Question

write 6-7 paragraph of the problem Of The Russian Economy

Answer 1

Russian Economy :

• Russia has an upper-middle income mixedand transition economy with state ownership in strategic areas of the economy. Market reforms in the 1990s privatized much of Russian industry and agriculture, with notable exceptions to this privatization occurring in the energy and defense-related sectors.
• Russia's vast geography is an important determinant of its economic activity, with some sources estimating that Russia contains over 30 percent of the world's natural resources. Russia's natural resources at $75 trillion US dollars. Russia relies on energy revenues to drive most of its growth.
• Russia has an abundance of oil, natural gas and precious metals, which make up a major share of Russia's exports. As of 2012 the oil-and-gas sector accounted for 16% of GDP, 52% of federal budget revenues and over 70% of total exports.^[Russia is considered an "energy superpower". It has the world's largest proven natural gas reserves and is the largest exporter of natural gas. It is also the second-largest exporter of petroleum.

Russia’s economy is plagued by three major problems:

1. Its poor investment climate, which includes ineffective institutions;
2. weak competition; and
3. the government’s excessive role in economic regulation.

Unless these problems are resolved soon, we won’t be able to support even the current 4% growth.

The government's focus on social problems:

• Many countries with authoritarian regimes try to increase their electoral support by implementing high-profile, but usually ineffective, social programs.
• In fact, even the documents prepared by the government show that this is so. For example, the Healthcare Ministry’s pension reform policy document concludes that the resources allocated in Russia for the pension system are equivalent to the funds set aside for this purpose in Western Europe. Unfortunately, the results achieved are considerably worse than in Europe.
• Therefore, I think that this focus on social pledges is good for gaining support ahead of the election, but misguided as actual solutions to these problems.

Russia's Economic Crisis :

• In the early hours of the 21st of August, a putsch in the Soviet Union against Mikhail Gorbachev failed, leaving three men dead and the country in a state of shock. The coup had been staged by members of the Soviet government who had taken issue with Gorbachev’s liberalising, democratising reforms over the previous few years. Those who had planned the attack then fled, and were all taken into custody within three days.
• The coup was prevented mainly due to a campaign of civil resistance led by newly elected Russian President Boris Yeltsin. Yeltsin had been the first person in history to resign from the Politburo voluntarily a few years earlier in 1987, and this garnered him a reputation as a rebel and an anti-establishment figure. His involvement in stopping the August Putsch, as it became known, solidified his popularity in the Soviet Union. Although Gorbachev was restored to his previous position as General Secretary of the Communist Party, his power was vastly diminished, the event having destabilised the already-fragile political situation in the USSR. Yeltsin was hailed as a hero and remained President after the dissolution of the Soviet Union in December 1991.

Economic catastrophe :

• According to David Satter in The Less You Know, the Better You Sleep: Russia’s Road to Terror and Dictatorship Under Yeltsin and Putin, the start date for Yeltsin’s reforms can be traced to January 2nd, 1992. On this day, Yegor Gaidar, deputy prime minister, freed prices. His prediction, according to Satter, was that prices would increase between three and five times. But this isn’t what happened. Over the course of the next ten months, prices rose by a factor of nearly thirty. The results of this were that the money in people’s savings accounts, money that had in some cases been saved for decades, disappeared virtually overnight. As usual, the poor were being hit the hardest by the follies of the elite.
• Hyperinflation had the added effect of being a perfect environment for a criminal class to take control of the markets and earn huge amounts of money. Due to a shortage of turnover capital as a result of inflation, production was paralysed. The regime’s answer to this was to issue government credits at rates of 10 to 25%. Instead of being used to pay workers’ salaries, they were deposited at banks, and bank officials and factory directors split the profits. Others got themselves export licences through bribing government officials, bought raw materials in roubles and then sold them abroad at world prices, making huge amounts of money in the process. And still others got themselves import permits after the government, fearing famine, began selling them in 1991. Food products were imported at 1% their real value, the rest of the cost subsidised by Western commodity credits, and a small group of traders made enormous sums of money from it: in 1992, import subsidies amounted to 15% of GDP.
• A second scheme the government put in place was the distribution of vouchers, which were meant to represent ‘a citizen’s share of the national wealth’, valued at ten thousand roubles. Many Russians were uncertain what to do with these vouchers, and so sold them on the street for miniscule returns like a bottle of vodka or ten dollars. Some invested them in voucher funds, which turned out to be scams, or bought shares in their own factories.
• But organised crime groups realised they could use these vouchers to invest in industry. These groups, who collected thousands of vouchers over a few years, used them to secure around a third of the country’s industrial base, propelling themselves to unimaginable wealth.

These measures led to the collapse of the Russian economy. Russia’s GDP fell by 50% between 1992 and 1998. This was worse than the decline faced by the United States during the Great Depression. (Some estimates say this figure is askew; the lack of industrial investment and the stopping of the production of non-consumed goods may have altered this figure. For example, the military sector, which has less weight in a nominally ‘free’ market, experienced a sharp drop in production. Regardless, the number is high.) In the same period, industrial production declined by 56%. Since then, things haven’t got huge amounts better: although Russian GDP peaked in 2013 at $2 trillion, it was back down to $1.2 again in 2016 due to a drop in oil prices and exchange rates.

These are the problems of the Russian's economic ,crisis & catastrophe of the Russians economy.