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Communism
● Communism is a socioeconomic system structured upon common ownership of the means of production and characterised by the absence of classes, money, markets and the state
● The means of production would be owned by the proletariat(the wage earning working class)
● One class with an equal distribution of wealth would arise
Communism in the Soviet Union● Communism prevailed as a socioeconomic system in the Soviet Union from 1922 to
1991● In the Russia the means of production was not held by the working class but
instead the central government● This is known as a command economy(an economy in which production,
investment, prices, and incomes are determined centrally by a government● Beginning in 1928, the entire course of the economy was guided by a series of
Five-Year Plans(nationwide economic plans). By the 1950s, the Soviet Union had, during the preceding few decades, evolved from a mainly agrarian society into a major industrial power
Transition to Market Economy● After Mikhail Gorbachev came to power, continuing economic liberalisation moved the
economy towards a market-oriented socialist economy● The transition from a command economy to a market economy was a huge step for
Russia that created many problems such as: economic collapse, hyperinflation, privatization, corruption, price drop for oil
● Boris Yeltsin implemented “shock therapy”-sudden release of price and currency controls and immediate trade liberalization within a country.
● Massive poverty was also an outcome
Consequences of the Economic Transition
● Privatization lead to many bankruptcies● Decentralization of power lead to local
governments disregarding the policies of central governments
● Corruption● Inflation which caused a decrease in the
output of the country
Consequences Cont.
● Greater inequality causing a higher crime rate(which is not overseen)
● Decrease in availability of public services (medical and educational)
● Weak enforcement of law
Putin’s Economic Policies● Progressive reforms from 2000 to 2002● Progressive income tax with a peak of 31% replaced
with a flat income tax of 13%● Corporate tax reduced from 35 to 24%● Social security contributions cut from a flat rate of
39.5% of payroll to an average of 26%● Small scale tax violations decriminalized● simplified registration, licensing and standardization of
enterprises - number of enterprises increased by 7% annually since 2002
Putin’s Economic Policies
● Drastic change in 2003● Confiscation of biggest oil company Yukos● Started re-nationalization throughout country● Condoned corruption● Bribes to go to uni, stay out of the military, stay out of
prison, etc
Medvedev’s Policies
● Less oil dependence and increasing technology sector● Privatization of assets to bring in Western capital due
to financial crisis● Reform rather than nationalization
Dangers of Russian Economy
● Little implementation of laws● Too much dependence on oil● Russia needs other factors to grow an economy able to
sustain the life style that has arisen since the end of the Soviet Union
● Stagnation of oil prices, hindering growth● Corruption is allowing for companies to do what they
want
GDP Growth since 1999
● GDP per capita in 1999 - $1338.99● GDP per capita in 2004 - $4108.57● GDP per capita in 2008 - $11700.22● GDP per capita in 2012 - $14037.02● Steady increase with the exception of 2009 for obvious
reasons
Russia’s Environmental Policies
● There are numerous environmental issues from policies during the Soviet Union
● Russia has made an effort to steadily migrate to environmentally friendly standards.
● Pushed by both western markets and by the state.● Deforestation● Air pollution● Water pollution● Lack of funds
Current Russian Economy-Currently, as of the last two months, Russian economy is showing signs of collapse.Major Contributions to Declining Economy-Invasion of Crimea led to sanctions from Western Powers, where Russia exports goods such as wheat.-Consumer demand failed to make up for Declining investments
Current Russian Economy
Effects of Declining Russian Economy-The Russian Ruble has weakened about 9.6% against the dollar this year, more than 175 other currencies. -Experts predict the involvement in Crimea will drop Russian Economy into another economic recession towards the end of this year.- Direct cost of annexing Crimea will cost the Russian Government 3 billion dollars, along with 2 billion dollar to replace funds from Ukraine’s budget and 1 billion dollars to help raise pensions upto Russian standards.
Articleshttp://www.economist.com/node/12628030
http://topics.nytimes.com/top/news/world/series/kremlin_rules/index.html
http://www.bloomberg.com/news/2013-02-26/russian-economy-poised-to-slow-again-world-bank-says.html
http://www.cbc.ca/news/world/russia-world-s-worst-oil-polluter-now-drilling-in-arctic-1.1281291
http://www.forbes.com/sites/deanpopplewell/2014/04/02/theres-the-rub-shoring-up-the-russian-economy/
http://www.businessinsider.com/the-truth-about-russias-economy-2014-3
http://rt.com/business/russia-economy-growth-expectations-173/
http://www.bloomberg.com/news/2014-03-17/russia-sees-economy-tipping-into-crisis-as-western-sanctions-hit.html