Russia Gap Analysis - Draft

Strategic Planning & Analysis Division

E&E Bureau

USAID

February 14, 2011

Introduction and Overview

This analysis draws on E&E Bureau’s Monitoring Country Progress (MCP) system. The core of the Monitoring Country Progress (MCP) system consists of five indices: (1) economic reforms; (2) democratic reforms or democratization; (3) macroeconomic performance; (4) human capital; and, most recently, (5) peace and security. The MCP indices are based on well-established, readily available public data and standardized to a 1 to 5 scale in which a 5 represents the most advanced standards worldwide.

Primary data sources include the European Bank for Reconstruction and Development (EBRD), Transition Report (November 2010); Freedom House, Nations in Transit (June 2010); and the World Bank, World Development Indicators (May 2010). The Appendix elaborates on the indicators that compose each index, including definitions, data sources, and indicator rating scales (i.e., the conversions from the raw data to the 1 to 5 scale).

Figure 1 provides a bird’s eye view of Russia’s current progress on the five indices with the most currently available data. Compared to the ideal of 5 on the 1 to 5 scale, Russia’s gaps are substantial. Russia falls below the average for the 29 countries in Central and Eastern Europe and Eurasia (E&E) 1 on all five of the indices. Russia’s greatest overall gaps are on democratic reforms (gap of 3.4) and peace and security (gap of 2.6.) These are also the areas where Russia has the largest gap relative to the E&E average. On democratic reforms, Russia has a relative gap of 1.2, whereas on peace and security Russia has a relative gap of 0.9 compared to the E&E average.

Russia shares a similar profile to many of its neighbors in Eurasia. It scores notably higher than the Eurasian average in the human capital index and is second only to Belarus. Its worst ranking, relative to other Eurasian countries, is on the peace and security index, where only Tajikistan, Kyrgyzstan, and Uzbekistan have lower scores.

Democratic Reforms

As shown in Figure 1, Russia lags behind most countries in E&E on democratic reforms. According to Freedom House’s Nations in Transit, Russia “continues to sink into a stagnant form of authoritarianism.”2 Its current score on the democratic reforms index places Russia in the category of consolidated authoritarian regime, i.e., a “closed society in which dictators prevent political competition and pluralism and are responsible for widespread violations of

1 The countries of Central and Eastern Europe and Eurasia included in the analysis are: (1) Northern tier countries of Czech Rep., Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, Slovenia; (2) Southern tier countries of Albania, Bosnia, Bulgaria, Croatia, Kosovo, Macedonia, Montenegro, Romania, Serbia; and (3) Eurasian countries of Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine, Uzbekistan.

2 Freedom House, Nations in Transit 2010, p.436.

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basic political, civil, and human rights.”3 Figure 2 illustrates Russia’s scores on the seven

components of the democratic reform index. Overall, Russia’s profile is similar to other Eurasian countries, with little variation among the components of the democratic reform index; none of the components score higher than a 2. Figure 3 provides a global context for Russia’s rating on democratic reforms. While Russia may be similar to other Eurasian countries, these countries are heavily represented among the worst performers worldwide on measures of governing justly and democratically.

Figure 4 shows trends in Russia’s democratic reforms index score over time. After considerable progress leading up to the demise of the Soviet Union in 1991, Russia’s democratic progress stagnated and backslid through much of the 1990s. Backsliding accelerated following the start of Putin’s presidency in 1999, and Russia has returned to the low levels of democracy it experienced in the late 1980s. As shown in Figure 5, Russia has experienced the greatest deterioration in democratic reforms among countries in the region since the late 1990s. Figure 6

summarizes the changes in the component scores over this same period. While all of the component measures have regressed to some extent in the past ten years, the decline in Russia’s overall score has been driven most heavily by deterioration of the electoral process, national governance, and civil society indicators, all of which have seen declines of more than 35% in the past 10 years. In 2009, only the corruption measure declined, albeit slightly, due to increases in bribe-taking, pressure on businesses, and the failure of the authorities to address police corruption, according to Freedom House. Transparency International’s Corruption Perception

Index provides additional corroboration of the Freedom House assessment of corruption; out of 178 countries, Russia ranks 154 on the index, better than only three countries in Eurasia and the same as Tajikistan.

