The Economy
Before the Soviet revolution Belarus was possibly the poorest region of central European Russia. Manufacturing began to develop rapidly after 1918 in and around Minsk, Vitebsk and Gomel. In Gomel, the region which includes Vetka District, substantial factories producing machine tools and agricultural machinery were established. Even so new industrial development in Belarus was dwarfed by similar developments in Russia and the Ukraine. Then in 1941-45 the country was devastated by the war and German occupation. More than two hundred towns were destroyed including Minsk, Vitebsk and Gomel where 80 - 90 per cent of pre-war buildings were destroyed.
It was during post-war reconstruction that Belarus economic and industrial development really took off. It was now the centre of major transit routes between Russia and East-Central Europe. From the 1950s on it became one of the major manufacturing regions of the Soviet Union producing a wide range of products including tractors, heavy trucks, metal-cutting lathes, synthetic fibres, TV Sets, semi-conductors and microchips. By 1986 compared with 1913 industrial and agricultural output had risen more in Belarus than in the USSR as a whole or in Russia and the Ukraine. In that year the Soviet Government established quality marks for 900 industrial products and Belarus achieved the highest proportion of such products in the USSR. Its industry was also the most technically advanced, increasingly specialising in research and development and assembling high tech products. Some eighty per cent of its production was exported compared with around sixty per cent in other Soviet Republics. It was equally high in the rankings for its production of flax, potatoes and eggs, and in grain it was only surpassed by the Ukraine. It produced more housing and with higher rates of occupation than any other Soviet Republic and its people had a higher expectation of life at birth than the people of Russia or the Ukraine. The World Bank said that in 1991 Belarus had "one of the highest standards of living in the former Soviet Union."
Following the break up of the Soviet Union in 1991 production in Belarus fell constantly from 1991 to 1995. Initially, there were reforms towards the introduction of a market economy. Despite this it was estimated that between 1992 and 1995 output fell by as much as forty per cent and as a consequence most industrial workers were on a two to three day working week. The impact of this on living standards was made all the greater because industrial enterprises provided housing, day care centres, sports facilities and social clubs for their employees as well as pay. By 1994 there was growing concern that most enterprises were about to close partly because supplies from Russia were disrupted. It was against this background that Lukashenka was elected President. Unlike Russia there had been no rush to privatise enterprise in Belarus and in the same year Lukashenka called a halt to any further privatisation and ensured the continuation of subsidised public transport and utilities and free health care and education.
By 1996 output began to rise again and most of the large industrial enterprises had almost returned to full capacity working. Statistics indicated a continuous and substantial growth in gross domestic product and industrial production reaching a peak in 1997 but continuing at more modest rates thereafter. Nevertheless, Belarus Gross Domestic Output (GDP) had still only returned to 83.6 per cent of its 1991 level by 1999. However, this compared favourably with figures for other former Soviet Republics like Russia with just 62.5 per cent and Ukraine with 44.7 per cent. Higher rates of growth returned again in 2004 and 2005 when the economy grew by 11 per cent and 9.2 percent respectively. In 2005 the World Bank referred to the "puzzle" of the relative stability of the Belarusian economy compared with the "better performing transition economies" of other Former Soviet Union (FSU) countries like Russia and Ukraine. [1] Compared with them Belarus is dominated by: state owned or quasi-private firms in production and exports which are subject to much government intervention; high tax burdens and substantial redistribution of funds aimed at supporting traditional firms and employment; and high dependence on trade with Russia with minimal geographic diversification of exports. It explains this by arguing that until recently Belarus has benefited from "privileged access to the Russian market, temporary cost advantages and subsidies to exporters". While these factors are now declining the rise in oil prices has increased Russian growth and demand and also the proceeds from Belarus oil processing exports. At the same time domestic demand has been strong because of government involvement in the economy and because the terms of trade which restricted imports to the advantage of domestic producers and domestic enterprise in some sectors were "able to generate significant growth in both productivity and exports." It says that this "growth model" is not likely to be sustained for much longer because of: "chronic weaknesses in financial and investment performance, the depressed level of new business entry, and especially the slow changes in Belarus’Äô export patterns." It concludes that growth is unlikely to be sustained in future unless Belarus liberalizes the economy and introduces "structural and institutional reforms" including: hard budget constraints and greater operating flexibility in state owned enterprise; improvements in the business environment by reducing price controls and complementary measures; more transparent and efficient management of social protection; environmental measures particularly to deal with the consequences of the Chernobyl disaster; promoting the development of civil society and the emergence of strong small and medium-sized enterprises.
Sources:
World Bank (2006) Belarus Country Brief
http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/E...
World Bank (2005) Belarus: Window of Opportunity to Enhance Competitiveness and Sustain Economic Growth. Country Economic Memorandum for the Republic of Belarus. Report No. 32346-BY
United Nations Development Programme (UNDP) Human Development Report 2007/2008 Country Fact Sheets - Belarus http://hdrstats.undp.org/countries/country_fact_sheets/cty_fs_BLR.html
Belarus: Addressing Imbalances in the Economy and Society: National Human Development Report 2004-2005
Human Capacity of Belarus: Challenges and Social Responses UNDP National Human Development Report 2003
http://un.by/en/undp
[1] World Bank Report No. 32346 (2005) Belarus: Window of Opportunity to Enhance Competitiveness and Sustain Economic Growth: Country Economic Memorandum for the Republic of Belarus.