Commercial Organizations). Infringements on the requirements concerning disclosure of information shall be prevented by both the enforcement of stipulations of laws “On Joint Stock Companies,” “On Protection of Rights and Lawful Interests of Investors,” “On Securities Market,” and the introduction of international accounting standards (with different tax and financial accounting), introduction of criminal charges for denial to disclose information. The problem of withdrawal of assets (“shedding of assets”) and transfer price formation to the detriment of the issuer, shareholders, creditors, and the state shall be settled both in the framework of the law “On Joint Stock Companies,” and by applying stipulations of the Criminal Code (Articles 165, 201, 204), by improving tax legislation and its enforcement (with regard to issuers and individuals – beneficiaries of control over financial flows), by improving financial accounting, by reforming the labor legislation (simplified procedures of dismissal of general managers), tighter requirements concerning the carrying out of large transactions and transactions involving interested parties, revision of double taxation treaties with offshore zones.

   The protection of creditors’ rights is of the principal importance for the recovery of investment activity of Russian enterprises. This problem shall be settled by implementation of an integrated set of measures in the framework of obligation and legal protection (indirect protection of ownership rights), corporate law, bankruptcy procedures, tax regulation, execution proceedings. In this connection, courts shall less widely resort to the practice of applying bankruptcy procedures as a routine method to recover debts in order to protect enterprises from unscrupulous seizure of control over them (or some of their assets). According to Article 10 of the RF Civil Code such practice shall be viewed as abuse of the law. Creditors initiating the bankruptcy procedures shall be obliged to submit sufficient proof of impossibility to recover debts by other means.

   (Abstract)

   In late 1980s and early 1990s the importance (equal to that of price and commodity market liberalization and financial stabilization) of privatization for successful transition to the market economy was recognized by the international economic theory. However, practically no attention was paid to the possibility of a prolonged parallel coexistence of different sectors of the economy characterized by an important role played by the mixed form of property, i.e. enterprises with a state-owned share of capital.

   In practice all transition economies encountered this phenomenon (although on a different scope). The special urgency of this problem for Russia is determined by the specifics of the starting conditions and a number of serious failures in the course of the implementation of radical methods of the economic transformation (late financial stabilization, prolonged transformational slump, prevalent rent seeking in the behavior of the management of a number of companies and industries at large, which occurred due to the interlacing of the business and authorities).

   All these developments render the study of the issues related to the management of state property in mixed companies (mainly in the form of joint stock companies, or corporations) objectively necessary.

   The scope of the object of potential privatization (a huge number of state owned enterprises in the total absence of the legal private sector), the structural and sectoral specifics of the economy (a considerable specific weight of the fuel and energy and the military and industrial complexes, etc.), the important role played by the bureaucracy and the directors were the factors behind the implementation of the compromise privatization model, which allowed for numerous exemptions and deviations from the standard scheme and transaction procedures. The first chapter of the study reviews the evolution of the Russian privatization legislation introduced over the whole period of radical market reforms focusing on the constraints on privatization and its sectoral specifics.

   As a result, in the country there was formed a respective model of corporate governance originated at those formally privatized enterprises where a share of capital was owned by legal persons and individuals and another share was owned by the state. The second chapter thoroughly analyzes the quantitative and qualitative aspects of the state property in Russian corporations.

   Basing on the analysis of a large amount of statistical information, it was found out that this form of ownership is most frequent in the fuel and energy complex (practically the whole complex is owned by the state), sectors of the infrastructure (major transportation facilities, communications, housing and utilities), and the social and cultural sphere, what in principle agrees with provisions of privatization programs. As concerns regions this situation was registered in the West Siberia, a number of national Republics and Moscow. Interregional differences related to the degree to which the state maintains its control over the corporate sector depend on the specialization of a respective regional economy within the framework of the single national economic complex of the former USSR and the status of a subject of the Russian Federation determining the influence of its leadership on the implementation of the all-Russian privatization model within the territory under its jurisdiction.

   At the same time, the participation of the state in joint stock capitals via state-owned blocks of shares noticeably prevails over the issuance of “golden shares.” It shall be also noted that the amounts of a considerable part of state-owned blocks of shares is not sufficient to allow the state as a shareholder to maintain effective majority control over corporations.

   This section of the study discusses the most important categories of state-owned blocks of shares, offers a typology of organizational and legal forms, in which the mixed form of ownership in the Russian economy was realized in the 1990s, reveals the role played by the state in procedures of corporate government at privatized enterprises.

   The fact that the state retained a considerable degree of control over property in many sectors of the economy was responsible for the emergence of the problem of management of its property in the corporate sector. At the same time, the state relying on the success of cash privatization did not consider this problem important either in terms of normative and legal substantiation, or in terms of elementary registration and inventory of property. The third chapter of the study analyzes the process of formation of the regulatory and legal basis of the management of the state property in the corporate sector of the economy and evaluates the instruments applied in this process.

