Command Economy In Belarus: A Comprehensive Overview

Belarus has a mixed economy, combining elements of a market economy and a planned economy. It is an upper-middle-income economy, with a focus on full employment and a dominant public sector.

Since the collapse of the Soviet Union in 1991, Belarus has retained a largely non-market economy, eschewing privatisation efforts in favour of centralised political and economic controls by the state. Belarus has been described as a welfare state or market socialist.

The Belarusian economy is heavily reliant on exports, with a well-developed manufacturing industry, services sector and agriculture. The country has maintained government control over key industries, with the state determining the production and distribution of certain goods and services.

However, the Belarusian economy has evolved since the post-Soviet period, moving from a quasi-Soviet system based on state property, state planning, support for inefficient enterprises and the massive redistribution of funds, to a more flexible hybrid model.

Belarus's economy is a mix of market and planned systems

Belarus has a mixed economy, combining elements of a market economy and a planned economy. It has a private sector, where individuals and businesses make autonomous decisions based on self-interest, and a public sector, where the state determines the production and distribution of certain goods and services.

The country's economy is dominated by the state, with the public sector producing over 48% of the gross value and employing over 57% of the labour force. The private sector, on the other hand, is mainly concentrated in services and the information industry, such as retail, public catering, consulting, advertising, and computer programming. Foreign direct investment forms a tiny part of the economy, with foreign-owned companies contributing only 3.5% of the gross value.

Since gaining independence in 1991, Belarus has retained a largely non-market economic system, maintaining government control over key industries and rejecting most privatisation efforts. The highly centralised Belarusian economy emphasises full employment and a dominant public sector, with the state controlling key industries such as manufacturing, services, and agriculture. The country has a well-developed manufacturing industry and is the world's 74th-largest economy by GDP.

While Belarus has made some attempts to introduce market mechanisms, the economy remains heavily dominated by the state. The state plays a significant role in the enterprise sector, with the government and local executives performing ownership functions and influencing the production process. The country has a rigid planning system, with the Council of Ministers adopting long-term and mid-term plans for social and economic development. The state also provides various forms of support to loss-making state-owned enterprises, such as subsidised credits and preferential treatment during public procurement contracts.

Overall, Belarus's mixed economy is a result of the country's unique historical context, political system, and economic priorities. The balance between the market and planned elements allows the country to pursue its economic goals while maintaining state control over key sectors.

The country ranks 135th on the 2022 Index of Economic Freedom

Belarus has a highly centralised, mixed economy, with a dominant public sector. It is described as a welfare state or market socialist. Since the collapse of the Soviet Union in 1991, Belarus has retained a largely non-market economic system, with centralised political and economic controls by the state. The country ranks 153rd out of 178 countries on the 2015 Index of Economic Freedom (IEF), compiled by the Heritage Foundation. This ranking places Belarus among the 'repressed' economies.

The IEF takes into account ten components, grouped into four broad categories: Rule of Law, Limited Government, Regulatory Efficiency, and Open Markets. The overall economic freedom is scored on a scale of 0 to 100, with 100 representing the maximum freedom. Belarus scored 48 index points in 2024, a decline from 51 in 2023. The world average is 59 index points.

Belarus's economy has been characterised by slow market reforms and extensive price controls. The private sector's share of Belarusian GDP was estimated at only 30% in 2010, and it is subject to various administrative restrictions. Meanwhile, state-owned enterprises must meet mandatory production targets and their managers face criminal prosecution if they fail to do so.

The Belarusian economy has also been marked by high inflation, frequent devaluations of the national currency, and a high investment rate, with most investment coming from state-owned enterprises or government programmes. The country has suffered from chronic macroeconomic disequilibria, including high inflation, current account deficits, and fiscal and quasi-fiscal imbalances.

The Belarusian labour market is highly regulated, with important elements of the central planning system still in place. While firms nominally determine wages, the government can influence wage structures through a centrally determined wage grid called the tariff system.

The country's economic model has been described as the last enclave of the non-market economy in Europe. The slow pace of market reforms and the retention of centralised controls have led to a decline in economic growth since 2011. Belarus now faces the challenge of implementing far-reaching market-oriented economic reforms and macroeconomic stabilisation.

