Structural Challenges for Soes in Belarus: A Case Study of the Machine Building Sector

22 Pages Posted: 20 Apr 2016

See all articles by Edgardo M. Favaro

Edgardo M. Favaro

affiliation not provided to SSRN

Karlis Smits

Queen's University

Marina Bakanova

KU Leuven - Centre for Institutions and Economic Performance (LICOS)

Date Written: March 1, 2012

Abstract

Are Belarus's state owned enterprises positioned to grow in 2011-2015 as successfully as in 1995-2006? State owned enterprises account for 55 percent of Belarus's output and two-thirds of overall employment; economic growth in 1995-2006 was the result of capacity expansion and productivity improvements in state owned enterprises. These sources of economic growth originated in policy decisions that preserved the functioning of the command and control economy and allowed the country to exploit preferential commercial access to the Russian market in several goods and services. Are the same reasons likely to facilitate the performance of state owned enterprises and overall economic growth in 2011-2015? This paper concludes that this is not likely to happen. Times have changed: the slowdown in production and exports in 2009-2010 was unquestionably associated with a transitory decline in demand for durable goods in Russia. But there have also been more permanent market forces at work: a steady increase in competition in Russia and other Commonwealth of Independent States markets resulting from low-price Chinese and Russian-produced capital goods; and a shift in demand from low-quality/low price to high-quality, high-price transport equipment demand in Russia and other Commonwealth of Independent States markets. And these forces are there to stay. This conclusion leads to the following questions: Would state owned enterprises be able to adapt to observed market changes? What reforms would be relevant to facilitate the necessary adaptation?

Keywords: Markets and Market Access, Transport Economics Policy & Planning, Debt Markets, Economic Theory & Research, E-Business

Suggested Citation

Favaro, Edgardo M. and Smits, Karlis and Bakanova, Marina, Structural Challenges for Soes in Belarus: A Case Study of the Machine Building Sector (March 1, 2012). World Bank Policy Research Working Paper No. 6010, Available at SSRN: https://ssrn.com/abstract=2028267

Edgardo M. Favaro (Contact Author)

affiliation not provided to SSRN

Karlis Smits

Queen's University ( email )

Kingston, Ontario K7L 3N6
Canada

Marina Bakanova

KU Leuven - Centre for Institutions and Economic Performance (LICOS) ( email )

Waaistraat 6 - box 3511
Leuven, 3000
Belgium

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