   The major means of exerting controlling influence on companies with mixed capital over 1990s was (and is now) the appointment of government officials as state representatives in the managerial bodies of these corporations. A large number of objects of management and the actual ambiguity of aims pursued by the state with regard to each such enterprise in the situation of lacking necessary managerial skills and legal material incentives determined the ineffectiveness of this institution. Management on the terms of trust was not widely practiced. The general situation of lax legal regulation of ownership and control in the economy (first of all in terms of enforcement of regulations) also played a negative role.

   The study also focuses on the place and role of specific substitutes of the state in the sphere of property management, such as holdings (Chapter 4) and regions (Chapter 5). Although being in principle potentially feasible means for the settlement of the problem of managing state property in the corporate sector, in practice both these substitutes pursued quite different aims in the situation of weak state and lacking clearly defined policy in this sphere, which prevailed in Russia.

   The specially created state holdings and companies became rather tools to settle specific sectoral problems than the tools of management of the state property. Enterprises with mixed capital presented an obvious and available resource used in the bargaining between regions and the federal center, which in mid-1990s urgently needed regional support in pursuit of the concentration of all efforts to achieve the formal financial stabilization and due to political considerations. However, in practice many regions were not ready to realize the thesis of broader independence (including issues of the management of state property), while some of them abused this principle.

   As a result of these developments the formal distribution of shares in capitals of joint stock companies partially owned by the state and the actual role the state played in their management became apparently inconsistent. The considerable share of the state in capitals of joint stock companies in the absence of strict control renders the state subordinated to and dependent on non-state shareholders and managers. This situation is characteristic of many other Russian corporations, where shareholders and investors encounter non-transparency of enterprises’ operations and transfers of material and financial assets from the parent company to its subsidiaries controlled by the managers or structures related to them.

   The sixth chapter analyzes the major problems related to the functioning of enterprises partially owned by the state in the context of the general development of the corporate sector and implementation of market reforms at the national level. The standard (in terms of the market economy) “external” mechanisms of the corporate discipline stimulating managers to act in the interests of formal owners are practically blocked in the modern Russia, what sharply increases the role played by the activity of shareholders in voting at the meetings and the functioning of Board of Directors. In the situation of chronic deficit characteristic of the 1990s, the state as a shareholder was primarily interested to ensure budgetary revenues at the expense of alternative (with regard to plain sales of property) sources: dividends, lease payments, transfer of property for trust management, etc.

   The seventh chapter of the study deals with the management of state property in the corporate sector in the new situation, which arose in the late 1990s, when after the financial crisis of 1998 the top leadership became aware that the weakness of the state should be overcome in order to create prerequisites for the settlement of the crisis and adopted the course towards the complex reform of the management of state property and the creation of a unified organizational and economic mechanism in this sphere.

   This section of the study evaluates the novations introduced to the regulatory and legal basis (the Concept of the Management of State Property and Privatization in the RF approved on September 9, 1999, and related instruments) and presents a systematized description of the actual situation in the sphere of the management of state property in the corporate sector in years 2000 and 2001, including numerous examples from the practices of Russian companies revealing different aspects of this problem and related conflicts.

   The conclusion provides major findings and recommendations on the economic policy the state shall pursue in the sphere of managing its property in the corporate sector. The recommendations present a whole set of short, medium, and long-term measures.

   In the short-term run, it is feasible to regularly carry out re-attestations of state representatives to ensure that they meet the necessary professional requirements.

   In the framework of the medium-term horizon the major issue is the specification of ownership competence of the state in joint stock companies depending on a number of criteria (the share of state in the capital shall be considered as the most important criterion).

   The specification of the state competence in joint stock companies requires to achieve first the following individual goals: 1) to define and regulate the functions of the persons representing the state interests in such companies more clearly by introducing amendments to the respective legislation currently in force (mainly outside the legislation approved by the RF Federal Assembly); 2) to introduce elementary mechanisms of control over financial flows and the process of the reproduction of capital in companies with the state participation and to build these mechanisms in procedures governing the functions of persons representing state interests in the managerial bodies of these companies; 3) to inventory and rank the state-owned blocks of shares in terms of regions and sectors in order to ensure revenues of budgets at all levels and to implement urgent institutional reforms.

   In the long-term outlook, a logical system of the management of state-owned blocks of shares in joint stock companies and other enterprises of mixed ownership shall be gradually created basing on the individual approach to each object of management grounded on the program-targeted principle. Such a system presupposes that the state shall determine the aims of its participation in the capital of each enterprise, clearly formulate its respective tasks and to fix the means suitable to influence the object of management (basing on effective control mechanisms) in respective documents.

