Price liberalization

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In a market economy, a concept such as price liberalization.This phrase means that the state sets on the market free of price limits, thereby encouraging entrepreneurial activity.The process of such pricing flexibility gives the whole economic system as a whole and lead to increased production.As a result, increased competition in the market, manufacturers have come up with new interesting ideas and improve the quality of goods.In other words, the liberalization of the prices leads to the state system of free pricing.This is due to the fact that the government in this case may be partially or completely absolve themselves of responsibility for direct regulation of prices.

Here's how, for example, looks like the liberalization of prices in the United States.In this country, prices for dairy products are regulated by Congress, that only sets the optimum price limits.If the prices of dairy products are below it, the state is buying all these items, send them to the export or charity.

In the planned economy, which is characterized by tight control over all value (set it above), price liberalization is a must.That it allows capital to move freely in the economy and the market of goods and services to become more mobile.Furthermore, the correctness of the price liberalization to reduce the level of bureaucracy in the economy and empower the inflow of investment funds and enter the international market.

Price liberalization today is known in two versions.The first option is inherent in the countries of Eastern Europe and Russia, is the method of "shock therapy".It is known to many who lived through the excitement in 1992.

second option, the softer it is called - "progressive liberalization".It is this system of transition to free pricing adopted by most developed European countries.By the way, because at one time developed and Vietnam, and China, in 1973 - 1986 years - France, and after the Second World War and the countries of Western Europe.

As for our country, the liberalization of prices in Russia took place in the first months of 1992.It was then freed from state regulation of its prices for all products, except for milk, bread, and tickets for public transport.It issued a decree on free trade.Every citizen could move their money into foreign currency.In addition, the share of imports of goods produced in Russia.It should be noted that the liberalization of prices in Russia went lightly and swiftly.So that by the March 1992 policy and population experienced the full method of "shock therapy" - there was hyperinflation 2,600%.All this has led to the depreciation of money, including those that were many Russian citizens' bank accounts.

authorities had to introduce coupons for many of the goods and give them to the Russians, and businesses - to issue loans.Since working capital in the factories is no longer enough, began to occur salary delays.By the way, the salary is also impaired.But unemployment rose sharply delineated the difference between rich and poor segments of society.Undoubtedly, "Gaidar" reforms have paid off.

now there were no shortages of goods, but prices have risen 30-fold, but the income of the population for the year declined by nearly 50%.Particularly hard hit by the reform of state employees and retirees.Now, many analysts say that the error at the time of the monetary reform lies in the fact that the politicians thoughtlessly realized a theoretical recommendations of monetarists, not taking into account the specifics of the Russian economy.