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Perestroika was one of the policies introduced to the Soviet Union by Mikhail Gorbachev in 1985. Perestroika was used to mean 'economic restructuring'. Gorbachev realised the Soviet Union economy was failing and felt the communist system did not need to be replaced, but certainly needed to be reformed, and this would be done by the process of perestroika. A key part of perestroika was to reduce the amount of money being spent on defense, and to do this Gorbachev felt the Soviet Union should:

In contrast to economic reforms in China, perestroika is widely regarded to have failed in its original goal of restructuring the Soviet economy. The reasons for its failure have been examined by many economists and historians, including Merle Goldberg. Among the reasons cited for perestroika's failure was the inability to promote new private or semi-private economic entities and the unwillingness of Gorbachev to reform Soviet agriculture. Unlike the Deng Xiaoping reforms in China, perestroika not only failed to bring immediate economic benefits to most people, but the dismantling of the planned economy created economic chaos which was a large factor in the collapse of the Soviet Union.

See also glasnost.

Further Reading