Russian political economy
With all the attention recently paid to the new Russian president, the new Russian prime minister, and the militaristic Victory Day parade, broader analysis is neglected.
James Lerch alerted me to a Newsweek article about political economy in Russia. Owen Matthew's account makes the whole picture look pretty shaky.
And the political implications are?
Economy of Clay
"Moscow is flush with oil money. But the new President Dmitry Medvedev needs to do more than just redistribute it to bring his nation back to fiscal health...
"Moscow may seem an odd place to host a major international boat show—not least because Russia's capital is nearly a thousand kilometers from the open sea. But over the last few years, a heady combination of easy oil money and a taste for excess has worked strange miracles in this, Europe's brashest capital...
"Across town... the skyscrapers of the Moskva-City business development are springing up like mushrooms after the rain. By 2015, Moscow will boast the 10 tallest office buildings in Europe...
"On paper, Russia's basic economic indicators appear quite healthy: growth has averaged 7.5 per year for the last eight years, the country's massive debts have been replaced with a $150 billion stabilization fund, and its trade balance shows a healthy surplus of $72.5 billion last year...
"[B]y some estimates, Russia's GDP growth should have been closer to 14 percent...
"The underlying reasons for Russia's underperformance are more political than economic... the policies of Putin's Kremlin—which will doubtless be continued by the Medvedev administration—have considerably worsened Russia's economic situation... Put bluntly, 'the state uses the law selectively to expropriate the property of its enemies—or of any business which individual bureaucrats want to steal,' says Sergei Filatov, an activist for the United Civic Front opposition group...
"The result is a kind of state-sanctioned extortion. And by extension, that every businessperson in Russia knows that his or her business is only safe from being raided and stolen by bureaucrats or police to the extent that they have powerful allies in the police or administration themselves...
"Not surprisingly, given the fact that it is more profitable to be a bureaucrat than a businessman, that the size of Russia's bureaucracy has risen by 50 percent in the eight years of Putin's rule... More, a survey last year of 16-to-24-year-olds by the Moscow-based Levada Center found that nearly 70 percent of young Russians aspired to work for the state rather than become entrepreneurs...
"[T]he Kremlin has been the fastest-growing Russian corporation of all, extending state control into almost every sector of the economy from energy and metals to the defense industry, car and aircraft makers and the media. These giants are grossly inefficient by any Western corporate standards, yet the flood of oil money coming in obscures their fundamental unsoundness in a deluge of cash..."
Labels: economics, politics, Russia
posted by Ken Wedding @ 8:21 AM
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