Figures 7 and 8 provide further information on two key aspects of democratic reforms: media sustainability and NGO sustainability. According to IREX’s Media Sustainability Index, Russia has experienced considerable decline in media sustainability since 2001. For 2010, Russia’s media sustainability is rated the weakest in producing journalism that meets professional standards of quality and in maintaining supporting institutions that function in the professional interests of independent media. Russia’s score on USAID’s NGO Sustainability Index in 2009 is similarly poor with a score of 4.4, indicating a middle level of NGO sector development with sustainability that is minimally to somewhat impeded. In contrast to the civil society component indicator of the MCP democratic reform index, the NGO sustainability score for Russia has not deteriorated substantially in recent years. Legal environment, financial viability, and public image are the components of the NGOSI with the largest gaps.

Economic Reforms

Russia has performed better on economic reforms compared to democratic reforms, as shown in Figure 1. Scoring 3.1 on the economic reform index, Russia is just below the E&E and Southern Tier averages. “Despite progress in recent years,” as noted by the EBRD, “significant challenges still remain for Russia to increase efficiency, promote more effective competition and follow best practice corporate governance and business standards. …The state also continues to play a large

3 Freedom House, Nations in Transit 2010, p. 25.

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– and in some areas growing – role in the economy, especially but not exclusively in strategic sectors and banking.”4

Figure 9 shows the breakdown of the economic reform index on the nine component measures of the index. The nine economic reform indicators from the EBRD have been categorized into two stages. First-stage reforms involve price liberalization, trade and foreign exchange reforms, and small and large scale privatization; i.e., reforms that reduce government intervention in the economy. Second-stage economic reforms entail building government capacity to regulate and oversee the private sector; in some sense, they involve getting the government back in the economic sphere, albeit in a market-friendly way. Second-stage reforms include enterprise reform, competition policy, banking reform, infrastructure reform, and non-bank financial reform.

As with most countries in the region, Russia has made greater progress on stage 1 reforms, but less progress on stage 2 reforms. The largest gaps remain in enterprise reform and competition policy, two areas that are commonly in need of reform throughout the region. Relative to other countries in the region, Russia surpasses the Eurasian regional average on every measure except trade and foreign exchange reform and even surpasses the Southern Tier average on small-scale privatization and non-bank financial reform.

Figures 10 and 11 shows the trends over time for overall economic reform index and stage 1 and stage 2 reforms in Russia compared to the average performance in the E&E region. Although Russia experienced strong gains in the early to mid-1990s, it experienced substantial backsliding in both stage 1 and stage 2 reforms during the 1998 financial crisis, largely driven by declines in trade and foreign exchange reform and banking and non-banking financial reform. Since then, economic reforms have progressed at a slower pace and have not progressed since the mid-2000s. The recent worldwide financial crisis has not prompted the backsliding on economic reforms that Russia experienced in 1998, although the trade and foreign exchange reform score remains below the1998 score.

The World Bank’s Doing Business country ranking provides another perspective on economic policy reforms. This ranking is based on ten microeconomic reform aspects of the business environment influenced by government interventions ranging from rules and regulations needed to start a business, employ workers, register business property, access credit, pay taxes, and close a business. According to the World Bank’s Doing Business 2011 analysis, Russia ranks 123rd out of 183 countries worldwide for ease of doing business, placing it in bottom 33rd percentile on this measure (Figure 12). In contrast to EBRD’s economic reform measures, Russia’s ranking on the Doing Business indicators is low compared to most countries in the E&E region; it ranks 26th out of the 29 transition countries. Moreover, Russia’s ranking has been slowly declining since 2005 when it ranked in the lower 45th percentile, although recent declines are due mainly to improvements in other countries that have outpaced Russia. Russia scores particularly poorly on dealing with construction permits (with a rank of 182) and trading across borders (162).

4 EBRD, Transition Report 2010, p. 138.

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Democratic and Economic Reforms

Figure 13 displays the relationship between scores on the economic reform index and democratic reform index among the countries of Europe and Eurasia. Overall, countries that do well on the democratic reform index also do well on the economic reform index, although that relationship is somewhat weaker within the E&E regions. While Russia is not an outlier, nor is it a strong example of this relationship. Compared to countries with a similar rating on economic reforms, Russia has one of the worst ratings on democratic reforms.

Economic and Democratic Reforms Projected

We averaged the progress of economic and democratic reforms over the past five years in Russia and projected the average annual rate of change forward to see how soon Russia might approach the proposed economic and democratic reform threshold (of reform progress on average of Bulgaria, Romania, and Croatia in 2006). Recognizing the limitations of taking projections out too far, we find that given Russia’s recent declines in democratic reform, Russia will continue to fall farther from the threshold within the next five years (to 2015) if it continues at the average rate of progress from the past five years (Figure 14).