   At this stage the state may pursue a number of additional goals (alongside with goals set for the medium-term stage, such as more or less high performance of functions determined for enterprises with the state participation in their capitals, increase of non-tax revenues of the budgets of all levels, etc.) related to the creation of stable prerequisites for economic growth (restructuring of production, attraction of investment, implementation of certain structural and industrial policies).

   However, even the detailed regulation of functions performed by the state representatives at the enterprises of mixed ownership on the basis of the set of the proposed measures and other requirements the state applies to the companies, in which it owns a share of capital, does not guarantee an automatic, fast, and radical improvement of the standing of companies with mixed capitals.

   In the market situation the immanent shortcomings of state ownership determine that companies with mixed capitals lag behind the more effective private sector. However, the Russian economy in transition, where even many privatized enterprises fail to demonstrate the expected effectiveness of management performed by new owners, the realization of the interests of the state as a shareholder, alongside with the achievement of such goals as increasing non-tax budgetary revenues and implementation of the structural policy, may provide a positive impact on the process of corporate governance at large basing on the consistent enforcement of the spirit and letter of the law.

   Economic Policy Recommendations

   There is a necessity to implement a whole set of short, medium, and long-term measures. In the short-term run, it is feasible to regularly carry out re-attestations of state representatives to ensure that they meet the necessary professional requirements. Certain steps in this regard have been already implemented. In the framework of the medium-term horizon (the measures to be implemented over two to three years) the major issue is the specification of ownership competence of the state in joint stock companies depending on a number of criteria (the share of state in the capital shall be considered as the most important criterion). As concerns the majority blocks of shares, sets of regulations and procedures allowing the state as the strategic owner to perform its managing functions shall be introduced. As concerns minority blocks of shares (at and below 25 per cent) there shall be introduced sets of regulations and procedures allowing the state as one of many shareholders to perform its controlling functions related to the operations of enterprises.

   The specification of the state competence in joint stock companies requires to achieve first three individual goals: 1) to define and regulate the functions of the persons representing the state interests in such companies more clearly by introducing amendments to the respective legislation currently in force (mainly outside the legislation approved by the RF Federal Assembly); 2) to introduce elementary mechanisms of control over financial flows and the process of the reproduction of capital in companies with the state participation and to build these mechanisms in procedures governing the functions of persons representing state interests in the managerial bodies of these companies; 3) to inventory and rank the state-owned blocks of shares in terms of regions and sectors in order to ensure revenues of budgets at all levels and to implement urgent institutional reforms, not excluding the pursuit of more active structural and industrial policy in the future.

   In the long-term outlook, (five to seven years) a logical system of the management of state-owned blocks of shares in joint stock companies and other enterprises of mixed ownership shall be gradually created basing on the individual approach to each object of management grounded on the program-targeted principle. Such a system presupposes that the state shall determine the aims of its participation in the capital of each enterprise, clearly formulate its respective tasks and to fix the means suitable to influence the object of management (basing on effective control mechanisms) in respective documents. In the long-term outlook the issue of the total reorganization of the system of governmental agencies involved in the regulation of property relations shall also be considered.

THE EMERGENCE OF THE NATIONAL AGRI-FOOD MARKET UNDER TRANSITIONAL CONDITIONS

   The break-up of the centralized, planning system took place under the impact of a number of steps aimed at the economy liberalization, particularly privatization and recognition the institution of private property, price and trade (including foreign trade) liberalization, the introduction by the means of legislation of restrictions on the government regulation of the entrepreneurial activity at the federal and regional levels. All the noted measures substantially pushed the agri-food sector towards market and generated considerable structural and organizational changes in the food chains.

   At the same time, however, the establishment of the conditions for entrepreneurial activities and the emergence of new structures on the food markets does not mean a rapid emergence of an effectively operating market, and there is a highly imperfect situation there.

   The value-added of the paper can be identified thanks to at least two issues raised therein. First, that is an analysis of structural changes in the food markets that would help develop the theory of transitional economies. The answer to the question as to whether one should need single out the processes in the economies that go from plan to market as a single theory, or such processes may fit into already known theories, still remains unanswered. Nonetheless, it is already evident that the processes in market economies that center on overcoming the market deficiencies (and this is a permanent process of development) differ greatly from the processes in the economies that just 10 years ago were unaware of market realities. That is why the description of market processes in transitional conditions is extremely important for further theoretical generalizations. Secondly, the present paper constitutes an attempt to conduct price analysis and the analysis of the dynamics of market margin on the food markets. That was impossible to accomplish in the prior years because of the absence of time series. The conduct of the price analysis will allow evaluation of positive changes taking place in the market for food and equalization of price proportions.

