Handbook of Eurasian Political Economy

HANDBOOK  
OF EURASIAN
POLITICAL ECONOMY
Edited by Alexander Bulatov and Egor Pak
Moscow
2022

УДК	338
ББК	
65.01 
Published with support 
of the Priority 2030 Strategic Academic Leadership Programme
РЕ Ц Е Н ЗЕ Н Т Ы 
 Доктор экономических наук, профессор, декан  
экономического факультета и зав. кафедрой международных 
экономических отношений РУДН И. В. Андронова.
Доктор экономических наук, доцент,  
зав. кафедрой мировой экономики РГГУ Е. В. Зенкина
	
	
Handbook of Eurasian Political Economy / Edited by Alexander 
Bulatov and Egor Pak. Moscow: Aspect Press Ltd., 2022. — 316 p.
ISBN 978-5-7567-1254-4
The handbook summarizes two decades of research conducted at MGIMO 
University and its partner institutions into the economic and political dynamics unfolding in and between the countries of post-Soviet Eurasia. The ability of post-Soviet Eurasian states to reap benefits from economic interdependence and internationalization was limited by the peculiarities of their systems 
of political and economic governance. The impact of politics on business, 
trade, and finance in post-Soviet Eurasia is at the focus of this handbook.
УДК 338
ББК 65.01
© MGIMO University, 2022
ISBN 978-5-7567-1254-4
© Aspect Press Ltd., 2022

Table of Contents
EDITORS’ INTRODUCTION5
PART I. ECONOMIC SYSTEMS AND POLICIES
Chapter 1. Economic System and Policy of Russia
Alexander Bulatov
10
Chapter 2. Economic System and Policy of Kazakhstan
Egor Pak27
Chapter 3. Economic System and Policy of Belarus
Yuri Kvashnin......................................................................................................................43
Chapter 4. Big Business in Ukraine
Yuri Kvashnin......................................................................................................................64
PART II. STATE–BUSINESS RELATIONS IN POST-SOVIET EURASIA
Chapter 5. State and Big Business in Russia
Alexander Bulatov.
............................................................................................................82
Chapter 6. Economic Policy Towards Small  
and Medium Enterprises in Georgia
Kristina Nadashvili and Simon Nadashvili95
Chapter 7. State and Small and Medium Enterprises in Armenia:  
Changing Relations
Marianna Ovakimyan and Sergey Abelyan.......................................................... 115
PART III. EURASIA’S INTERNATIONAL POLITICAL ECONOMY:  
KEY FACTORS
Chapter 8. Political Economy of Foreign Trade in Post-Soviet Eurasia
Andrey Spartak............................................................................................................... 134
Chapter 9. Structural Foundations of Eurasian Regionalism:  
Commonalities and Differences
Irina Bolgova.................................................................................................................... 161
3

TABLE OF CONTENTS
Chapter 10. Integration Trends in Post-Soviet Eurasia:  
Political Economy Aspects
Galina Kostyunina.......................................................................................................... 176
Chapter 11. Political Economy of Sanctions
Vladimir Osipov.
.............................................................................................................. 197
Chapter 12. Impact of China’s Belt and Road Initiative  
on Post-Soviet Eurasia
Denis Kalashnikov.......................................................................................................... 212
Chapter 13. Political Economy of Eurasian Energy Sector  
and Its External Relations
Igbal Guliev and Yulia Solovova................................................................................ 230
PART IV. THE SOCIAL DIMENSION OF EURASIAN  
POLITICAL ECONOMY
Chapter 14. Political Economy of State–Society Relations  
in Post-Soviet Central Asia
Denis Elagin...................................................................................................................... 248
Chapter 15. Political Economy of Education  
in Post-Soviet Eurasia
Igor Filkevich.................................................................................................................... 269
Chapter 16. Gender Aspects of Eurasian Political Economy
Sofia Rebrey.
..................................................................................................................... 287
ABOUT THE AUTHORS.
...................................................................................................313