Economic Performance

The MCP economic performance index includes key structural economic indicators as well as indicators of macroeconomic stability and growth. As shown in Figure 1, Russia’s economic performance score (2.8) is above the Eurasian average but below the E&E average. Figure 15

shows the breakdown of the economic performance index on the ten component measures of the index, showing substantial variation among these component measures. Russia’s economy performs well (scoring a 3.5 or above) on measures of long-term unemployment, private sector share of GDP, and energy security, but performs poorly (scoring under 2) on export share and composition, foreign direct investment, and domestic inequality.

Russia’s economy experienced one of most significant reversals in economic output worldwide as a result of the global economic crisis. While Russia’s economy grew by 8.1% in 2007 and 5.6% in 2008, it contracted by 7.9% in 2009 (Figure 16). Energy and metal (primarily oil and gas) are central to the Russian export sector and the overall economy (Figure 17), and played a major role in the boom and bust. The plunge in the price of oil by more than 70% (Figure 18) during the second half of 2008 through early 2009 precipitated the drastic contraction in output in 2009.

In addition to economic output, many of Russia’s other economic indicators deteriorated substantially during the global financial crisis. The unemployment rate increased in 2008 and 2009 after years of decline (Figure 19). The current account surplus decreased from about 6% in 2007 and 2008 to 4 % in 2009, the fiscal balance deteriorated from a surplus of 4% of GDP in 2008 to a deficit of 5.9% of GDP in 2009, and both private capital inflows and international reserves declined.

In 2010, Russian economic growth rebounded to an estimated 4.4%, leaving Russian GDP well short of pre-crisis levels (Figure 20). The recovery is expected to continue with average growth rates of above 4% forecast for 2011-2015, thanks in part to a recovery in oil prices.5 Actual and

5 Economist Intelligence Unit, Russia Country Report, December 2010.

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estimated data for 2010 show that Russia has seen improvements on a variety of other economic indicators during the recovery, including about a percentage point decline in unemployment, an appreciation of the ruble, an increase in financial reserves, and an improvement in the budget deficit.6

Human Capital

Of the five MCP indices, Russia has the smallest gap on the human capital index, with a score of 3.1 (Figure 1). Its score exceeds the Eurasian average and is slightly below the E&E average. As with the economic performance index, Russia’s overall human capital index score hides substantial variation on the component indicators (Figure 21).

Education. Russia performs relatively well on the education components of the human capital index as represented in its score of 4.0 on the education gap indictor. This indicator summarizes a variety of measures including enrollment rates and performance on cross-country surveys of educational performance. As shown in Figure 22, Russian performance on these surveys of educational performance approaches or exceeds the OECD average. Despite these educational performance scores, though, survey results from businesses suggest that that the Russian education system may not be preparing the workforce with the skills needed by business enterprises (Figure 23).

Health. Russia’s performance on health components is more varied and very poor on some measures. While infant mortality rates are low in Russia, adult mortality in Russia is among the worst in the region (Figure 24) despite slight improvements over the past decade (Figure 25).7

Consequently, Russian life expectancy is also among the worst in the region, declining slightly to just under 68 years in 2008, after a few years of an increasing trend (Figure 26). The low level of life expectancy in Russia is primarily a male problem. Russia is among a handful of countries in E&E which have the highest life expectancy gender gaps in the world (Figure 27). As of 2009, Russian men die approximately 12 years earlier then Russian women on average.

As is common in Eurasia, Russia suffers from a dangerously high tuberculosis incidence rate (Figure 28) with about 110 new cases of TB per 100,000 population compared to a global incidence rate of 13.9 new cases per 100,000 population. Moreover, multi-drug resistant tuberculosis (MDR-TB) is on the rise; about a fifth of TB cases in the countries of the former Soviet Union are resistant to TB drugs.8 HIV prevalence is also on the rise in Russia and has doubled from .5% in 2001 to 1% in 2009 (Figure 29).

Income. Russian GNI per capita income (PPP) reached a high of USD $19,779 in 2008, dropping slightly to $18,350 in 2009 after a decade of impressive growth. Per capita income in Russia is now similar to that Poland and exceeds all other Eurasian countries and most Southern Tier countries as well (Figure 30).

6 Economist Intelligence Unit, Russia Country Report, December 2010. 7 Adult mortality rates reflect the probability of dying between the ages of 15 and 60. This indicator tracks the noncommunicable disease and injury rates, which reflect the chronic diseases familiar to more developed countries and also may highlight risk factors such as tobacco and alcohol use and inactivity and/or unhealthy diets leading to chronic diseases. 8 USAID, The 2010 Europe and Eurasia Health Vulnerability Analysis.

