¥Reform of State Enterprises and Cooperatives
–Jan. 1988 - Law on State Enterprises
enacted
¥Decentralized management
¥Increased autonomy
¥Increased flexibility of state
enterprises
1.Autonomy increased for firms to set
production targets
2.Conflicted with persistence of
compulsory state orders (goszakazy)
– state orders still accounted for 90%
of production in 1988
3.Allowed workersÕ voice in
selection of management (ex. RAF - IGRA)
–1988 Law on Cooperatives
¥Created powerful incentives for state
enterprises to create cooperatives
¥Exempted Coops from compulsory plan
assignments
¥State firms created profitable sideline
business without direct central governmental control
and influence
¥Coops granted significant freedom to set
wages and prices (e.g., directors set own wages and
that of allied nomenclatura workers
¥Allowed creation of Coop banks
¥Coop banks increased financial
flexibility of founding state enterprise ÒkoopÓ partners
¥By beginning of 1991 80% of all Soviet
Coops where kooperativy
pri or attached to state
enterprises & produced 80% of total goods and services sold by coops