The Republic of Belarus (also Byelorussia) is an eastern European country, which was formerly the most western of all Soviet Union republics. It became independent in 1991, although it largely aligns its foreign policy with its eastern neighbor, the Russian Federation. Although the country had a very solid industrial base in the last years of the Soviet Union, it has lost much of its advantage with the breakup of the Soviet Union and the loss of the former Soviet internal market. Its advantage has also weakened under an authoritarian political regime largely dominated by the president.
Belarus regained its independence in 1991 with the agreed breakup of the Soviet Union. It is, however, a member of the Commonwealth of Independent States (CIS), a treaty-based organization bringing together a number of the former Soviet republics. The Russian Federation plays a pivotal role in the CIS leadership. Historically Belarus, as such, was never independent and sovereign in the past. During World War II, there was an attempt to create a Nazi-supported puppet state, but to a large extent the area of Belarus was directly controlled by the Germans, and many people suffered.
It has been reported that every fourth person in Belarus was killed in World War II. The war devastated the national economy, as those factories that were not affected by military operations were relocated to either Russia or Germany. It is estimated that more than half of the pre–World War II economy was destroyed or relocated. Interestingly, Belarus is a founding member of the United Nations (UN), although in 1944 it was a constituent republic of the Soviet Union (together with Ukraine). This inconsistency gave the United States more than one vote in the General Assembly of the UN, but this right has never been exercised.
The economy of Belarus recovered very well in the postwar period, and it became a major industrial base in the region. This was supported by the promotion of immigration to Belarus of professionals and others who would spur economic growth. To a large extent the industrialization plan worked well, and achieved steady positive results until the breakup of the Soviet economy. In the model of a centralized economy, cross-republic (cross-jurisdiction) economic collaboration and integration were one of the major tasks. Therefore, the factories in Belarus depended largely on the raw material produced in other Soviet republics, and all the plans were made when energy prices were more or less centrally fixed (capped) regardless of the movements in the international market for energy.
With the breakup of the federal common market and liberalization of input prices, Belarus factories lost regular supplies and most of them are de facto bankrupt, although on paper they may still be in existence and operational. One of the possible solutions is the renting of factory premises (usually fractionally) to individual entrepreneurs, where they accept the obligation to employ some of the de facto laid-off workers of the state-owned factory. However, these attempts have not yielded long-term stability.
The economy of Belarus has recorded high growth rates in the last few years. This is mainly due to the fairly low starting base. The Republic of Belarus is regarded as a nondemocratic country, where elections are not universally recognized. The officially reported growth rates are just below 10 percent, and this certainly would have put Belarus on the map of economic successes if it were not such an isolated country. The regime of President Aleksandr Lukashenka is regarded as extremely autocratic (dictatorial) and stifling of any form of societal innovation. On a few occasions, foreign nationals have been evicted from Belarus, or simply advised to leave.
The major industries in Belarus are production of heavy industrial track, heavy chemical industries (usually the most “dirty” ones), and some energy production. The computing industry is growing, as well as the services sector. Agriculture is still rather intensive. Some attempts have been made to privatize companies, but success was not reported. However, it is possible that silent nomenclature privatization has taken place, although not made public as yet.
In line with countries with similar political regimes, the nomenclature privatization model is most likely to have taken place. This process is usually supported by purposely initiated high (hyper-) inflation, which was recorded in Belarus in the late 1990s and early 2000s. At present, the nominal inflation is still higher than reported economic growth, and overshoots it by about 2 percent. The overall economic climate for entrepreneurs and foreign direct investments is not regarded as very good, and most likely it will remain so in the foreseeable future.
- Axell, Russia’s Heroes, 1941–45 (Carroll & Graf, 2002);
- M. Birgerson, After the Breakup of a Multi-Ethnic Empire (Praeger/Greenwood, 2002);
- D. Martinsen, The Russian-Belarusian Union and the Near Abroad (Norwegian Institute for Defence Studies/NATO, 2002);
- Zaprudnik, Belarus: At a Crossroads in History(Westview Press, 1993).
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