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Regional Disparities. Given the vast size of Russia, regional disparities on measures of human capital are to be expected. The UNDP recently examined regional differences in Russia on the Human Development Index (HDI). Similar to the MCP human capital index, the HDI combines measures of income, life expectancy, and education. Values range between 0 and 1, with values of 0.8 to 0.9 representing “high human development” and values of 0.9 or higher representing “very high human development”. In 2008, just prior to the global financial crisis, Russia’s HDI score was 0.825. However, calculations of HDI at the regional level in Russia reveal that nearly 40% of the population lives in regions with HDI below 0.8, in the “medium human development” range (Figure 31).

Differences in HDI scores among the regions are largely a function of income and, to a lesser extent, life expectancy. As shown in Figure 30, the per capita income (PPP, US$) of Moscow at $37,987 is above the OECD average and close to that of Australia. Of the 80 Russian subdivisions for which data is available, though, 85% have per capita incomes below the Russian average. The regions of the North Caucasus Federal District, for instance, have per capita incomes between $6,904 and $2,882, similar to those of Egypt and India. Regional disparities in life expectancy are nearly as substantial (Figure 32). At the upper end of the spectrum, Ingushetia has a life expectancy of 80 years, similar to that of the Euro area, while the life expectancy in Chukotka is 20 years lower and below the life expectancy in Madagascar.

Despite the persistence of regional disparities, the share of the population living in areas with HDI of 0 .75 or lower has declined from nearly 30% in 2004 to less than 1% in 2008 due to both gains in regional GDP per capita and widespread improvements in life expectancy.

Human Capital and Economic Performance

There is a less pronounced relationship between human capital and economic performance (Figure 33) compared to the relationship between economic and democratic reforms. Compared to countries with a similar rating on human capital, such as Albania and Ukraine, Russia scores about average on economic performance.

Environmental Performance

Yale and Columbia University’s Environmental Performance Index (EPI) ranks 163 countries on 25 performance indicators tracked across ten policy categories covering both environmental public health and ecosystem vitality. Environmental health categories include: (1) water (effects on humans); (2) air pollution (effects on humans); and (3) environmental burden of disease. Ecosystem vitality categories include: (1) forestry; (2) fisheries; (3) agriculture; (4) climate change; (5) air pollution (effects on ecosystem); (6) water (effects on ecosystem); and (7) biodiversity and habitat. On each measure, countries are scored from 0 to 100 based on the percent proximity to an established international environmental policy target.

Overall, Russia ranks 69 out of 163 countries on the 2010 EPI, with a score of 61.2. Russia’s rank is similar to many of its neighbors – Belarus ranks 53; Georgia ranks 59; Ukraine ranks 87; and Kazakhstan ranks 92 – but well below the highest ranking E&E country of Slovakia (13). Across the components of the index, Russia’s performance varies widely as shown in Figure 34. The environmental health scores attempt to measure health outcomes and risks from

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environmental sources. Russia performs strongly on air pollution indicators (measuring health risks from indoor and outdoor air pollution) and water indicators (measuring access to water and sanitation). It does poorly, however, on the environmental burden of disease indicator, which measures the number of disability adjusted life years (or DALYs) lost due to environmentally influenced diseases. A comparison of Russia’s score on environmental health to a variety of other countries is provided in Figure 35.

The ecosystem vitality scores attempt to measure degradation of ecosystems and natural resources. With its vast water and forest resources and lack of strong demographic pressures, Russia performs well on indicators of water, fisheries, forestry, and biodiversity. It has substantial performance gaps on measures of air pollution, agriculture, and climate change. The low score on agriculture is largely driven by weak regulation of pesticides, whereas the low score on climate change is due largely to the inefficiency of Russian electricity production. Despite Russia’s energy independence, it is, like many countries of the former Soviet Union, highly inefficient in its overall use of energy (Figure 36).

Peace and Security

The MCP peace and security index was developed to mirror the six primary elements of the peace and security objective developed several years ago by the Director of Foreign Assistance. These elements include combating weapons of mass destruction, combating transnational crime, counter-narcotics, counter-terrorism, stabilization operations and security sector reforms, and conflict mitigation. Overall, Russia’s peace and security score of 2.45 is substantially lower than both the Northern and Southern Tier and Eurasia averages; only Tajikistan, Kyrgyzstan, and Uzbekistan are ranked lower. Russia’s profile on all six components of the peace and security index is provided in Figure 37, which reveals considerable variation among the components.

