Russian Economy- Elisa & Aramide

Category: Globalization

GDP Growth Rate: 7.6%

Labor Force: 75.1 Million People
Composition -
Agriculture: 10.8%
Industry: 28.8%
Services: 60.5%

Consumer Inflation Rate: 12%
Unemployment Rate: 5.9%

Basic Economic Overview:
As prices of oil skyrocketed in the mid 1970's, the Russian economy flourished, saving it from a failing attempt at industry reform. The economy faltered with the threat of a renewed arms race with the US, and developed a restructured economic plan, which included more independence for state enterprises. This was squashed by an collapse in oil prices and an anti-alcohol campaign.
When the Soviet Union collapsed in 1991, the Russian ruble was sent into a period of hyper inflation, creating an increase in rationing and shortages of consumer goods. Around this time, corruption and profiteering run rampant. Oligarchs took hold of the few privatized companies through the Loans for Shares initiative, forcing President Yeltsin to sell bonds to get out of debt. This was to no avail, as the Asian financial crisis forces a default on loans. In 2000, president Putin instituted tax reforms along with an oil industry boom have led to a larger middle class in Russia today.

Russia and Globalization:
Russia was effected by the East Asian Ecomonic Crisis. Prior to this however, Russia's leaders had turned to privitization which drastically hurt the Russian economy. Because of the privitization and hyper inflation, there was massive corruption in the Russian government. Recently because of the rise of inflation, Russia signed a bilaterial market agreement with the United States. However, as Russia pays back its Soviet Union debts to the IMF, they are running into other troubles; though the country exports over 80% of the world's timber, oil, natural gas, and metals these exports only account for 30% of Russia's revenue. Russia has little manufacturing base compared to Asian countries and they are very vulnerable to swings in thte world's consumer good prices. Russia has recently tried hard to switch to a new market economy. However, because of past debts and their role in globalization they have made little progress.