16/2/19: Deep Crises: past, present, future?

Venezuela's economic (and political, social, public, etc) woes have been documented with exhaustion, although no one so far has produced a half-meaningful outline of solutions that are feasible and effective at the same time.

Take for example, the @IIF pitch in: "Venezuela’s economic collapse is almost unprecedented in recent history. Zimbabwe in the last 20 years and the collapse of the Soviet Union are the only comparable episodes." This accompanied the following chart:

What is, however, remarkable in this exposition, is not Venezuela's demise, which is impressive, but the experience of Russia and the contrasting experience of Ukraine in post-Soviet collapse era.

Here is the data from the World Bank on post-USSR collapse recoveries, through 2017. It is the similar to the one used by IIF, but a bit more current and details. And it compares the Western 'darling' of Georgia experience with that of the Ukraine and Russia:

You don't need to have a PhD in economics to comprehend the chart above in political terms: like it or not, the Western 'policies prescriptions' have not been a great source of optimism for Georgia,  Ukraine and Russia in the 1990s.  It hasn't been a great source of optimism for Georgia in the 2000s, and it hasn't been of much use for Ukraine since 2014.

In part, the reason is that the Western prescriptions for policy development and reforms were not exactly followed by these countries in the past, and in part, these prescriptions were not suitable to these economies and their societies. But, also in part, the reason as to why Western reforms did not work their magic in the three former-USSR states is that they were never accompanied by the genuine buy-in from the West. There was no 'great trade' opening, no 'structural FDI rush', no 'Marshall Plan supports'.  What little tangible support was extended to these countries (and other post-Soviet states) from the West was largely siphoned off into the pockets of the Western contractors and domestic oligarchs.

Russian recovery 'miracle' that is traceable above was down to the removal of the Western contractors from the proverbial feeding trough, and consolidation of domestic oligarchs and corrupt elites. One can't call these changes 'liberal' or 'reforms', but they were successful while they lasted (through 2014).

What is also telling is that the rates of recovery - at peak rates - in Georgia (during the hey-days of Western-style reforms) were not quite comparable with the same rate of Russian economic recovery. And that is before one considers the peak recovery in Ukraine since 2014.

Incidentally, returning to the IIF chart above, neither Peru (it took the country 8 years to recover from its 1989 crisis) nor Bolivia (same duration for its crisis of 1982) compare to the cases of the post-USSR collapse crises in magnitude and recovery duration. Zimbabwe does, and it recovered from its 1998-started economic collapse in 18 years, by the end of 2017). Last time I checked, Zimbabwe also did not follow the Western 'prescriptions' in its policies path, and still beats Georgia and Ukraine in terms of its experience (both former USSR states are now in year 28 of post-1989 economic crisis).