Russia scores relatively well on controlling weapons of mass destruction due to its border control and export controls on items of significance for nuclear explosions. Russia does relatively poorly on counter-terrorism due to recent incidences of terrorism and political instability in the North Caucasus. It also does poorly on stabilization operations and defense reform due to human rights abuses, high military expenditures, and a high homicide rate. Finally, it scores the lowest on transnational crime due to money laundering, intellectual property theft, trafficking in persons, and a criminalization of the state.

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Russia MCP Gap Analysis (Draft)

USAID E&E Bureau

Strategic Planning and Analysis Division February 2011

                                                                                                                       

                                             

           

           

 

 

   

   

 Figure 1 Europe and Eurasia MCP Index Scores, 2009/10

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Russia

E&E Avg.

Eurasia Avg.

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Southern Tier Avg.

Democratic Economic Economic Human Peace and Reforms Reforms Performance Capital Security

Ratings are based on 1 to 5 scale, with 5 representing the most advanced. Each circle represents an E&E county’s score on that Index. The countries of Europe and Eurasia included are: (1) Northern tier countries of Croatia, Czech Rep., Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, Slovenia; (2) Southern tier countries of Albania, Bosnia, Bulgaria, Kosovo, Macedonia, Montenegro, Romania, Serbia; and (3) Eurasian countries of Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine, Uzbekistan. See accompanying analysis for notes on sources.

        

  

 

  

  

 

 

           

                                                                                                                                                                 

 Figure 2 Europe and Eurasia Democratic Reform Scores, 2009

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1.0 Electoral Civil Society Independent National Local Judicial Corruption Process Media Democratic Democratic Independence

Governance Governance

Ratings are based on 1 to 5 scale, with 5 representing the most advanced. Each circle represents an E&E county’s score on that Index. The countries of Europe and Eurasia included are: (1) Northern tier countries of Croatia, Czech Rep., Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, Slovenia; (2) Southern tier countries of Albania, Bosnia, Bulgaria, Kosovo, Macedonia, Montenegro, Romania, Serbia; and (3) Eurasian countries of Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine, Uzbekistan. Source: Freedom House, Nations in Transit. 2010

                

                                                                                      

 Figure 3 Eurasia vs. Global Dataset for Governing Justly and Democratically

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Note: n=153. Ratings are based on a scale from 1 to 5, with 5 representing the best score. Sources: World Bank Institute, Governance Matters Indicators (2007 and 2010); Freedom House, Freedom in the World (2008 and 2010) and Freedom of the Press (2008 and 2010).

   

   

 

         

                                                                                                                                               

 Figure 4

Europe and Eurasia Democratic Reform Scores, 1985‐2009

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1.0 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

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Eurasia Avg.

Russia Southern Tier Avg.

Democratic Reform scores are based on 1 to 5 scale, with 5 representing the most advanced. The countries of Europe and Eurasia included are: (1) Northern tier countries of Croatia, Czech Rep., Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, Slovenia; (2) Southern tier countries of Albania, Bosnia, Bulgaria, Kosovo, Macedonia, Montenegro, Romania, Serbia; and (3) Eurasian countries of Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine, Uzbekistan. Source: Freedom House, Nations in Transit.

     

       

          

                                           

 Figure 5

Democracy Trends in Europe and Eurasia

Percent Change in Democracy Index Score, 1999‐2009

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Democracy Index Score, 2009 Democracy Index scores are based on 1 to 5 scale, with 5 representing the most advanced. Source: Freedom House, Nations in Transit.

   

 

 

 

 

 

                                           

 Figure 6

Democracy Trends in Europe and Eurasia

Percent Change in Democracy Indicator Score, 1999-2009

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Russia Democracy Index Score

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Democracy Index Score, 2009 Democracy Index scores are based on 1 to 5 scale, with 5 representing the most advanced. Source: Freedom House, Nations in Transit.

   

  

 

                                 

 Figure 7 Media Sustainability Index

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Source: IREX, Media Sustainability Index 2010. Scale of 0 to 4 where 4 is the most sustainable.

Figure 8 NGO Sustainability Index 

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Russia Azerbaijan

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Environment

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Infrastructure Public Image

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NGO Sustainability Index Component Indicators

Source: USAID, 2009 NGO Sustainability Index for Central and Eastern Europe and Eurasia, 13th Edition – June 2010. Scale of  1 to 7 where 7 indicates a low  or poor level of NGO development and 1 indicates a very advanced NGO sector.  Scores of 5‐7 are Considered “Early transition” phase; scores of 3‐5 are considered “Mid‐transition” phase; and scores of 1‐3 are considered “Consolidation” phase.

