BusinessWeek: August 3, 1992

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 Economic Trends

THE CLOSET CAPITALISTS OF RUSSIA AND UKRAINE

Westerners argue that for economic reform to advance in the former Soviet Union, millions of Russians and others who toiled under the grip of a command economy must shake off ingrained prejudices against initiative and shed their distrust of profit-making. The process, some believe, could take a generation or two.

But just how ingrained are these attitudes? Is there in fact a homo Sovieticus, whose habitsindeed, whose personalityis so very fixed? No, say three economists who have conducted extensive surveys in Russia and Ukraine. Robert J. Shiller of Yale University, Maxim Boycko of Moscows Institute of World Economy & International Relations, and Vladimir Korobov of the Kherson Pedagogical Institute in Ukraine questioned people in the U.S., Russia, Ukraine, Germany, and Japan on risk-taking and other issues. Their findings appear in the current Brookings Papers on Economic Activity.

Russians and Ukrainians are more inclined to take risks than most observers might expect, the study reports. People surveyed demonstrated a willingness to start new businesses to the same degree as Americans, and their eagerness to invest in other peoples ventures was even greater than that of Americans. In Moscow, for instance, 51% said they would be tempted to invest a substantial portion of their savings in a new business started by friends, knowing that the business was very risky and could failor make investors rich. In Omsk, a city in western Siberia, 42% indicated an interest in making such investments. In New York, by contrast, the figure was 33%.

Many responses appeared to reflect situational rather than attitudinal factors. For instance, people in the ex-communist countries concede that workers do not do quality worknot because they are unable to, but because there is a lack of incentives to do so. If incentives are offered, the authors argue, behavior could change rapidly.

KAREN PENNAR
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