Coupled with huge military spending during the cold war arms race, Reagan’s strategy resulted in the complete depletion of the Russian hard currency reserves and the beginning of its economic problems. In an attempt to reform USSR, Gorbachev introduced the policy of Perestroika which sought to combine free market concepts with a centrally controlled economy. Unfortunately, the policies lead to further economic hardship characterized by high inflation and widespread shortages of consumer goods. This was particularly attributed to the fact that the attempts by Michael Gorbachev to carry out economic reform in the Soviet Union were not sufficiently radical enough to restart the collapsing economy of the union in the late 1980s. For example, although to some extent the reforms resulted in the decentralization of Russian economy, the fundamental elements of the previous Stalinist system such as government monopoly over property ownership and price controls. Consequently, the people became even more disillusioned with Gorbachev’s Soviet system.Additionally, the underperformance of the economy of the Soviet Union under the policy of perestroika eventually forced Gorbachev’s government to initiate several spending cuts and the USSR could no longer afford to keep its famous Red army divisions across the Eastern Europe. The similarities between the current situation in the US and the former Gorbachevs USSR.
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