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. Last Updated: 07/27/2016

World Bank Study Backs Market Push

WASHINGTON -- Countries emerging from communist rule can increase their drastically lowered incomes by implementing pro-market policies, strengthening private property and holding down inflation, the World Bank advises.


Its detailed report, "From Plan to Market," covering Russia, China and 26 other countries, was made public Thursday after a year of preparation.


The bank acknowledged that communism had provided a third of the world's people with a degree of economic security.


"Yet the state-dominated economic systems of these countries, weighed down by bureaucratic control and inefficiency, largely prevented markets from functioning and were therefore incapable of sustaining improvements in human welfare," said World Bank President James Wolfensohn in the introduction to the survey.


The report estimated that the income of the average Russian declined by more than 4 percent a year after 1985. In 1994 it was worth about $4,610, compared with more than $25,000 in the United States.


World Bank officials said Russia's decline is now bottoming out, though they provided no precise figures.


"People visiting the country have a sense that the country is growing again," said Michael Bruno, the bank's chief economist. "Growth only starts when inflation gets below 40 percent a year, and we think it's about 30 to 40 percent in Russia now." The International Momentary Fund, the bank's sister organization, said consumer prices rose last year by more than 197 percent.


Variations among the 28 countries listed were huge. Incomes in China, starting from a much lower level, grew by nearly 8 percent a year after 1985, reaching an estimated value of $2,510 in 1984. Last year, prices increased by about 17 percent.


"In most of these countries, including Russia, little progress has been made in the overhaul of social programs," the report said. "Reforms are urgent if deep, intergenerational poverty is not to become institutionalized."