The Pros and Cons of Russia´s Economy Essay

Russia has built a strong, but stagnating economy on several natural resources to include the refinery and export of natural gas and oil. According to the Jim Picht (2014) exportation of natural gas and oil to Eastern Europe account for 70 percent of Russia’s exports and 53 percent of the government’s revenue. Along with exporting oil to Eastern Europe, Russia also exports too many countries to include China and Belarus. Europe fueled majority by Russian supplied natural gas and oil, the dependency of Europe’s need for this natural resource is the reason Russia’s economy is so strong. In 2014, when Russia decided to invade the neighboring country of Ukraine has led Europe to begin searching for other suppliers of their natural resources. If Europe finds other countries to supply the natural resources

Judging by these figures, Russia’s economy wasn’t too dreadful and seemed to be, if anything, improving.

Amid Russian Revolution years there is the chance to watch the Russian economy experiencing a few basic moves, including a portion of the most exceedingly bad things that can happen to a nation. There was war and civil war. The economy endured monetary breaking down, separation, and starvation. There was a breakdown of state limit: government prohibited Vodka.

The Russian state has been characterized by its strong heritage of powerful, autocratic leadership. This domination by small ruling elite has been seen throughout Russia's history and has transferred into its economic history. Throughout the Russian czarist period, to the legacy of seventy years of communism; Russia has been a country marked by strong central state planning, a strict command economy and an overall weak market infrastructure (Goldman, 2003). Self-interest, manipulation and corruption have all been present in the Russian economy, and have greatly helped the few as opposed to the many. To this day, Russia still struggles with creating a competitive and fair market.

As Russia was industrializing, they saw a need for more trade in their economy. Russia only had

Yeltsin grew up in a small community with not much to live off of, so he often said that “I want their lives to improve before my own eyes (Berger).” Yeltsin remembered how he grew up in poverty and he did not want others to live like him, or if they were at the beginning of his presidency, he wanted to change the economy so they were able to achieve more. His perseverance to help the less fortunate is where his idea for the 500 Day Plan to reform the economy stemmed from. There were many goals throughout the plan and, “One of their goals during the first 100 days of the reform plan is to halt inflation (Goldman).” Inflation was a large problem not only in Russia but in other countries throughout Europe as well, so the hope to end inflation would greatly help the economy and the quality of people’s lives. Unfortunately, there were many problems with the transformation of the economy because the inflation was so extreme. Inflation continued to grow and, “Homelessness and poverty increased as the government failed to pay pensions or the wages of workers in the state sector. Manufacturing output continued to slump. Financial crime and corruption flourished with impunity (Steel).” Many of the economic problems that Yeltsin planned to fix failed, and actually put Russia in a worse state than it was in before. The value of the rouble, which is Russia’s currency lost almost all of its value, making inflation an even bigger problem. Throughout the 1990s, Yeltsin tried to help to recover the economy, and “Thanks to an increase in the world price of oil, Russia’s economy began to revive in 1999 but not enough to revive the president’s popularity (Steele).” At this point, the economy was improving little by little, but Yeltsin’s popularity was on a decline because of the worsen state he put Russia into economically. Even

Russia's future position in the world is dismal. The inability to compromise were formed by difficult transition from communism to capitalism when Mikhail Gorbachev introduced the policies of glasnost and perestroika . Strong, hard and inflexible characters of Russian leaders has already created many problems for the whole world but first of all for people in the country who are blind to see what is going or who simply thinks that it

This chart shows how much the United States exports to Russia in comparison to how much the US imports from Russia as well as the trade deficit from 2000-2006 (Cohen). Even though there was such a deficit in past years, I believe that if we help Russia better their trading, then our exports would increase and our deficit would decrease in years to come. Helping Russia better their trade

Many officials at the top of the Russian political ladder do not seem to think the economy in Russia is stable enough to last a moderate amount of time. The main reason many people think the Russian economy is in

The key to budget balance lies in taxing oil exports. The operational measures that supported the Russian economy and the financial system in the past if continued to be implemented in the future could further stabilize the nation’s condition. Russia should fix the tax rates for the coming years in order to enable this. Tax breaks for new small enterprises should be established in Russia, as well as fiscal incentives for the industrial enterprises. In order to be competitive in the future their should be transparency of Russian companies, understanding how adopted measures are working and how they would work. As a part of this strategy, if implemented, from 2020 onwards firms will be obliged to introduce the best possible technologies .As a result Russian companies will hold standardised position that will determine the

Income and inequality has reached historical highs in most OECD countries, and for Russia it is still rising. In the mid 1980s the rich are 10percent and earns 7 times more income then the poor’s 10 percent today, it is 10 times more. 40% of Russia has seen little extra cash in their pockets from economic growth in recent decades. Rising inequality is not only a threat to social cohesion. But it is also an economic concern. It tends to drag down long term economic growth and harms opportunities. The face of poverty has also shifted from elderly to younger generations

Corruption- The actual system is set up in a way that only elites and foreign companies working in Russia plunder public wealth to enrich themselves. These elites group receive some contracts or other kinds of favors in exchange of their loyalty.

Russia’s economy is ranked 143rd freest in the 2015 index and has an economic score of 52.1. Russia has had gains in business freedom, freedom from corruption, property rights, government spending and a labor freedom that has been offset by declines in monetary freedom. In the Europe region, Russia is ranked 41st out of 43 countries, and its overall score is below the world average. Although Russia has had an increase in political and economic isolation, coupled with falling gas prices, its economic freedom score has increased by 1.6 points since 2011. A better outlook than what Greece has in their score. The declines in financial freedom and property rights have been the cause for the lack of overall progress

Historically, the ruble is one of Europe’s oldest currencies and has been in use since the 13th century. Over the past 100 years, the ruble has experienced two major economic crises and is on the brink of a third. The first crisis came after the overthrow of Tsar Nicholas II and the establishment of the Soviet Union in the early 1920’s. Under the regimes of Joseph Stalin, Nikita Khrushchev, Leonid Brezhnev, and Mikhail Gorbachev the Soviet ruble was able to stay on par with the value of the USD, due in large part to enormous overvaluation. This fiscal negligence came to its’ boiling point in 1991 following the collapse of the Soviet Union. What followed was a decade of hyperinflation, widespread poverty, and loss of foreign investment. Although Vladimir Putin has managed to calm a great deal of economic despair that plagued the country in the 1990’s, recent trends suggest Russia is on the verge of another economic disaster. If the Russian ruble is continuously devalued due to Western and European Union (EU) sanctions, then Russian foreign policy would grow increasingly volatile and potentially result in escalated conflicts as Putin would grow increasingly desperate to reassert his authority.

Following the fall of the soviet union in 1991, the Russian economy entered a downward spiral. The IMF was at the ready and loaning Russia billions of dollars in an attempt to prevent a total collapse of it's economy. The leaders of the IMF undoubtedly understood that the leaders of Russia were not the most trustworthy people to loan such money to. However, their economy was collapsing and if allowed to fail, the rest of the world would surly suffer the consequences.