Editors’  
Introduction
T
HIS handbook summarizes two decades of research conducted at 
MGIMO University and its partner institutions into the economic 
and political dynamics unfolding in and between the countries of 
post-Soviet Eurasia. United by post-Soviet legacies in political governance 
and business practices, these countries have pursued two major policy 
tracks in their mutual relations: maximizing benefits from economic interactions within post-Soviet Eurasia while diversifying trade counterparts 
and flows in search for markets and sources of investment far beyond their 
geographic regions. The ability of post-Soviet Eurasian states to reap benefits from economic interdependence and internationalization was limited by 
the peculiarities of their systems of political and economic governance. The 
impact of politics on business, trade, and finance in post-Soviet Eurasia is at 
the focus of this handbook.
As of late 2022, the security landscape in Eurasia is undergoing rapid 
change with hardly unpredictable outcomes. The national economies of 
post-Soviet Eurasian countries as well as the modes of their interaction are 
being strongly affected. It may take several years for an equilibrium to be 
attained and for new trends to set in. The handbook, therefore, cannot serve 
as a guide to the future of Eurasian political economy. We believe, however, 
that it goes a long way towards exploring the political drivers of economic 
development and interactions across post-Soviet Eurasia since the start of 
the new millennium. Many of the patterns described in the handbook are 
likely to persist beyond 2022, while some will be upended during the turbulent transition to a new regional political and economic order.
The handbook consists of 16 chapters dissecting the economic systems 
and policies of the largest post-Soviet republics in Eastern Europe, South 
Caucasus, and Central Asia, analyzing the patterns of relations between the 
governments and the private sector, economic integration issues, and trade 
flows — as they were impacted by conflicts, economic sanctions, and other 
political controversies over the decade since 2014.
5


 EDITORS’ INTRODUCTION
Part I of the Handbook focuses on the economic systems and polices  
of the largest post-Soviet Eurasian states.
Alexander Bulatov introduces the economic system of Russia and 
discusses the rationales, drivers, and principles underlying the key directions of Russian economic policy. He explains how and why the state in 
Russia came to dominate business activity both at the level of large corporations and small and medium-size enterprises.
Egor Pak analyzes the structure of Kazakhstan’s economy in a comparative perspective. He argues that Astana’s effort to diversify the national 
economy away from hydrocarbons over the last decade has only been 
partially successful. He predicts mounting challenges for Kazakhstan post2022 in maintaining a balance between economic engagement with Russia, 
on one hand, and the West and China, on the other.
Yuri Kvashnin explores the economic systems of Ukraine and Belarus. 
He explains the role that powerful competing business groups played in 
Ukrainian politics before 2022 and compares the whole gamut of perspectives on the evolution and current state of Belarus’ economy — from those 
emphasizing its lack of viability to those praising the country’s economic 
governance as ingenious and corresponding fully to the country’s geopolitical predicament.
The chapters of Part II analyze the patterns of state-business relations  
in post-Soviet Eurasia.
Alexander Bulatov argues that in Russia relations between state and big 
business have been unequal because the state has been reserving the role 
of a senior partner while treating the big businesses is junior partners. That 
said, the group of junior economic partners of the state has been heterogeneous and has included not only private, but also state and quasi-stateowned (parastatal) enterprises.
Kristina Nadashvili and Simon Nadashvili describe the main measures 
undertaken by the government of Georgia to support small and medium-sized enterprises. A free and competitive economy cannot exist without 
strong small and medium-sized businesses, that is why supporting them 
has been one of the Georgian government’s longstanding priorities. Some 
of the measures have had spectacular success, as illustrated by the case of 
a Georgian winemaking company.
6

EDITORS’ INTRODUCTION
Marianna Ovakimyan and Sergey Abelyan look at the evolution of the 
government regulation of micro, small, and medium-sized enterprises in 
Armenia. She also traces the ongoing change in the structure of such businesses in the country.
Part III provides conceptual perspectives on a variety of key factors shaping 
economic interactions within post-Soviet Eurasia.
Andrey Spartak provides a quantitative and qualitative overview of the 
political economy of foreign trade in post-Soviet Eurasia by comparing 
intra-regional and cross-regional flows. Foreign trade flows are said to be 
the cornerstone of the initial capital accumulation in the region, perpetuating a resource-oriented structure of the economy. Spartak argues that 
the preferential trade arrangements that exist with the Commonwealth of 
Independent States (CIS) and the Shanghai Cooperation Organization (SCO) 
may cushion the blow to the Russian economy dealt by the new round of 
economic sanctions in 2022.
Irina Bolgova examines domestic and international sources of the 
remaining economic interdependence and regionalism in parts of Eurasia.
Galina Kostyunina looks to enrich the theoretical discourse on the 
nature and motive forces of post-Soviet integration. She considers the 
Eurasian Economic Union (EAEU) as a breakthrough integration format 
that has brought tangible economic results to its founders. However, diverging geopolitical agendas, low levels of economic interdependence, and 
sovereignty concerns remain the key persistent hurdles to deepening and 
expanding the EAEU.
Vladimir Osipov investigates the political economy of sanctions 
in post-Soviet Eurasia. He argues that, from an historical perspective, 
economic sanctions in general and against Russia in particular have been 
a tool of protectionism while contributing little to international peace and 
security.
Denis Kalashnikov discusses the implications of China’s Belt and Road 
Initiative (BRI) for the post-Soviet Eurasian economies. Beijing’s geoeconomics ambition is to establish China as a powerful economic force in 
Central Asia — sidelining Russia and the West. Nonetheless, the author 
concludes that Russia may still be able to offer a viable economic development policy alternative to China to some post-Soviet Eurasian states — 
should Russia’s own economic policy undergo a massive overhaul.
7