   The innovation nature of the paper. The research into agri-food markets in the Russian economy is a new phenomenon, as well as, in general terms, any research into market processes in a country that had been existing within the strict centralized and planned system for decades and for which the mere concept of the market was a pure formality. It took roughly the decade to realize what happens in the agrarian markets, to what its failures should be attributed, and how the process of adjustment to market imperfections takes place. The process of data accumulation was taking place all those years: that is why practically all the recent Russian research (given that in the early 90’s there were not any in the area of food markets) into agri-food markets were rather of descriptive nature. The present paper is not an exception in this regard, however we took an effort to reach some level of generalization of the processes, particularly in the area of institutional transformations. Furthermore, the paper focuses on new processes that were emerging in the wake of the financial crisis.

   The research methodology. That is the most delicate issue. As noted above, the absence of the respective statistical data and time series data does not allow any accurate quantitative evaluation of the situation. In the present research, we accomplished the descriptive analysis of structural and institutional transformations in the agrarian markets. Another methodological approach employed in the paper is the food chain approach. It was used in the course of the price analysis as well as while analyzing the processes of vertical integration in the Russia food sector.

   The research objectives are: the analysis of the crucial structural transformations on the agri-food markets, assessment of the vertical integration processes in the food markets as an attempt to adjust to market deficiencies and serious failures, price analysis, and the analysis of the market margin.

   The first section of the paper deals with the analysis of the crucial structural transformations that happened in the food markets in the course of reforms, particularly the emergence of a new in principle economic agents (farmers) in the agricultural sector, the change in the rope played by households., the analysis of the role of private intermediary structures from the perspective of their exercising of the function of adjustment to market deficiencies. As well, the section tackles the analysis of the evolution of the government’s role on the food markets, and the cnage in the concept of food funds. The sections ends up with a conclusion about the administrative barriers being the result of a considerable decentralization of the regulation policy and the absence of the national market regulation policy.

   The second section of the paper deals with the analysis of the vertical integration processes in the food sector. There may be numerous motivations for vertical integration, while in the conditions of an imperfect market the main one is the attempt to overcome the market failures. Under the single ownership, the choice made in favor of vertical integration can be attributed to the failure to operate on the part of both the market and contract enforcement system. The high risks related to the failure to fulfill a contract induce the practice of the full control over the production. The section provides the evaluation of new vertical integration processes that started in the wake of the financial crisis.

   The third section provides the analysis of pricing and market margin in the food markets, which allows following the gradual process of evolution of structures and institutions and their adjustment to market imperfections.

   The concluding part comprises conclusions drawn from the analysis conducted as well as recommendations on main directions of the government food markets regulation policy. In the part of the recommendation on the market regulation policy, the main conclusion is that the government abandonment its role as a market agent does not imply its refuse to pursue the market regulation policy. There are areas of regulation that constitute an absolute government power: that is, first, the support to the formation of market environment; secondly, the support to emerging market institutions; thirdly, the improvement of the antitrust regulation and fiscal regulation taking into account the emergence of new operators in the market; and finally, the improvement of the system of statistical reporting and accountability on the food markets.

   Economic policy proposals

   The main priority directions on which the government should concentrate its efforts should be as follows:

   First, the support to the establishment of the nationwide informational market system which should comprise market data collection, processing, dissemination, and monitoring of the situation in the food market. The main condition for the establishment of such a system should be an equal access to it for all the agents operating in the respective market. It is the solution of this problem that would allow a substantial contraction in transaction costs and raising the attractiveness of market transactions in the produce vertical.

   Secondly, the government should undertake the accomplishment of tasks related to the creation of market institutions, i.e. an elaboration of behavioral standards and regulations for agents in the market for food, development of mechanisms of legal guarantees for contract enforcement. The easiness with which all the market agents fail to fulfill their obligations as per the respective contracts is amusing. It is understood that the guarantees for contract fulfillment is at the same time a problem of business ethics, however the solution of this particular problems is less dependant on the state itself and requires a relatively longer term of operating within the entrepreneurial community.

MONETARY POLICY IN THE POST-CRISIS PERIOD

   Abstract

   The paper aims to analyze the problems encountered by the Russian monetary authorities in the post-crisis period (1999 and 2000) and to determine optimal monetary policy under the present conditions in the framework of existing theoretical approaches.

   In order to analyze the situation of the Russian economy in the post-crisis period we reviewed the theoretical model of small open economy in the short term outlook basing on the IS-LM approach (similar to the Mundell – Fleming model), where the demand for money positively depends on the real exchange rate of the national currency. Therefore, the LM curve is negatively sloped at coordinates e – Y. We review the prerequisites determining the existence of such a relationship and analyze the comparative statics of monetary and fiscal policy shocks in the model.

   The special shape of the LM curve means that several equilibria may exist in the economy. Accordingly, depending on the initial situation of the economy and the amount and permanency of the impact of monetary or fiscal shock the resulting influence on the economy may greatly vary and be significantly different from the results usually obtained in the framework of the traditional Mundell – Fleming model. These differences were demonstrated in the comparative statics in the framework of our model.

