The Russian Crisis of 1998: Was It a Result of a “Shock Therapy”?

The “openness” promoted by the liberalisation process referred, ironically, to the openness to the financial crises in developing world in the 1990s. Russian case was the leading one among them, in which the “shock therapy” implemented by the neo-liberal perspective has been still under discussion. The paper analyzes and discusses such crisis in terms of the relevant models of crisis. The paper maintains that contrary to the general view shaped by neo-liberal perspective, the Russian Crisis has several compounds, which cannot be easily tackled in terms of either first or second generation models, rather points to the third generation models. Since the third generation models can be handled as a combination of theories such as financial market failures, highly volatile capital flows and contagion problems the paper finds out that those are the most appropriate ones for the Russian case contrary to the neoliberal perspective.