 EDITORS’ INTRODUCTION
Igbal Guliev and Yulia Solovova focus on the energy dimension of the 
political economy of resource-abundant post-Soviet countries — Russia, 
Azerbaijan, Kazakhstan, and Turkmenistan. The authors admit that a global 
green energy transition would generate risks to these countries’ prosperity. However, each state in one way or another is already embarking on 
a low-carbon path.
Part IV discusses important social issues arising from the peculiarities  
of the post-Soviet Eurasian political economy.
Denis Elagin explores the political economy of state-society relations 
in post-Soviet Central Asia. In particular, his chapter looks at the impact of 
political institutions, social policy, inter-ethnic relations, and international 
migration. The chapter also addresses the role political repression which 
is widespread in the region and serves to political eliminate checks and 
balances constraints and ensure a semblance of political stability.
Igor Filkevich examines the post-Soviet trends in education in post-Soviet Eurasia. While the СIS countries have been successfully consolidating 
national educational systems and ensuring their responsiveness to the 
government preferences, some key common legacies of these systems 
appear to have persisted.
Sofia Rebrey explains why gender is an essential part of post-Soviet 
Eurasian political economy by looking at the interconnections between 
gender inequality and economic development. Her chapter recommends 
consistent gender equality policy to address important challenges posed by 
the ongoing geopolitical crisis.
To sum up, this handbook’s holistic, albeit critical, findings might be of 
help to a broad audience of academics and policymakers who are looking 
for comparative analyses of the key aspects, trends, ideals, and realities of 
the political economy of post-Soviet Eurasia. This handbook is also recommended to graduate students of economics, politics, and management who 
explore post-Soviet Eurasia for cases to support their research projects.

Part I
ECONOMIC SYSTEMS 
 
AND POLICIES

Chapter 1
Economic System  
and Policy of Russia
Alexander Bulatov
T
HIS chapter examines the foundations of Russia’s economic system 
and its economic policy. An attempt is made to use a methodological 
approach to identify Russia’s specific features in comparison with the 
economic systems of developed countries and the rest of the post-Soviet 
Eurasia. The main directions of Russia’s economic policy are also analyzed. 
Finally, a medium-term forecast of the evolution of the country’s economic 
system and its economic policy is presented.
Economic System of Russia: Methodological Aspects
When analyzing the national economic system (national economic 
model), first of all, its specifics are identified that distinguish a given country 
from states, primarily neighbors, with a similar level of development. In this 
process special attention is paid to the ratio of forms of ownership in the 
country and the degree of independence of its economic agents [Baumol et 
al.2007; Hall, Soskice 2001), as well as the impact on the country’s economic 
system of its political, social and cultural systems, most notably the institutions that form these systems [Shaw et al. 2019].
Different sets of indicators can be used to analyze a country’s economic 
system by independently selecting them from national and international 
statistics. Among ready-made sets of indicators, probably one of the best 
is included in the annual Global Competitiveness Report by the international non-governmental organization World Economic Forum (WEF). 
The report is based on national statistics and surveys of local entrepreneurs in most countries of the world. It is aimed at assessment of the 
Global Competitiveness Index presented in points, but a large number 
and representativeness of indicators (over 100) included in this index 
and grouped in 12 sub-indices, enables to reveal the specific features 
of national economic systems. Let us illustrate this by the example of 
10