RUSSIA:RUSSIA:

Economic and political overview

GOALSGOALS::

To enquire basic knowledge about Russia and Russian economics

To analyze and to understand main features of economic positions of Russia in the contemporary world

To formulate personal opinion on the idea of perspectives of Russian development

RESULTS:RESULTS:

To prepare oneself for other study courses in MGIMO, Russia

To make a short presentation on the main topics of Russian economic strategy

WHAT IS RUSSIA?WHAT IS RUSSIA? BIG EUROASIAN

COUNTRY? IMPORTANT WORLD

PARTNER? COUNTRY OF COLD

AND WINTER? COUNTRY OF VODKA

AND CAVIAR? COUNTRY OF ILLEGAL

BILLIONAIRS?

Latest historical backgroundLatest historical background

Gorbachev and his team of economic advisers introduced most fundamental reforms, which became known as perestroika (restructuring).

Elimination of the monopoly on most trade operations.

The most significant reforms in the external sector - foreigners were allowed to invest in Russia in different forms of enterprises, and cooperatives.

The reforms made some inroads in decentralization.

Unforeseen Results of Reform

Gorbachev's new system had the characteristics of neither central planning nor a market economy.

The Soviet Union left a legacy of economic inefficiency and deterioration to the fifteen constituent republics after its breakup in December 1991.

Economic Reform in the 1990sEconomic Reform in the 1990s Two fundamental and interdependent goals--

macroeconomic stabilization and economic restructuring--mark the transition from central planning to a market-based economy.

An ambitious program of radical economic reforms. The record to date indicates that the goals for

macroeconomic stabilization and economic restructuring programs may have been unrealistically high.

Since 1991 both political and economic authority have devolved significantly from the national to the regional level .

Territory

17,075,400 square kilometres (Eleven time zones)

Land boundaries – more than 21 139 kmPopulation

Population: 145.0 million About 57 percent of population working age.

Urban population: over 107 millionRural population: over 39 millionState language: Russian

Moscow: population - 8.7 million

Other cities with population over 1 million: Saint Petersburg (5.0) Rostov-on-DonChelyabinsk SamaraNizhny Novgorod VolgogradUfa OmskNovosibirsk EkaterinburgPerm VoronezhKazan 

Administrative DivisionAdministrative Division

21 Republics, 6 territories, 49 regions, 1 autonomous region, 10 autonomous areas and 2 cities of Federal Importance (TOTAL: 89)

May 2000 – 7 Federal districts were formed/

The State Power System in the The State Power System in the Russian FederationRussian Federation

One of the basic principles of constitutional government is the division of powers.

The President is at the summit of the system of state power Each institution of state power is only partially responsible

for enforcing the Constitution The President’s place in the state power system is tied to his

constitutional prerogatives regarding, above all, the executive branch of power.

relations between the President and the government reflect most fully the President’s imperative in setting domestic and foreign policy.

PRINCIPLES OF THE PRINCIPLES OF THE CONSTITUTIONAL GOVERNMENTCONSTITUTIONAL GOVERNMENT

THE DIVISION OF POWERSPowers must not be concentrated in the hands of

one person or the institutionPOWER MUST BE DIIVIDED AMONG

THE LEGISLATIVE, EXECUTIVE AND JUDICIAL BRANCHES

CLEAR DELINEATION OF RESPONSIBILITIES AND A SYSTEM OF CHECKS AND BALANCES

PRESIDENT:PRESIDENT:

To approve the structure of the federal executive bodies of power;

To appoint deputy prime ministers and ministers:The right to preside government meetings;To excise control over the lawfullness of the

government action;Direct subordination of the security ministers to the

President;The right to dismiss the government or to accept the

Prime Minister’s resignation (the resignation of the government);

Works chares two consultative bodies – the Security Council and the State Council

GOVERNMENTGOVERNMENT

The Government is headed by the Prime Minister. It also includes the deputy prime minister and federal ministers. Besides federal ministries, the structure of the Government includes federal structures and federal agencies.

