chapter  3
30 Pages

Structural and Cultural Factors

The government officials and advisers who developed Russia's economic reform strategy failed, most fundamentally, in not adequately recognizing that radical economic reform is not just about economics---that market transactions take place in political, organizational, and cultural contexts that are relatively enduring. Far from being extraneous to economic relations, these factors importantly shape the economic sphere and constrain actions within it. For example, structural arrangements that influence work relations, and therefore motivation and productivity, must be understood if economic improvement is to be realized through reform, and the developmental basis of ongoing

There is nothing novel about our emphasis on the embeddedness of economic relations in a larger network of political and social arrangements, as is illustrated in the 1992 World Bank Country Study cited above. The fundamental importance of these interrelationships is well established in the literatures of comparative political and cultural studies and organizational analysis. Structural and cultural dimensions of a nation are critically important to the operation of its economic sphere, this literature indicates, and must be taken into account if programs aimed at restructuring complex and long-standing economies are to be viable. In mainstream economics, also, this perspective has achieved increasing acceptance. We will elaborate on these points below.