Russia's retreat to statization and the implications for business

Despite the many problems that emerged during Russia's experiment with mark et economy in the 1990s, Western firms are not likely to forego the lure th at still exists in that market of 150 million people. Understanding the eco nomic and political developments of that decade, and their effects upon bus iness, can provide insights into the potential far business opportunities i n the coining years. This article is based on a longitudinal field study of the political and economic environment for businesses in Russia, supplemen ted by statistical data and other information from published sources. We an alyze the major economic and political developments during the 1990s and cl assify them in four stages -commercialization, privatization, nomenklatura, and statization. A scenario is then presented in which the statization sta ge, a period of increased state involvement in the economy, will likely con tinue in the next decade. An enlarged state role, however, is expected to c oexist with a still evolving private sector. The article concludes with imp lications for Western firms doing business ii? Russia's mixed economy.