Branches of PowerBranches of Power

International organization International organization participationparticipation

APEC, ARF, ASEAN (dialogue partner), BIS, BSEC, CBSS, CE, CERN (observer), CIS, EAPC, EBRD, G- 8, IAEA, IBRD, ICAO, ICC, ICCT (signatory), ICFTU, ICRM, IDA, IFC, IFRCS, IHO, ILO, IMF, IMO, Interpol, IOC, IOM (observer), ISO, ITU, LAIA (observer), MIGA, MINURSO, MONUC, NAM (guest), NSG, OAS (observer), ONUB, OPCW, OSCE, Paris Club, PCA, PFP, SCO, UN, UN Security Council, UNAMSIL, UNCTAD, UNHCR, UNIDO, UNITAR, UNMEE, UNMIK, UNMIL, UNMISET, UNMOVIC, UNOCI, UNOMIG, UNTSO, UPU, WCO, WFTU, WHO, WIPO, WMO, WToO, WTO (observer), ZC

Labor force: Labor force: 71.83 million71.83 million

Labor force - by occupation: agriculture 12.3%, industry 22.7%, services 65%Unemployment rate: 8.3% plus considerable

underemployment

  2001 2002 2003 2004 2005 2006

GDP Growth,% 5,1 4,7 7,3 7,2 6,4 7,9

Industrial production growth, % 4,6 3,7 7 8,3 4 7,7

Fixed capital Investment growth, % 8,7 2,6 12,5 10,9 10,5 1,6

Federal Government Balance, %GDP 3 2,3 1,7 4,2 7,5

Jan-Feb11,4

Inflation (CPI), % change 18,6 15,1 12 11,7 10,9 10,0

Current Account, bln $ 35,1 32,8 35,9 60 86,6 28

Reserves(including gold) bln $ 36,6 47,8 76,9 124,5 182,2 195,9

GDP and Industrial ProductionGDP and Industrial Production Structural composition has changed (Table 2)Construction – rapid growthAt least part of the decline in 2006 –

exceptionally cold winterDifferent competitiveness level compared to

foreign goodsSignificant growth in consumer electronics

(lower import tariffs on parts)

INDUSTRY GROWTH RATE (%)INDUSTRY GROWTH RATE (%)

  2003 2004 2005

GDP 7,3 7,2 6,4

Agriculture, hunting, forestry 5,5 3 1,1

Extraction of mineral resources 10,8 7,9 1,7

Manufacturing 9,5 7,8 4,4

Electricity, gaz, water production and distribution 1,6 2,1 1

Construction 13 10,2 9,7

Retail and wholesale trade, repair and maintenance of vehicles 13,2 9,8 12,4

Transport and communication 7,2 10,5 6,2

Finance 9,6 4,5 6,4

Immovable property operations, leasing and services provisions 3 4,5 9

Agriculture, hunting, forestry -11,9

Extraction of mineral resources -2,3

Manufacturing -4

Construction -1,4

Trade and other services 9,7

Hotels and Restaurants 2,6

Transport and communication -2,1

Finance 7,4

Real Estate and Leasing -0,5

Government Administration and social security 7,2

Growth in employment in selected sectors, 2005

Total fixed capital investmentTotal fixed capital investment

Double-digit fixed capital investment growth

However, absolute investment levels remain low in comparison with emerging market economies.

Investment concentrated in oil and gas industry

Manufacturing – low investment

External DebtExternal Debt

Two trends:1. A substantial reduction in sovereign debt2. Rapid increase of debt accumulated in

corporate and private sector3. IMF Debt = 0Influence:1. Relatively low interest rates2. High oil prices

Russia's International ReservesRussia's International Reserves(US $ bln.)(US $ bln.)

(Bank of Russia's current cross-rates as of (Bank of Russia's current cross-rates as of reporting date)reporting date)

Year Volume

31.12.04 124.5

01.07.05 151.8

23.09.05 156.2

National Projects (2005)National Projects (2005)

  2006 2007 Total (06-07)

Health 88,4 120,5 208,9

Education 25,3 31,2 56,5

Housing 35,4 46,2 81,6

Agriculture 16,2 18,7 34,9

Total 165,3 216,6 382