Russia

Light Industry

The most important branch of light industry is cotton textiles, which has production centers in Ivanovo, Kostroma, Yaroslavl', and about two dozen smaller cities between the Volga and Oka rivers east of Moscow. The economic slump of the 1990s had a dramatic effect on textile production and other light industries. In 1995 Russia's light industry suffered the sharpest drop in production of all economic sectors, slumping by an estimated 25 to 30 percent compared with the previous year. Prices for light-industry goods increased by an average of 2.9 times in 1995 after having increased by 5.6 times in 1994.

Unemployment in Russia's textile production centers has been among the highest in the country. In early 1996, an estimated 70 percent of workers in the industry were on furlough or working part-time. The chief cause is the Russian consumers' decline in personal income, hence in demand. In the mid-1990s, consumers purchased most of their textile products at flea markets, which offered both a wider variety of merchandise and cheaper prices than most stores. By the end of 1995, orders for all types of light-industrial production were 48 percent of the average for the previous years. Production declined by 20 percent in fabrics, 21 percent in leather shoes, and 44 percent in knitted goods, but stocks of finished products grew because demand decreased at a faster rate.

The high price of cotton also has hampered the textile industry, which had been accustomed to paying low prices for its raw material when the major suppliers in Central Asia were part of the Soviet economic system. Although their cotton is not of high quality, Central Asian sellers now charge world market prices. (Cotton from the "far abroad," outside the former Soviet Union, is even more expensive, however.) In 1996 industry experts expect some improvement because of expanding export markets in Europe and new investment in light industry by Russia's banks. They also expect an increase in domestic shoe manufacturing in the 1990s because the high import duties on foreign shoes make them twice as expensive as Russian shoes--although in 1996 some 65 percent of shoes sold in Russia were imported. The former member countries of the Council for Mutual Economic Assistance (Comecon--see Glossary) were the chief source of such goods.