Question

What are Russia’s economic strengths and challenges? minimum 2 paragraphs please

Answer 1

Political and macroeconomic stability has become a significant requirement for economic growth rejuvenation and plays a crucial role in continuing rapid growth. It is foolish to believe that stability will persist long into the future once it has been gained in the past. The economic situation in Russia remains very vulnerable to shocks, and the authorities must work diligently to ensure that the situation does not get out of control. Macroeconomic stability is not assured by the high crude oil prices. On the other side, there is always a risk to the prospect of a drop in oil prices and the subsequent budget destabilization, not to mention the whole economy.

The longer oil prices stay high, the more difficult it will be to adapt to change later. On the other side, if it lasts too long, a favorable market situation may lead to destabilization because it can trigger political decisions that will trigger budget spending beyond the accumulation of revenue. In other situations, destabilization may result from a debt crisis on foreign trade liabilities, a consumer loan market crisis, or uncertainty in ownership relationships

A toughening of the administrative levers of the government increases opportunities to promote economic activity, but ensuring that newly created entities do not surpass the administrative assets of the government is crucial. To prevent a crisis, Russia needs conservative budgetary policies that rely solely on assets raised by rising labor productivity, a low-and flat-tax policy, and prudent monetary policies that curb the ruble's exchange rate.

Capital of humanity. As a crucial factor in rapid social and economic growth, the post-industrial era places emphasis on the advancement of man and his creative abilities. Most notably, it involves ensuring decent health care and education along with improving the national pension scheme, science and other social spheres. Through industrialization, human capital will play a similar role to that of the railways, that is, it will act as an engine that demands the growth of other industries. In this context, Russia has an inherent advantage–its human capital is far more developed than in other countries with similar per capita GDP rates.

Position on taxes. Russia has taken decisive steps over the past few years to reform its tax system. Taxes are significantly reduced, resulting in a marked improvement in their collection. The rate of non-payment of taxes actually decreased to nearly zero. The introduction of flat taxes (mainly income tax) marked an important step towards the implementation of a progressive tax system. Before further advances in this field are made, three basic facts should be taken into account.

.The taxation practices of Russia show great differences from the European culture. In the West, a tax is something people are willing (or expected) to pay for the services it offers to society to the government. This duty can therefore increase or decrease depending on the volume of services that citizens expect from their government, as well as the quality of the services they provide. It makes very little sense to educate taxes now, as most of the problems relate to the quality of tax management. When tax authorities may easily recalculate taxes from several previous years and produce sums that surpass the profits of a corporation, then any discussion of tax rates will lose its sense.

High rates of economic growth play an important role in increasing the disparity between Russia and the most developed countries. The Russian economy continues at record high levels, despite slowing somewhat. For a transition from recovering growth to investment growth, this slowdown is inevitable. Nonetheless, there are inherent risks embedded in the claims that economic growth is the most conclusive measure of the success of government actions. First, they relate to strictly quantitative parameters and to the detriment of performance and other systemic shifts they extol development.