   We further demonstrated that the trajectory of change in the real exchange rate and the issuance in the Russian economy in 1995 through 2000 may be well described in the framework of such a model. Assuming that the Russian economy was in the stable equilibrium, its movements in 1995 through 1997 may be described as the movement along the LM curve to the unstable equilibrium characterized by high real Ruble exchange rate and low amount of issuance followed by the emergence in the economy of a gap between equilibrium values of the amounts of issuance for the IS and LM curves, i.e. surplus money supply, due to the exogenous decline in the real Ruble exchange rate. The present trajectory is directed toward a higher real Ruble exchange rate and amount of issuance; however, excessive liquidity persists.

   A thorough analysis of the current situation of the monetary and banking spheres of the Russian economy revealed major specifics of the nature and character of implemented monetary policy. In particular, it was noted that the mechanism of money supply was destroyed in the situation of the systemic crisis of the banking system. At the same time the rationing of credit was tightened, the household savings in the form of bank deposits did not return to the pre-crisis level, the price of supporting the banking system proved to be too high.

   Since the financial markets in Russia were practically destroyed in August of 1998, the RF Central Bank could not use operations on the open market as tools of monetary policy. The basic working tools were interventions on the forex market, deposit operations, and changes in the regulations on mandatory reserves. The forex market practically lacked the potential to sterilize Ruble interventions.

   The lack of actually working interest rates in the economy and the rationing of credits meant that the economy lacked the interest and credit channels of money transmission. The only working mechanism of money transmission was the exchange rate channel related to the inflow to the country of funds received by exporters and their sales (first of all, the mandatory stipulated portion of receipts) to the Bank of Russia via the domestic forex market.

   In year 2000, the nominal Ruble exchange rate stabilized at the level slightly below 28 Rub. / US$ and was supported by a considerable amount of gold and forex reserves. In the situation of persisting rather high inflation rates, the stabilization of the nominal exchange rate became a factor responsible for an increase in the real Ruble exchange rate. The most perceptible development was the appreciation of Ruble with regard to the European currency (due to the falling exchange rate of Euro against the US $), what rendered Russian goods less competitive on European markets.

   The favorable situation on the world raw materials markets and the household demand switching to domestically produced goods determined high profitability of the real sector of the economy, growth of enterprises’ account balances and decline of barter and non-monetary inter-enterprise payments. The growing demand for money initiated by the transactional motive in the real sector permitted to practically restore the real amount of Ruble money supply at the pre-crisis level by end-2000, while the monetization of GDP reached its peak. At the same time, the degree of dollarization of the economy remains high and is above the level registered before August of 1998.

   Basing on conclusions derived from the model and the analysis we review a number of recommendations concerning the choice of the optimal monetary policy for years 2001 and 2002 proceeding from the experience of foreign countries. In particular, it shall be noted that aims pursued by monetary authorities change as the moment of financial crisis passes. While immediately after the crisis the major task of the central bank was to stabilize the monetary sphere, the exchange rate of the national currency, and the recovery of the liquidity of financial markets, at later stages monetary policies set more long-term goals (for instance, targeting of inflation).

   Accordingly, we single out a set of increasingly urgent tasks for the Bank of Russia, which include:

   1) Gradual and steady decrease of inflation rates (from present 20 per cent to 7 – 10 per cent a year).

   2) Restrain on the growth in the money supply aiming to stabilize the amount of non-performing reserves of commercial banks (rest balances on correspondent and deposit acounts of the RF CB).

   3) Relieving the RF Finance Ministry of the function to regulate money supply via accumulation of funds on budgetary accounts.

   4) Maintenance of liquidity of the domestic financial market, broadening of the toolkit for the management of the money supply.

   5) Ensuring of a smooth revaluation of Ruble, prevention of sharp fluctuations of the real Ruble exchange rate.

   6) Creation of mechanisms protecting the Russian financial and banking system from new shocks related to external influences and movement of foreign capital flows.

   As measures preventing the accumulation of excessive liquidity, we recommend to restrict the inflow of short-term foreign capital. The analysis of the international experience in the sphere of applying different regimes of capital control revealed that the measures aimed to restrict the inflow of foreign capital in Russia shall be similar to the policies applied by Chili and Columbia in the 1990s.

   We also recommend to set limitations with regard to the amount of foreign liabilities of Russian commercial banks and to introduce regulations concerning the mandatory non-remunerated reservation of the majority of foreign investment in the Russian economy. The rate of reservation shall be set in negative relationship to the term of investment.

   However, these measures aimed to limit the inflow of short-term capital shall be supplemented by a number of steps toward the liberalization of the forex market and the regime governing the inflow of foreign capitals to Russia. For instance, it is recommended to lower the share of export receipts required to be sold on the Russian market, to remove barriers set on the forex market, liberalization of operations concerning non-residents’ balances on “C” accounts, and the recovery of the organized market of futures contracts related to forex-denominated funds and derivative financial instruments.