              

        

  

  

 

           

           

                                                                                                                                                             

 Figure 9 Europe and Eurasia Economic Reform Scores, 2009

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Small Scale Large Scale Price Trade and Enterprise Competition Banking Non‐Bank Infrastructure Privatization Privatization Liberalization Foreign Reform Policy Reform Financial

Exchange Reform ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ Stage 1 Reforms ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ Stage 2 Reforms ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐

Ratings are based on 1 to 5 scale, with 5 representing the most advanced. Each circle represents an E&E county’s score on that Index. The countries of Europe and Eurasia included are: (1) Northern tier countries of Croatia, Czech Rep., Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, Slovenia; (2) Southern tier countries of Albania, Bosnia, Bulgaria, Kosovo, Macedonia, Montenegro, Romania, Serbia; and (3) Eurasian countries of Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine, Uzbekistan. Source EBRD, Transition Report 2010.

   

   

 

             

                                                                                                                                           

 Figure 10 Economic Reforms in Russia and E&E Region, 2010

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Eurasia Avg.

1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009

Economic Reform scores are based on 1 to 5 scale, with 5 representing the most advanced. The countries of Europe and Eurasia included are: (1) Northern tier countries of Croatia, Czech Rep., Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, Slovenia; (2) Southern tier countries of Albania, Bosnia, Bulgaria, Kosovo, Macedonia, Montenegro, Romania, Serbia; and (3) Eurasian countries of Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine, Uzbekistan. Source: EBRD, Transition Reports.

     

   

   

     

                       

                                                                                                                                           

 Figure 11 Stage 1 and Stage 2 Economic Reforms in Russia and E&E Region, 1989‐2010

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1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Economic Reform scores are based on 1 to 5 scale, with 5 representing the most advanced. The countries of Europe and Eurasia included are: (1) Northern tier countries of Croatia, Czech Rep., Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, Slovenia; (2) Southern tier countries of Albania, Bosnia, Bulgaria, Kosovo, Macedonia, Montenegro, Romania, Serbia; and (3) Eurasian countries of Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine, Uzbekistan. Source: EBRD, Transition Reports.

 

 

 

 

                                                                                   

 Figure 12 Business Environment Percentile Rank

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Source: World Bank, Doing Business 2011 (October 2010). The analysis is based on 10 aspects: starting a business; dealing with construction; hiring and firing workers; registering a property; getting credit; protecting investors; paying taxes ; trading across borders; enforcing contracts; and closing a business.

 

                                                                 

 

   

   

    

 Figure 13

Economic and Democratic Reforms in 2009-2010 5

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3 SerMol UkrKaz Mont Bos

Aze

Econ

omic

Reforms

Taj Uzb Kos

2 Bel

Tkm

Southern Tier CEE

Northern Tier CEE

Eurasia Movements from prior year

1 1 2 3 4 5

Democratic Reforms

Ratings are based on a 1 to 5 scale, with 5 representing most advanced. Freedom House, Nations in Transit 2010 (2010); and EBRD, Transition Report 2010 (November 2010). Economic reforms data are 2010 Democratic Reforms 2009.

Figure 14 Russia Economic And Democratic Reforms, Actual and Predicted, 1998 - 2015

Economic & Democratic Reforms 5.0

4.5

4.0

Romania-Bulgaria-Croatia 2006 Threshold (3.53) 3.5

3.0

2.5

2.0

1.5

1.0 1998 2000 2002 2004 2006 2008 2010 2012 2014

Actual 1998-2009 Projected 2010-2015

Ratings are based on 1 to 5 scale, with 5 representing the most advanced.  Projection based on average annual change during most recent 5 year period. 

    

 

      

       

                                           

 Figure 15 Russia Economic Performance Index Scores

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

Private MSME Export FDI GDP Domestic Long Macro‐ Services Energy Sector Share of Share Cumulative Growth Inequality Term Stability As % of Security Share of Employment And 5 Yr Avg. Unemploy‐ GDP GDP Composition ment

Economic Performance scores are based on 1 to 5 scale, with 5 representing the most advanced. See accompanying analysis for notes on sources.

                

 

           

 Figure 16

Economic Growth in Russia Compared to the World and CEE

% Change 10

8

6

4

2

0

-2

-4

-6

-8

-10

World

CEE

Russia

2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: IMF, World Economic Outlook October 2010.

