Saturday, November 12, 2011

12/11/2011: Russian economy - Summary 2011

Summary of the Russian economy in the light of the removal of the final barriers to the country accession to the WTO (see the related note here). To see the slides, click on the individual frame to enlarge


Anonymous said...

I wonder will Russia succeed in evolving into an advanced economy? Given that it has the resources, the location and potential to have an advanced economy, what's holding it back?
I suspect it's corruption. Russia is on the 154th place out of 178 in the Corruption Perceptions Index published by Transparency International. How can russia fight corruption given that it's so engrained?
In January 2011, President Medvedev admitted that the government had so far failed in its anti-corruption measures.

TrueEconomics said...

I agree 100%. Corruption is the core problem. One of two core problems - the other is the slow pace of evolution of the democratic institutions.

Both problems are institutional (as in lack of concerted drive for reforms from above) and generational (as in engrained cultures of corruption and state-centrism among many citizens, especially of age 45+). These are lasting legacies of Communism. Soviet Union, in the 1970s and 80s was so deeply corrupt, even buying daily food was a matter of who you know and how much you can pay in hidden bribes or favors.

In some sense, Russia today is less corrupt than in the USSR days, it is only that today's corruption is more visible and more monetized, as opposed to Soviet corruption was more barter-like.

So you are correct - the main and most immediate obstacle to Russian modernisation and growth, as well as social recovery, is corruption. But the longer-term and correlated barrier is the need to develop real (not just populist) democratic institutions. Interestingly, at the very least, Medvedev put both of these into his agenda. The lack of success on both is disheartening, but at least there's a start.