Business and Economics
Belarussian business was one of the cornerstones of the Soviet economy, and clear traces of the central planning of the Soviet period are still evident. During the Soviet period, Belarus’s production and income levels per capita were higher than the all-union average. Nominal control of business was divided between Moscow (production of all-union importance) and Minsk (production of local importance). As an unusually large part of the industry was of strategic importance, Moscow’s control was extensive.
Initially, this meant greater opportunities for local decision-making power over the available production apparatus. However, few of the former Soviet republics have been so reluctant to cut ties with the Russian Federation. The high degree of integration with the Russian Federation even after the dissolution of the Soviet Union contributed to an unstable macroeconomic situation. High inflation despite extensive price controls, trade and current account deficits, a rapidly growing foreign debt and falling production levels have characterized the independent Belarus.
In other respects, too, attempts to reform the economy have been slow. Early goals such as price liberalization, deregulation and privatization have come into conflict with the industrial policy pursued, which promises support to priority sectors.
However, during the early years of the 1990s, the country’s economy showed some growth, mainly due to subsidized prices of imported oil and gas from the Russian Federation. As the Russian Federation began to raise the price of oil and gas, the growth rate slowed down. By the time the international financial crisis reached the country, the economy was hit hard and Belarus has been forced to apply for loans from the Russian Federation and the IMF. During the 2010s, the economic crisis worsened and the country was once again forced to apply for loans from the Russian Federation and also sought credit from Chinese banks. The problems of the Russian economy in 2014 further spread the Belarusian problems. During the 2000s, the country was forced into several devaluations.
As in most previously centrally planned economies, the primary sector plays a greater role in the Belarusian economy than is customary in industrialized countries. Agriculture, which was still organized in 1993 in 688 state and 1,825 collective farms, has slowly begun to transform in the direction of more decentralized and smaller farming units. The privately owned farms are still few, but despite this, the private sector accounts for a large part of the cultivation mainly of vegetables, fruits and potatoes. This is partly because many of the agricultural employees have the opportunity to grow for their own part alongside. A significant part of the acquisition and marketing organization has remained unchanged, and pricing for the more important crops is still partly done on administrative grounds.
About 45 percent of Belarus territory is said to be suitable for agriculture. Most of this area, or 7.4 million ha, is allocated for arable land. The dominant crops are cereals, mainly wheat and rye, as well as potatoes. Other crops that are grown to a significant extent are sugar beets, vegetables, fruits and flax. Livestock management has about 1/5 of the agricultural land, mainly in the form of natural pastures or for the cultivation of grassland. Cattle, pigs and sheep are the most important animal species, and animal production is mainly focused on meat and milk products.
Belarus was severely affected by the Chernobyl disaster in 1986. Large areas of cultivated land are still in decline due to radiation.
The forest is one of Belarus’s largest natural resources. About 34 percent of the country’s area is covered by forest. In addition to the dominant pine forest, there are also economically interesting stocks of oak, elm, maple and beech. In total, just over 7 million m 3 is harvested per year for both the paper and pulp industry and the sawmill industry. High harvesting combined with replanting and widespread destruction during the Second World War has made the population relatively young. Most of the forest is owned by the state.
Belarus is poor in extractable raw materials. This also applies to fossil fuels, where the country is largely dependent on imports. However, small deposits of oil and natural gas exist. The oil is mainly extracted in the southern part of the country, near the cities of Mazyr and Hrodna, but smaller deposits are also found in the north at Navapolatsk. Belarus also has large peat assets, which is broken on a significant scale for energy purposes.
Oil production is dominated by the refining of crude oil, mainly from domestic and Russian sources. Due to disputes with the Russian Federation regarding prices and tariffs on imported Russian crude oil, Belarus began to import from more remote regions such as Venezuela and Azerbaijan via ports in Estonia, Latvia and Ukraine in 2010.
Of the mineral, only the potassium carbonate deposits, in the Salihorsk region among others, are significant and correspond to about 1/6 of world production. Otherwise there are breakable deposits of rock salt; production is also carried out as a residual product of potassium carbonate extraction.
Belarus is an important transit country for oil and gas from the Russian Federation to Western Europe and also has a significant oil refining industry. About 90 percent of the country’s energy needs are covered by imports of oil and gas, mainly from the Russian Federation. Until 2007, the Russian Federation granted large subsidies on these supplies, but since then the subsidies have decreased, which has had major negative consequences for the Belarus economy. Since 2010, therefore, imports have also been made of crude oil from other regions.
