ABSTRACT

Mikhail Gorbachev's dramatic foreign policy initiatives are bearing fruit for the Soviet economy in the form of a significant reduction in the burden of defense. Gorbachev himself has undergone a fantastic learning experience in economic perestroika. In its first five years, economic perestroika failed to make much progress toward any of these goals; instead, it has left the country in the throes of three major crises-a disintegrating consumer market, a disrupted investment process, and a massive budget deficit. Five years of perestroika have ended with the consumer market in massive disarray. The first major blow to the consumer market was the antidrinking campaign launched in May 1985. A second major blow to the consumer market came from the government's decision to reduce imports of consumer goods in response to shortfalls in hard currency earnings resulting from the fall in the world market price of oil.