Putin has stepped down as president and stepped up as prime minister now. The Russian economy has gone through a lot of changes and the baton has been passed now. The steel man Vladimir Putin’s administration appears to have left Russia’s economy in a rosy state. Economic growth averaged 7.2% between 1999 and 2008. Foreign reserves stand at 30% of GDP and are the third highest in the world in absolute terms. The stock market has increased twenty-fold. The middle class is buying foreign cars, vacationing abroad, and dining at sushi restaurants, and surveys show that life satisfaction has increased across the board.
As project syndicate reports, Russia’s economic success is partly attributable to high oil and commodities prices. But oil is not the whole story. The tax reform of 2001 improved incentives to work and decreased tax evasion by introducing a flat 13% income tax – one of the world’s lowest. Liberalizing the procedures for corporate registration and licensing, and limiting inspections, improved the climate for small businesses and entrepreneurs. Conservative macroeconomic policy and financial-sector reform lowered interest rates and fueled an investment and consumption boom. Real wages tripled, and poverty and unemployment fell by half.
Source: Wikipedia
Inequality and corruption are going to be the main obstacles now. Despite Russia’s recent economic achievements, both remain at alarmingly high levels. According to Forbes magazine, there were 87 Russian billionaires, with combined wealth of $471 billion, a figure second only to the United States. Yet their net worth accounts for roughly 30% of Russia’s GDP, whereas America’s 469 billionaires are worth only about 10% of US GDP.
Source: WikipediaInequality and corruption are going to be the main obstacles now. Despite Russia’s recent economic achievements, both remain at alarmingly high levels. According to Forbes magazine, there were 87 Russian billionaires, with combined wealth of $471 billion, a figure second only to the United States. Yet their net worth accounts for roughly 30% of Russia’s GDP, whereas America’s 469 billionaires are worth only about 10% of US GDP.
More importantly, inequality of opportunity is very high as well. According to a recent survey, a majority of Russians believes that acquiring wealth requires criminal activity and political connections. Only 20% believe that talent matters. These beliefs are self-fulfilling prophecies.
2 comments:
Subscribe to:
Post Comments (Atom)
The survey results are quite disappointing..(
Pilot-Pooja said...
May 13, 2008 at 8:00 AM
ya I agree, but then if economy stays good, even that shall improve
Jas said...
May 14, 2008 at 1:15 AM