Domestic energy production, about 10 percent of imports, consists of oil, biofuels, peat and natural gas. Almost 40 percent of the total energy supply is exported. Electricity is produced almost exclusively from natural gas, and it is heavily subsidized for household consumption. The share of renewable energy of the total supply is about 7 percent (2009).
When the Chernobyl accident occurred in Ukraine in 1986, a build-up of nuclear energy in Belarus was underway. However, work on the two planned facilities, of which the first is located about 30 km south of Minsk, was discontinued in 1990 with reference to public opinion. As a result of the increased cost of energy imports, Belarus has long-standing plans to resume the nuclear program.
During the period 2011-20, the intention is to reduce the need for energy imports from the Russian Federation. If fully implemented, the Russian natural gas demand will decrease from over 80 percent (2009) to about 55 percent of the total energy supply. Currently (2012), the construction of two nuclear reactors at Ostrovets with production start around 2020 is being prepared, based on Russian financing and technology.
During the Soviet period, the relatively high degree of industrialization, combined with the lack of important sources of raw materials, meant that Belarus was very dependent on other republics within the Soviet Union. Most of the industry, including important industries such as machine manufacturing and electronics, was also controlled by Moscow ministries. During the Soviet period, the large importation of fossil fuels at low prices meant that the Belarusian industry was heavily subsidized. As prices have risen to levels more in line with the world market, many companies have encountered difficulties.
The heavy engineering industry, to which both the civilian and defense-related electronics industries are attributed, still accounts for almost half of total employment. The industry, which is preferably located in Minsk and the country’s other major cities, is largely horizontally integrated with large units as a result.
The chemical industry is also built around large plants, in some cases in connection with the country’s two refineries in Navapolatsk and Mazyr. In addition to heavier oils and other relatively low-value petroleum products, fertilizers and standardized basic chemicals are the industry’s main products. The process industry in general mainly utilizes the country’s forest assets; the paper and pulp mills are just as important from the employment point of view as the chemical industry.
In addition to the engineering industry, the production of textiles and clothing, as well as leather and shoes is the country’s most important industry. Apart from food, the light industry is otherwise neglected. Some manufacturing of consumer capital goods, such as white goods and home electronics, occurs but is difficult to assert against foreign products. Not infrequently, Belarus’s defense industry has accounted for a significant portion of the total production of such products. Nevertheless, the conversion from production of military equipment to civilian production has proved difficult to implement.
Belarus’s foreign trade is largely done with the Russian Federation, Ukraine, EU countries and China. Until 1994, there were extensive import and export controls. Harmonization with Russian legislation and the tariff structure has since taken place. Mainly, machinery, vehicles and chemicals are exported, while the main import goods are oil, gas and metals.
- COUNTRYAAH: Find major trading partners of Belarus, including major exports and major imports with latest trade value and market share as well as growth rate.
The effects in the country’s southeastern part of the Chernobyl accident and accusations of human rights abuses have meant that tourism has declined since the mid-1980s. Still, it is a hospitable, beautiful and interesting country on the everyday level, whose cultural heritage testifies to the ties to Poland. This is less true for Minsk, whose cold power architecture and desolate parade streets are reminiscent of the Soviet era, and more for the countryside where country roads lead through a rolling green landscape with many forests and thousands of lakes.
In the eastern part of the country, cities and architecture have been influenced by the influence from the east. Polatsk has a stately cathedral and the center preserves an old-fashioned small-town feel. A visit to the Chagall Museum in the artist’s birthplace of Vitsebsk will be memorable. South-west of Minsk are two of the most interesting buildings of the Polish High nobility – the enormous 16th-century brick castle in Mir and the 16th-century Nesvizh castle in Italian style.
- According to AllCityPopulation, the capital city of Belarus is Decrease with a population of 1,800,000 (estimate 2009). Other major cities include Gomel with a population of 476,000, Mogilev with a population of 368,000, Vitebsk with a population of 342,000, Grodno with a population of 327,000, Brest with a population of 310,000 (estimate 2009)
Both are listed on UNESCO’s World Heritage List. In Hrodna, which was one of Poland’s three capitals, there is a 14th-century castle whose museum clarifies the character of Belarusian folk culture as well as the classic royal palace from the mid-18th century. The city also has a well-developed music and theater life.