Russia's Economy

Russia's Economy: Signs of Progress and Retreat on the Transitional Road

Charles Wolf
Thomas Lang
Copyright Date: 2006
Edition: 1
Published by: RAND Corporation
Pages: 72
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  • Book Info
    Russia's Economy
    Book Description:

    Sixteen years after the Soviet Union's demise, the Russian economy can still be appropriately characterized as transitional. The authors shed light on ambiguities surrounding this status through an exploration of four questions related to issues of interest to government decisionmakers.

    eISBN: 978-0-8330-4255-2
    Subjects: Political Science

Table of Contents

  1. Front Matter
    (pp. i-ii)
  2. Preface
    (pp. iii-iv)
  3. Table of Contents
    (pp. v-vi)
  4. Figures
    (pp. vii-viii)
  5. Tables
    (pp. ix-x)
  6. Summary
    (pp. xi-xiv)
  7. Acknowledgments
    (pp. xv-xvi)
  8. Abbreviations
    (pp. xvii-xviii)
  9. CHAPTER ONE Introduction
    (pp. 1-6)

    Russia’s economy—or, more accurately, its political economy—has in recent years been replete with both bad news and good news. The bad news stems from evidence of the central government’s reversion toward authoritarian intervention in the economy: the breakup of the privately held oil giant, Yukos, and government seizure of its assets, thereby abrogating property rights; the bending of the legal system to prosecute and incarcerate for massive tax fraud Yukos’s former principal owner and Putin adversary, Mikhail Khodorkovsky, and his deputy, Paton Lebedev; the takeover by state-owned companies of private companies outside as well as inside the energy...

  10. CHAPTER TWO The Macroeconomy
    (pp. 7-12)

    After the Soviet Union collapsed in 1990, real output in the Russian economy fell sharply. However, the depth of the fall was overestimated, the reason being that the pre-collapse GDP of the Soviet economy had been overestimated (Aslund, 1990; Rowen and Wolf, 1990). Consequently, observation of the economy’s post-collapse level was erroneously inferred to represent a larger drop than actually occurred.

    Numerous characteristics of the Soviet economic system contributed to erroneous estimates of its size, including the absence of market-determined prices for final output, the widespread prevalence of hidden inflation, and the frequency of “value-subtracting” rather than “value-added” use of...

  11. CHAPTER THREE Oil and Natural Gas—Prices, Production, and Exports
    (pp. 13-22)

    As already noted, the Russian economy’s performance in the first six years of the 21st century has been significantly stronger than it was in the years immediately after the Soviet Union’s collapse. GDP growth was volatile from 2000 to 2005, with the low end of the growth range at 4.7 percent, in 2002, and the upper end at 10.0 percent, in 2000. Despite these fluctuations, average annual growth during this period was 6.6 percent, which is three times the unweighted average growth of the other G8 members.¹ The question of interest is, What accounts for Russia’s creditable record?

    Numerous explanations...

  12. CHAPTER FOUR Markets and Reform
    (pp. 23-28)

    As discussed in Chapter Three, fossil fuel prices are important elements in explaining Russia’s recent impressive economic performance. One question that remains is, How much of Russia’s economic performance can be plausibly attributed to other factors—specifically to the economy’s transition from centralized planning to decentralized decision-making; from resource allocation by the state and its bureaucracies to allocation through market-driven, business competition; and from state enterprise to private enterprise?

    In the past decade, Russia has enacted numerous conspicuous economic reforms, including the sharp ruble depreciation in 1998 (referred to earlier, in Chapter Two) and the flat individual income tax of...

  13. CHAPTER FIVE International Transactions
    (pp. 29-38)

    U.S. policymakers are particularly interested in Russia’s economic transactions with three differently situated countries or group of countries: the Central Asian states, Kazakhstan, Uzbekistan, Turkmenistan, Tajikistan, and Kyrgyzstan; the “proliferation-risk” countries, Iran and North Korea; and China. U.S. policy concerns relating to the Central Asian group stem from the possibility that economic transactions between Russia and these states may reflect aggressive Russian efforts to revive and expand Moscow’s formerly dominant influence in Central Asia and to undermine U.S. efforts to enlarge its presence and influence in the region. Whether and when the implicit “zero-sum” premise underlying this concern (i.e., that...

  14. CHAPTER SIX Russian Military Spending
    (pp. 39-44)

    In the 1980s, during what was to be the Soviet Union’s last decade, one of the principal controversies engaging the attention of analysts within the U.S. government and the academic community focused on measurement of the Soviet “defense burden”: the ratio between Soviet military spending and the Soviet Union’s GDP. Analysts especially skeptical about the validity of Soviet statistics contended that the defense burden was probably between 25 and 30 percent (Ericson, 1990; Epstein, 1990; Aslund, 1990). Other analysts, both within government and in the academic community, acknowledged that the Soviet defense burden was large relative to that of other...

  15. CHAPTER SEVEN Conclusions and Implications
    (pp. 45-48)

    Russia, with a GDP about one-fifth that of China but a per capita product twice that of China, is considered to have the second largest of the numerous economies considered to be “transitional.” Exactly where it lies in the gamut of transitioning economies is not clear. Nor is it clear, though probably more important to discern, what the pace of the Russian economy’s transition is and whether the transition is going forward, toward market-oriented, decentralized resource allocation; is going backward, toward centralized, state-controlled decisionmaking; or is, instead, oscillating between these two. These issues are deeply controversial and vigorously, sometimes vehemently,...

  16. Appendix
    (pp. 49-52)
  17. References
    (pp. 53-54)