Belarus is categorised as Not Free on the 2022 Freedom House index

Belarus is categorised as 'Not Free' in the 2022 Freedom House index, with a rating of 153 out of 180 countries for press freedom. The country is deemed an authoritarian state, with elections being openly rigged and civil liberties severely restricted. Security forces have violently assaulted and arbitrarily detained journalists and ordinary citizens who challenge the regime.

The judiciary and other institutions lack independence and provide no check on the power of the authoritarian government. The government has stifled civil society voices that have demanded democracy, with arbitrary arrests, politically motivated prosecutions, surveillance, censorship, and intimidation becoming the new reality.

The political and human rights crisis in Belarus worsened in 2023, with the authorities stifling civil society voices and demands for democracy. Under the authoritarian rule of President Alyaksandr Lukashenka, arbitrary arrests, politically motivated prosecutions, surveillance, censorship, and intimidation have become commonplace.

The government has also targeted human rights or humanitarian organisations, preventing them from visiting political prisoners and observing detention conditions. The government has also denied the existence of political prisoners, despite evidence to the contrary.

Public sector employees make up 39.3% of the total workforce

Belarus has a mixed economy, combining elements of a market economy and a planned economy. The country's economy is composed of a private sector, where individuals and businesses make autonomous decisions based on self-interest, and a public sector, where the state determines the production and distribution of certain goods and services. The public sector makes up a significant portion of the Belarusian economy, with public sector employees accounting for 39.3% of the total workforce as of 2015. This indicates a relatively large role for the state in the country's economic system.

The size of the public sector in Belarus has evolved over time. Since gaining independence in 1991, the country has shifted away from a purely planned economy, introducing market-based reforms. However, the pace of these reforms has been slow, and the country has retained centralised political and economic controls, with the state remaining dominant in key industries. The public sector continues to play a crucial role in areas such as manufacturing, services, and agriculture, which are major contributors to the country's economic growth.

The public sector in Belarus is characterised by a high degree of centralisation and state control. This includes state ownership of key enterprises, administrative price controls, and support for inefficient state-owned enterprises. While there have been some efforts towards privatisation and market liberalisation, these have often been limited or reversed. The state's role in the economy is further reinforced by the country's political regime, which maintains tight control over economic activities.

The large public sector in Belarus can be attributed to various factors, including the country's political and economic history, as well as the desire to maintain full employment and a welfare state. The public sector provides essential services such as healthcare and education, contributing to the country's high human development index ranking. However, it also faces challenges, such as inefficiency and a lack of innovation, which have impacted the country's economic growth and competitiveness.

The country's biggest company, Naftan, is a mix of private and public ownership

Belarus has a largely non-market economy, with the state retaining centralised political and economic controls and eschewing privatisation efforts. The country's economy is highly centralised and emphasises full employment and a dominant public sector.

The country's biggest company, Naftan, is an example of the mix of private and public ownership in Belarus. Naftan is a large petrochemical complex that produces various types of fuel, lubricating oils, bitumen, aromatic hydrocarbons, and petrochemical products. It was put into operation in 1963 and received the first Belarusian gasoline. The company produces more than 70 products, including oils, gasolines, and diesel.

Naftan is a Belarusian state-owned oil refinery located in Novopolotsk in the Vitebsk Region. It is one of two oil refineries in the country. In 2017, Naftan processed 8.3 million tons of crude oil, producing 2.8 million tons of diesel fuel, 2.1 million tons of fuel oil, 0.8 million tons of gasoline, and other products. 40.5% of its production was sold in Belarus, while the remaining 59.5% was sold in other countries, including Russia, Ukraine, Latvia, Lithuania, the Netherlands, and the United Kingdom.

While Naftan is majority-owned by the state (99.83% as of 2017), it has also undergone privatisation efforts. In 2002, the Republican Unitary Enterprise Novopolotsk Production Association "Naftan" was transformed into an open joint-stock company. This privatisation effort allowed for private ownership of a portion of the company, with the remaining shares held by the state.

Naftan's mix of private and public ownership reflects the complex nature of Belarus's economy, which, while largely non-market, has also undergone some market reforms and privatisation efforts. The country's economic model has been described as a welfare state or market socialist, and it has been ranked as an upper-middle-income mixed economy.

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