Economic Independence and Regional Cost-Accounting Relations in the Former Soviet Union

Abstract

Central to the former Soviet Union's successful transition to a market economy is the economic independence of both enterprises and regions. Market relations require that enterprises be self-financing, dependent only on their own productivity. Regional economic independence, however, must be balanced with the government's responsibilities. Self-financing at the local government level would inhibit the regional redistribution of income to reverse inequalities created under central planning. While enterprises should be independent in matters of production, the public sector should be able to provide the social infrastructure necessary for economic independence.