   Policy Recommendations

   The paper aims to analyze the problems encountered by the Russian monetary authorities in the post-crisis period (1999 and 2000) and to determine optimal monetary policy under the present conditions in the framework of existing theoretical approaches. Basing on conclusions derived from the model and the analysis we review a number of recommendations concerning the choice of the optimal monetary policy for years 2001 and 2002 proceeding from the experience of foreign countries (in particular, issues of control over the movement of capitals and the domestic monetary policy after the devaluation).

   Due to the fact that at present the only channel of money transmission is the forex market (via forex inflow to the country), the RF government and the RF Central Bank face the task to limit the inflow of foreign short-term capital, which does not increase the amount of investment in the country but mainly flows in financial markets, and the sterilization of export receipts. At the same time, the set and potential of tools available to the RF Central Bank for the sterilization is exceptionally limited, what requires the elaboration of non-standard tools aimed to regulate the monetary and forex spheres.

   We review the introduction of certain measures aimed to control the movement of capital as such a tool. However, the measures aimed to restrain the inflow of short-term capital shall be supplemented by a number of steps toward the liberalization of the forex market and the regime governing the inflow of capital to Russia.

THE EVALUATION OF THE EFFECTIVENESS OF THE BUDGET FINANCING OF THE FEDERAL HEALTHCARE INSTITUTIONS

   The paper constitutes the first effort to analyze the revenue and expenditure structure of federal healthcare institutions belonging to different authorities, particularly federal clinics within the RF Ministry of Healthcare network. The paper considers possibilities of using the current system of statistical and financial reporting for the quantitative evaluation of the effectiveness of the budget funding of federal healthcare institutions. The work was focussed on institutional characteristics of the mechanism of funding the federal clinics, including recent attempts to change that. The paper shows that the applied mechanism ensures a multi-layer funding of federal clinics’ operations, reproduces a costly economic type, that is not consistent with the requirement to an efficient use of resources. The paper comprises recommendations on changing the procedures of the budget funding of the clinical operations of the federal healthcare institutions.

   Proposals on economic policy.

   The noted institutional analysis of the funding of federal healthcare institutions allows formulation of the following budget policy recommendations:

   1. To accomplish the transition towards a single-channel budget funding of the clinical operations of the federal healthcare institutions. That will require the amending of the Classification of Budget Expenditure and exclusion from the functional classification of the federal budget of item 1701/430/315 “The targeted expenditures on provision of expensive kinds of medical treatment to the citizens of the Russian Federation”. The allocations under this expenditure item should be transferred to complement the expenditure amount under item 1701/430/301- “Clinics”.

   2. To change the budget funding procedures with the payments for the final results of the federal clinics’ operations; to accomplish the transition from the budget funding of the federal healthcare institutions based upon the budget expenditure on their maintenance towards the funding based on tariffs for the treated patients by the completed treatment cases. The introduction of such a mechanism will require an adoption of the RF government Resolution “On the funding of federal healthcare institutions”.

   3. To draw distinctive limits in regard to the federal clinics’ obligations towards the manager of budget funds with the provision of medical services within the volume agreed upon. To set the institutions’ right to utilize the rest of their capacity to provide medical services paid for at the expense of off-budget resources.

   4. To introduce procedures of mutual planning by the RF Ministry of Healthcare and the respective bodies of RF Subjects of the provision of cutting-edge kinds of medical services. That should allow a more accurate identification of quotas of every RF Subjects in terms of availability of cutting –edge kinds of medical services that could be ensured by the federal clinics and funded from the federal budget.

   5. To accomplish transition to the funding of the federal clinics at the expense of the compulsory medical insurance funds based upon tariffs ensuring a reimbursement of the whole list of expenditures related to the provision of medical services.

   6. To add to the list of federal healthcare institutions and federal agencies’ reports with a form that should contain the data on the number of treated patients, the number of bed-days, number of visits to a doctor that were made at the expense of the funds received from different sources.

   7. To create a new organizational and legal form: that is a public (municipal) not-for-the-profit entity, which should ensure a greater economic independence of healthcare institutions along with the greater transparency of their financial operations compared to the current form.

THE CONSEQUENCES OF AN INTRODUCTION OF STABILIZATION MEASURES BASED UPON THE FIXATION OF NOMINAL EXCHANGE RATE

   The evaluation of episodes of chronic inflation shows that in the majority of cases a high inflation is rather a compulsory measure that a controlled instrument employed by government authorities seeking seniorage. The long periods of high inflation are poorly manageable, related to instability in an economy and huge social costs. As well a danger possibility of sliding into a hyperinflation trap appears. These arguments are major ones in the course of implementation of stabilization programs aimed at lowering inflation.

