What are Russia's main economic problems?

Answer 1

First a little disclosure, I'm a Russian born American lawyer/economist. I think its important to say this because I have some understanding of the internal non-economic problems facing Russia that must be discussed, because they fully explain Russians economic problems.

So, first a brief history lesson. As you know, Russia was known as the USSR during the Soviet days, at that time its economy was based almost completely on Military R&D and weapons manufacturing, along with oil/natural gas production. Under the Soviets, Russia was one of the most corrupt countries in the world. With no free market, people traded favors and stole government property to trade to each other just to survive. When the Soviet Union collapsed in the early 90s Russia underwent legal reform, developing a Constitutional form of government similar to that in the US. However the authoritarian and centralized nature of government administration never changed, and when Putin, an ex-KGB member become president Russia very rapidly moved sharply to the right towards authoritarianism. The irony is that Most Russian's actually welcomed this change. The reaons for this are many, but the most fundamental one, and the one that is the greatest impediment to economic grouth is corruption. After the collapse of the USSR, Russian society decended into anarchy, with each ex-government beurocrat trying to grab what he could. This free-for-all resulted in the formation of a stong organized crime lement in russian society, with very strong government connections. the situation worsened when the first and later second (and currently ongoing) Chechen war resulted in gross military corruption and abuse of both soldiers as well as civilians in Chechnia. To sum up, the collapes of the Soviet State led to an environment suitable to the formation of organized crime and a war in chechnia further helped this organized crime element establish itself in government beurocracy. At the same time the corruption and war led people to demand the government to take action. Liberal reform and "democracy" rather than corruption were blamed for the increased instablility, and Putin was only happy to comply by increasingly centralizing the government. many of the emerging capitalists (many of them with organized crime connections) were blamed for the instablity, and Putin and his government took advantage of this feeling to scapegoat the emerging capitalist class. This led to a reintegration into government control of several industries. the oil and natural gas industries, privatized after the collapse of the Soviets was again put under government control. The free presss has virtually been eliminated, with only state sponsored stations being allowed to braodcast on radio or television. This incresing return to government central control over the economy and social life of Russians is what is to blame for most of Russias problems today. Exacerbating the problem is the flight of what economists call labor capital. many educated Russians (among them my family) left Russia right after the collapse of the USSR. Today the immigration continues, with many Russians who are able to leave, going off to places like the US or the EU, rather then trying to make a life amongs the corruption and disorder of modern Russia. This bleed of labor calital greatly hurts an economies industry, and that is exactly what is happening today. Yet antoher problem is population growth. Russia has one of the lowest population grouths in the world, it is in fact so low that Putin recently offered a monetary incentive to couples who have children. the reason for the low birth rate is predominantly due to the harsh nature of life in Russia (as result of the forementioned) as well as due to the high rate of divorce.

Russia has a wealth of natural resources. In many ways it is more wealthy then the US, but only in terms of natural resources. Russia has the biggest deposit of natural gas in the world and one of the largest supplies of oil. In fact most of Russias oil is yet untapped, simply sitting under the frozen tundra of Siberia. Thats not even mentioning the vast forests and other resources. At the begning of the 20th century Russia was the worlds biggest exporter of wheat in the world, it could do so again, if only it had the labor calital and a free market to do so. Therefore the bottom line with Russias economic problems is that they are mostly political. If Russia solved its corruption problems and developed a truely free market the Russian economy could blossom. Instead the Russian government has opted to depend entierly on oil/gas exports and are again restarting their arms industry.

Answer 2

Brad P's very long entry without paragraph breaks (what's the deal with that anyway?) mentions low population growth. But that's not quite right. Russia's population growth isn't LOW, it is NEGATIVE. The population is shrinking.

And that's a big, intractable problem that will forever hurt the economy. Even if somehow Russia's corruption problems could be solved by reformers, that can't change the fact that 50% more people die in Russia each year than are born. And that statistic will only get worse -- it's a death spiral, as the population ages, births can only fall further. The fewer young people, the fewer couples having kids. Which only feeds to population implosion. Which discourages couple from having kids ... and so it continues.

Business want markets to grow. Economies are supposed to grow. Those things are not likely to happen when the consumer is dying off.

Answer 3

1) Organized crime.
2) A fascist corrupt government.
3) Oil wealth.
4) The culture of Russia.
5) Alcoholism.

Answer 4

There are 2 impedments to a strong Russian econmony. First, is lack of a democratic system and second is absence of a free market economy. The lack of personal freedoms in Russia will stall the economy as there is no motivation to improve ones standing in society if the government can come and take it all away ie: Yukos Oil Company.

Answer 5

Lack of infrastructure
Lack of ethics
Lack of resources
Intense Greed
Strong Black Market
Poor tax base

Answer 6

their Socialist and always been. Which amounts to one party Fascist. If your not with them your against them iii