The truth of Russian economic reform

This study continues the issue of Russian economic reform in the study by Quast and Locatelli (1997) and extends the same reform in many aspects. In this article, in-depth study is also made in the reform strategies (vertical and horizontal integration and diversity) and the business performance of Gazprom, Russia´s natural gas company, as Russian had tried to save its domestic political and economic problems by means of the organizational reform (privatization) of Gazprom since 1993. Such study discovers that Gazprom had been truly a private corporation before 2005, however, it became practically a state-run business since 2005. This article further discloses that Gazprom´s business performance after the reform did not come from the corporate organizational reform, but rather resulted from the increase of natural gas price and was irrelevant to the production capacity. Data in many aspects, such as the adoption of privatization, LNG, sole proprietorship, merger and the strategy of market diversification, are used in this study to sustain Gazprom´s business performance after reform; however, it is believed that the key factor of these changes was whether Russia´s ruling party could really transform a state-run business into a private enterprise, as, otherwise, any economic reform would be a transient happening for Russian economy.