   The analysis of international experience of carrying out such programs shows that it is monetary base and nominal exchange rate that are used most frequently as a nominal anchor strictly controlled in the course of the conduct of stabilization. The advantage of the choice in favor of nominal exchange rate as such an anchor is that should the parameters of the control regime over exchange rate are sound, the actions of a central bank are clear. The economic agents can follow the bank pursuing the declared policy and assume, on the basis of regularly published data on the size of its reserves, state of the balance of payments, monetary aggregates, etc, for how long such a policy will be sustainable and whether the central bank is capable of maintaining the current regime under possible speculative attacks. As well, the fixation of exchange rate allows a more or less precise estimate of the impact of the exchange rate mode on export and import prices, thus simplifying the pursuance of an economic policy.

   Until the ‘70s, one of the major conclusions drawn from the analysis of economic policies in the area of stabilization programs became the fact that the programs aimed at a curbing of inflation led to a decline in economic activity, growth of unemployment and slowing down the economic growth rates. However the respective Latin American experiences in the late ‘70s showed that it was not always the fact. The main component of stabilization programs pursued in Argentina, Chile, Uruguay, and many other countries became a fixation or quasi-fixation of nominal exchange rate, while at the same time the declining inflation did not lead to recession,- on the contrary, upon the introduction of the fixed exchange rate regime there was a boom in production and consumption. In addition to the fixation of an exchange rate a low level, a short-term rise in economic activity is also encouraged by the fact that upon the statement on pursuance of stabilization program, inflationary expectations tend to fall. That leads to a lowering of transaction costs in the area of consumption and investing which are caused by the contraction in alternative costs for saving moneys. The arising re-investing leafs to a growth in real salaries and wages and domestic demand, whose growth is encouraged additionally by the effect of incomes arising due to the lowering inflation. The contraction of economic activity in the course of pursuance of such stabilization programs appeared pending and took place in a few years after the program start. That can be attributed to the fact that the countries that employed such programs would experience a serious strengthening of their real exchange rates, growth in real salaries and wages, and deterioration of their balances of payments, because of which their macroeconomic tendencies would change for opposite ones afterwards.

   The present paper deals with a review of theoretical approaches towards the description of stabilization programs based upon the fixation of exchange rate. As well, pursuant to the number of models provided in the paper, the present research provides a model of a small open economy. The latter differs from the aforementioned ones with restrictions imposed on capital flows and with another, complementary sector of its economy that produces an export commodity the price for which is set on the world market. The main results of the model are that the existence of an additional export resource, the price for which is rather pre-set in an exogenous way than set in the model, leads to the consumption trajectory of other goods as well as investment in all the sectors of the economy being strongly dependent on the price situation in the world market for the particular commodity and subject to equalization across the respective sector. The length of the stabilization program and the chances for maintaining the exchange rate also find themselves fully dependent on the world prices for the noted export commodity, should the respective industry’s output accounts for a considerable share of the overall output of the national economy. A favorable state of affairs in the world markets entails an overinvestment in the particular sector, while the strengthening of real exchange rate leads to a fall in its competitiveness. Other sectors develop at a lower pace, and should the state of affairs related to prices change, the economy finds itself in a worse position compared with the situation of evenly spread investment.

   The research also deals with an empiric evaluation of characteristic features of stabilization programs based upon the fixation of exchange rate and control over monetary base. The analysis implied an approach with the use of dummy variables, while the calculations were made using the panel data over 30 years separately for two groups of countries: the first one is developing countries, mostly Latin American ones, while the other group comprises the post-communist transitional economies.

   The research allowed the analysis of accessible instruments for a description of stabilization programs and the outcome of their application. The mechanisms and models described in the paper allow the understanding of causes for the arising the very effects noted in the course of implementation of stabilization programs (such as a strengthening of real exchange rate, growth in real salaries and wages, and possible rise in real output and real private consumption), as well as a change in comparative advantages of the sectors for trade and non-traded commodities.

   The econometric estimates of the stabilization programs’ outcomes on the panel data showed that to explain trajectories of growth in real GDP and households’ real consumption per capita in the countries that carried out stabilization programs, one needs to employ the same variables that work for an explanation of a the traditional models of estimates of economic growth factors. At the same time the dummy variables that are relevant to the start and the end of stabilization episodes appear significant in the majority of cases, given that it is negative growth rates in the course of the ending of stabilization programs based upon a fixation of exchange rate that appeared as the most stable result, while the respective episodes usually were accompanied by a currency exchange crisis and even by a larger-scale financial crisis.

   The economic policy proposals.

   The introduction of the regime of fixed or quasi-fixed nominal exchange rate is an instrument frequently practiced worldwide to lower inflation rate, especially because the fixation of exchange rate forms relatively stable expectations on the part of economic agents resulting from an increase in the predictability of economic policy. That appears very important for both emerging and transitional economies.

