After the fall of the Soviet Union, all former Soviet republics faced a deep economic crisis. Belarus has however chosen its own way of overcoming this crisis. After the 1994 election of Alexander Lukashenko as the first President, he launched the country on the path of "market socialism" as opposed to what Lukashenko considered "wild capitalism" chosen by Russia at that time. In keeping with this policy, administrative controls over prices and currency exchange rates were introduced. Also the state's right to intervene in the management of private enterprise was expanded, but on March 4, 2008, the President issues a decree abolishing the golden share rule in a clear movement to improve its international rating regarding the foreign investment.
As part of the former Soviet Union, Belarus had a relatively well developed industrial base; it retained this industrial base following the break-up of the USSR. The country also has a broad agricultural base and a high education level. Among the former republics of the Soviet Union, it had one of the highest standards of living. But Belarusians now face the difficult challenge of moving from a state-run economy with high priority on military production and heavy industry to a civilian, free-market system.
From 1991–1995, all sectors of the national economy were affected by the profound economic crisis, triggered by the collapse of the Soviet Union. At first, this event triggered the end of traditional economic processes, the sharp drop in the economic capacity of enterprises and of the population of the republics of the former Soviet Union that were key consumers of Belarus products, cessation of financing from the Soviet Union’s military sector which accounted for a considerable share of Belarus’ industry, shocks of price liberalization, and, above all, outpacing growth in prices for raw materials and energy resources. Moreover, Belarus, like the rest of the former Soviet Union republics, was characterized by a general lack of preparedness of the country’s institution and society for the market system of relations. The sharp growth in prices for raw materials and energy resources revealed the technological weakness of the economy with its resource-intensive and low-quality output. At the same time, the weak competitiveness of the local products, legal inter-government restrictions, and absence of marketing and financial management skills prevented the country’s economic entities from making up for the drop in effective demand at the traditional markets through the conquer of new export markets.
Peat, the country's most valuable mineral resource, is used for fuel and fertilizer and in the chemical industry. Belarus also has deposits of clay, sand, chalk, dolomite, phosphorite, and rock and potassium salt. Forests cover about a third of the land, and lumbering is an important sector.
The massive nuclear accident (April 26, 1986) at the Chernobyl nuclear power plant, across the border in Ukraine, had a devastating effect on Belarus; as a result of the radiation release, agriculture in a large part of the country was destroyed, and many villages were abandoned. Resettlement and medical costs were substantial and long-term.
Wages and labour marketcentral-planning system are still in place. In principle, the decision to determine wages is left to firms, but the Government can affect the structure of wages through the so-called tariff system, a type of centrally determined wage grid. The tariff system is binding in the budget sector, including enterprises and organisations mainly financed and subsidised within the state and/or the local budgets. The private (so-called self-financing sector) sector, representing, as already noted, only a small share of employment, has little autonomy.
Official unemployment rate is lower than 1%, but it includes only registered as unemployed. Methods of International Labour Organization (international standard) also include job-seekers who are not registered officially. Many unemployed people in Belarus are trying to avoid registration, because of obligatory public works, while unemployment benefits are very low (~70,000 BYR per month, or less than $10).