ighetti, 1993); and at the end of 1996 it was over 5,000. That translates into an annual inflation rate of more than 350%. Many business owners were, and still are, unwilling to accept rubles, preferring the more stable American and European currencies. (Famighetti, 1996) The I.M.F. study also addressed the problem of Russia's deficit, suggesting cuts in price subsidies and low-priority expenditures, such as administration. The Russian government set a target deficit of 2 1/2 to 3 percent of the gross domestic product. (Brendenkamp) This level has not been reached yet (Famighetti, 1996), but progress is being made. (Brendenkamp) Research and development in technology are nearly nonexistent in most private corporations in Russia. Many entrepreneurs who are independent of the government but do not own the corporations are unwilling to risk their capital in product development. Such attitudes are making technological modernization nearly impossible. Many companies spend 50% or more of their gross income repairing worn or broken machinery. (Yavlinsky) Crime is another factor which is preventing many individuals from starting businesses. With the poor economic conditions in the Russian Federation, many people have turned to crime to support themselves. During some periods, the property crime rate has increased by 20% per week. In such an environment, many individuals are hesitant of investing in a company for fear it will be burglarized. (Yavlinsky) Russia began its transition with a definite, if vague, plan for reform. Government leaders proposed a liberalization of the economy and financial stabilization. (Yavlinsky) Also, the military industry of the Soviet Union is turning toward civilian production. (Nelan) Liberalization of the economy is the process of removing price controls and restrictions on private ownership. A tremendous gain has been registered in that field. (Yavlinsky) As of the 1996 election in Russia, more than 70% of busin...
