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Archive for Friday, June 3, 1994

PROF COULD HELP FORGE NEW RUSSIAN ECONOMY

June 3, 1994

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A KU economics professor may have a hand in formation of the new Russian market system.

A Kansas University economist has been invited to help shape the emergence of a free-market system in the new Russian republic.

Mohamed El-Hodiri is awaiting assurances that a team of economic advisers he would head would have enough autonomy in advising a key committee of the Russian Duma, or parliament. Should the pieces fall into place during the next few weeks, El-Hodiri will become the chief economist for the team counseling Russia's Committee on Budget and Control.

``Russia is going through a total upheaval in the form of its economy and, in fact, new social relationships are being developed,'' he said.

El-Hodiri, who speaks Russian fluently, says the situation there dovetails with his main research focus, which is the study of changing social and economic dynamics. He also is the director for KU's Center for Applied Social Science Research, which is evolving into the Center for Societies in Transition.

The Russian project, which is sponsored by the accounting firm KPMG Peat Marwick under contract with the U.S. State Department's Agency for International Development, would commit El-Hodiri to spending the spring semester in Russia for three years. El-Hodiri, who spent two weeks there last month, also is likely to return for a short stay in August.

In many ways, El-Hodiri said, the Russians are starting from scratch in their task of forging a free-market economy.

``They can't understand the idea that consumers will make up their minds about what to buy,'' he said, explaining that in the former Soviet Union bureaucrats made choices for consumers.

El-Hodiri said the challenge for economic advisers like himself is to guide the Russians, without prescribing to them, as they build an economy that suits their emerging free society. That's difficult, he said, because the Russians want a recipe for capitalism; they don't understand that economists don't dictate but simply describe what's happening in the marketplace.

``The U.S. economy has its own dynamics and institutions,'' El-Hodiri said. Although the Russian economy will be based on private ownership, it won't duplicate the U.S. system.

``What's going to evolve there is not what we have here,'' he said.

El-Hodiri said his primary job is to help the Russians develop the technical resources to provide their own economic guidance. One of his personal goals is to help them develop a system of checks and balances.

``Specifically, what I would like to see for them is the formation of something like the Congressional Budget Office and something like the General Accounting Office,'' he said. ``Without an independent, objective body, it is not going to work.''

In addition to his professorship in economics, El-Hodiri also is on the Russian and East European studies faculty, and is co-director of the KU Institute for Public Policy and Business Research.

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