                    

                                           

 Pe

rcen

t Figure 17 Fuels, Ores, Metals and Precious Stones Exports

as % of Total Exports 100

90

80

70

60

50

40

30

20

10

0

64

73 69

29

16

87 83

74

49

44

66

87

68

79

49

67

42

55

9

38

22

38

1

10 9 11 12

26

1995‐1997 2006‐2008

Economist Intelligence Unit, various Country Reports and World Bank, World Development Indicators 2009 (May 2009). Most recent data for Turkmenistan is 2001; Uzbekistan, 2005.

        

  

           

     

        

 

 

5 year low Q1 2009 $45

Figure 18

The Price of Oil Peak Q2 2008 $122

US $ pe

r Barel

Anu

al Average

$120.00

$100.00

$80.00

$60.00

$40.00

$20.00

$0.00

Jan’10 $76

U.S. Energy Information Administration, World Database 2010.

 Figure 19

Unemployment in Russia, 2000-2009 pe

rcen

tage

Source: UNECE Statistical Database; EBRD Transition Report 2010.

   

  

  

 

          Figure 20

GDP as % of 1989 GDP 1989 = 100

160

140

120

100

80

60

40 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Northern Tier Avg.

Southern Tier Avg.

Eurasia Avg.

    

        

   

  

   

  

 

                                                                                                                         

                                                

            Figure 21 Europe and Eurasia Human Capital Index Scores

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

Northern Tier Avg.

Southern Tier Avg.

Eurasia Avg.

Russia

Under 5 Poverty and Life Expectancy Public Education TB Mortality Rate Income Expenditure: Gap Incidence

Education & Health

Human Capital Index scores are based on 1 to 5 scale, with 5 representing the most advanced. Each circle represents an E&E county’s score on that Index. The countries of Europe and Eurasia included are: (1) Northern tier countries of Croatia, Czech Rep., Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, Slovenia; (2) Southern tier countries of Albania, Bosnia, Bulgaria, Kosovo, Macedonia, Montenegro, Romania, Serbia; and (3) Eurasian countries of Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine, Uzbekistan. See accompanying analysis for notes on sources.

        

                                                                      

 Figure 22 Functional Literacy PISA vs. TIMSS vs. PIRLS

OECD Level

PISA TIMSS PIRLS

International Association for the Evaluation of Educational Achievement (IEA), TIMSS International Mathematics Report (2008), TIMSS International Science Report (2008) and PIRLS International Report (2008); and Organization for Economic Cooperation and Development (OECD), First Results from PISA 2006 (2007).

                 

   

                     

 Figure 23 Skills and Education of the Workforce as a Business Constraint

% of Business 90

80

70

60 2005

50 2008

40

30

20

10

0

Country/Region

World Bank and EBRD, Business Environment and Enterprise Performance Survey (2009).

 

                                   

 Figure 24

Adult Mortality Rate in Eastern Europe and Eurasia, 2008

Per 1

000

AMR is chance of dying between the ages of 15‐60 per 1000 population. Source: WHO World Health Statistics, 2010.

 

                                   

 Figure 25

Adult Mortality Rate in Eastern Europe and Eurasia, 1990-2008

Per 1000

Russia

Eurasia

Northern Tier CEE

Southern Tier CEE

AMR is chance of dying between the ages of 15‐60 per 1000 population. Source: WHO World Health Statistics, 2010.

        

                 

 Figure 26 Life Expectancy at Birth Years at Birth 76

74

72

70

68

66

64

62

60 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

NT CEE

Eurasia

Russia

Source: World Bank, World Development Indicators 2008 (April 2008).

                                       

       

 

   

 

 

 

 Figure 27 Life Expectancy Gender Gap Years a

t Birth

16

14

12

10

8

6

4

2

0

Northern FSU

Europe & Eurasia

High Income

Middle Income

Low Income

Russia

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

World Bank, World Development Indicators 2008 (April 2008). The life expectancy gender gap is female life expectancy minus male life expectancy.

      

       

             

 Figure 28

Tuberculosis Incidence 2008

New Cases per 100,000 Population

250

200

150

100

50

0

Northern Tier CEE Southern Tier CEE Eurasia

Source: World Health Organization, Global TB Control, 2010.

                   

 Figure 29

Adult HIV Prevalence Rates, 2001 and 2009 pe

rcentage

20092001

* Rates are less than 0.1%. Source: UNAIDS Global Report, 2010.

          

                                          

         

 Figure 30 Per Capita Income, 2008

* Regions of the North Caucasus Federal District

GDP per capita , PPP $

Source: UNDP, National Human Development Report in the Russian Federation 2010; World Bank, World Development Indicators ; UNDP, Human Development Report 2010.