   The fixation of exchange rate almost always leads to the strengthening of the national currency’s real exchange rate, which affects the competitiveness of the sectors that produce traded goods. As a result, the arising growth in imports entails a deterioration of the trade balance, which is often followed by a currency crisis and a sharp depreciation of national currency. A part of problems related to the strengthening of a real exchange rate of the national currency can be solved through the coordination of the monetary and credit policy and the exchange rate policy in such a way, so that to ensure a slow pace of the strengthening, which should match the rate of technological improvement of production technologies, growth in labor productivity, etc, .i.e. in such a way so that to ensure the change in the real exchange rate would match the change in technological competitive advantages, thus reducing a negative effect on the economy to minimum. This can be achieved by pursuing the strategy of compulsory periodical devaluations of the national currency to ensure the inflation rate would not be far superior to the national currency depreciation rate.

   In addition to the problem of the strengthening of a real exchange rate, the paper also emphasizes that in the conditions when the price for the produce of one of the sectors (mining sector) is set on the world market, then considering a favorable state of affairs (high prices) an overinvestment in the sector arises, which slows down the overall economy’s growth rate. At this point, there is some paradox: given that for oil and non-ferrous metals international prices stand high, it is the mining sector that ensure the major part of both budget and private sector’s revenues. However, in a longer term, it would be rational to withdraw additional revenue from these sectors and encourage investment in the others. In such a situation, an accumulation of funds at the expense of the mining industries’ additional income (especially considering that it is used to invest in processing industries) should encourage a smooth development of the economy by making its less sensitive to shocks caused by the situation in the area of foreign trade and increasing the steadiness and stability of the economic system.

	PUBLICATIONS

   “Russian Economy in 2000. Trends and Outlooks”: the regular review contains an in-depth and comprehensive analysis of all the areas of socio-economic and economic and political performance of the country in 2000.

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   “Post-communist Russia in the Context of the World Socio-Economic Development”. The publications comprises proceedings of the international Conference held on December 1-2, 2000 to celebrate the 10th anniversary of the Institute. The Conference focussed on highlighting the experience of the last decade of reform and on development of a concept for the country’s development for the years to come.

   The publication was sponsored by the United States Agency for International Development.

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   Vladimir Mau, and Irina Starodubrovskaia “The Challenge of Revolution. Contemporary Russia in the History of Revolution”. The new monograph was released simultaneously by The Oxford University Press and Vagrius Publishers. The monograph is designated for those who are interested what has happened with the country over last decades. Sociologists and politilogists, historians and economists can explore new facts and hypotheses therein. However to read this book, one need not to be a researcher- just be ready to think and discuss, do not reject unexpected concepts and follow the authors’ along sometimes complex, but exciting path of arguments and considerations of Russia’s past, present, and future.

	ANNOUNCEMENTS

COMPETITION

   The Institute for the Economy in Transition announces the Competition to fill the vacancies of associate researchers, senior and leading researchers in the following areas:

   - Macroeconomics;

   - Social and Economic Studies;

   - Study of the Real Sector;

   - Political Economy.

   Graduates of institutions of higher education having relevant academic works and professional experience are eligible to participate.

   The graduates of institutions of higher education, who acquired professional experience in the course of their studies are eligible for the Competition to fill vacancies of associate researchers notwithstanding the previous length of employment.

   Doctors or Candidates of Economic Sciences are eligible for the Competition to fill vacancies of leading and senior researchers.

   Applications shall be addressed to the Director of the Institute.

   Participants may find out about the terms of the Competition and contracts by contacting the Institute’s Scientific Council.

   Address: 103918, Moscow, Gazetny per., 5.

   Fax: (095) 203 88 16

   Contact telephone of the Scientific Council: (095) 220 55 65

POSTGRADUATE EDUCATION

   INSTITUTE FOR THE ECONOMY IN TRANSITION ANNOUNCES THE ENROLLMENT IN THE POSTGRADUATE DEPARTMENT

   1. General Information about the IET Postgra-duate Department

   Specialization:

   08 00 01 “Economics”

   08 00 05 “Economy and National Economy Management.”

   Graduates of institutions of higher education are eligible to study at the Postgraduate Department.

   The Postgraduate Department carries out full time and correspondence courses.

   Terms of study: 3 years for the full time courses, 4 years for the correspondence courses.

   Full time and correspondence courses present similar educational programs.

   Education at the Postgraduate Department:

    - free;

    - paid;

    - targeted (requires a letter of application for the enrollment in the Postgraduate Department indicating the amount of scholarship and confirming the payment on the part of the organization enrolling the postgraduate student).

   The Postgraduate Department announces the enrollment of attending students, who want to improve their professional skills and take a modern postgraduate economic course but not aim to write a thesis or earn the Candidate degree. This course may be taken in order to prepare for the examinations to enter the Postgraduate Department.

   Documents shall be submitted from September 15 till October 25 of 2001.

   Entrance examinations will be held in November of 2001.

   Postgraduate Department, phone: 229-55-65

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