Toward the privatization of the CIS weapons industry: The ‘collectivist’ option

The Russian military-industrial sector, like the economy generally is undergoing a turbulent transformation. Property rights, institutional arrangements, regulatory mechanisms and procurement demand are in rapid flux. In 1992 weapons production declined drastically, variously estimated between 20 and 67 percent, but arms contracts for 1993 are reported to be double last year's volume. This essay attempts to illuminate key elements of Russia's military-industrial transition by analyzing how property rights, tax and regulatory reforms of the sorts advocated by Alexsandr Isaev and Anatoly Chubais are apt to effect efficiency and military-industrial conversion. It is shown that while collectivist ownership could enhance economic efficiency, despite the usual Ward-Domar effects, Yeltsin's market reforms may not be sufficient to foster large scale military-industrial conversion.