       

                     

                

 Figure 31 Share of Russia’s Population living in regions with various HDI values

Share of Population 60

50

40 2004

2008

30

20

10

0 Less than 0.70 0.70 ‐ 0.75 0.75‐0.8 0.8‐0.9 More than 0.90

‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ Medium Human Development ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ High Human Very High Human Development Development

Source: UNDP, National Human Development Report in the Russian Federation 2010.

                                          

          

   

 

Years at Birth

Figure 32 Life Expectancy

* Regions of the North Caucasus Federal District

Source: UNDP, National Human Development Report in the Russian Federation 2010; World Bank, World Development Indicators ; UNDP, Human Development Report 2010.

           

                                                           

 Figure 33 Economic Performance and Human Capital in 2008‐2010 5

Econ

omic

Per

form

ance

4 Cze Slk Hun

Bul Est Pol Rom Lat SlnAze CroLitKaz Alb

MontGeo3 Kos

Rus BosTkm MacArm

Uzb SerKyrTaj Bel Ukr

Mol 2

Northern Tier CEE

Southern Tier CEE

Eurasia 1

1 2 3 4 5

Human Capital

Ratings are based on a scale from 1 to 5, with 5 representing the best score. World Bank, World Development Indicators 2008 (April 2008); EBRD, Transition Report 2010 (November 2010).

 

       

   

     

 

     

     

       

 

     

                                        

     

 Figure 34 Russia Environmental Performance Index, 2010

Environmenal Perfromance Index Score

Environmental Health

Air Pollution (effects on humans)

Water (effects on humans)

Environmental Burden of Disease

Ecosystem Vitality

Forestry

Fisheries

Water (effects on ecosystem)

Biodiversity & Habitat

Air Pollution (effects on ecosystem)

Climate Change

Agriculture

0 10 20 30 40 50 60 70 80 90 100

% Proximity to Target

Source: Yale Center for Environmental Law & Policy and Center for International Earth Science Information Network, Columbia University , 2010 Environmental Performance Index.

                                          

   

 

 

 Figure 35 Environmental Health Index, 2010

Russia

Chad

Zambia

Turkmenistan

Iceland

El Salvador

Belize

Ukraine

USA

Belarus

Serbia

Bosnia

Armenia

Kyrgyzstan

0 10 20 30 40 50 60 70 80 90

% Proximity to Target Source: Yale Center for Environmental Law & Policy and Center for International Earth Science Information Network, Columbia University , 2010 Environmental Performance Index.

100

     

                      

  

    

 

 

 

           

           

  

 

      

   

  

  

 

 

 

 Figure 36 Energy Dependency and Efficiency Net

ene

rgy im

ports a

s % of e

nergy use

Highe

r Dep

ende

ncy

100

80

60

40

20

0

‐20

‐40

‐60

‐80

‐100

Cze

Sln

Slk

Cro

Hun

Pol

Lat

Est

Lit

MacAlb

Bos

Bul

Rom

Arm

Geo

Rus

Kyr

Taj

Ukr

Mol

Uzb

Bel

III. Efficient & Independent VI. Independent but Inefficient

I. Efficient but Dependent II. Dependent & Inefficient

Kaz (2.0,‐113) Aze (1.9,‐171)

12345678

Ser

9

Northern Tier CEE

Southern Tier CEE

Eurasia

Non E&E Countries

USA

Euro Area

Ethiopia

Mozambique

Costa Rica

Panama (11.6, 72)

Australia (5.4,‐119)

Denmark

Argentina

Mexico

Angola (6.9, ‐671)

Yemen (6.7, ‐671) Tkm (1.0,‐257)Greater Inefficiency GDP per unit of energy use

World Bank, World Development Indicators 2009 (May 2009).

   

   

   

 

           

                                                                                                                     

                                                  

 Figure 37 Europe and Eurasia Peace and Security Scores

5.0

4.5

4.0

3.5

3.0

2.5

2.0

1.5

1.0

Northern Tier Avg.

Southern Tier Avg.

Eurasia Avg.

Russia

Counter‐ Counter‐ Transnational ConflictWMD Stabilization Terrorism Narcotics Crime Mitigation

Peace and Security Index scores are based on 1 to 5 scale, with 5 representing the most advanced. Each circle represents an E&E county’s score on that Index. The countries of Europe and Eurasia included are: (1) Northern tier countries of Croatia, Czech Rep., Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, Slovenia; (2) Southern tier countries of Albania, Bosnia, Bulgaria, Kosovo, Macedonia, Montenegro, Romania, Serbia; and (3) Eurasian countries of Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine, Uzbekistan. See accompanying analysis for notes on sources.