Download RUSSIA - Moscow State Institute of International Relations

RUSSIA:
Economic and political
overview
GOALS:
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:

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?

BIG EUROASIAN
COUNTRY?
 IMPORTANT WORLD
PARTNER?
 COUNTRY OF COLD
AND WINTER?
 COUNTRY OF VODKA
AND CAVIAR?
 COUNTRY OF ILLEGAL
BILLIONAIRS?
Latest 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 1990s

Two fundamental and interdependent goals-macroeconomic stabilization and economic restructuring-mark the transition from central planning to a marketbased 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 km
 Population
Population: 145.0 million
About 57 percent of population working age.
Urban population: over 107 million
Rural population: over 39 million
State language: Russian
 Moscow:
population - 8.7 million
Other cities with population over 1 million:
Saint Petersburg (5.0)
Rostov-on-Don
Chelyabinsk
Samara
Nizhny Novgorod
Volgograd
Ufa
Omsk
Novosibirsk
Ekaterinburg
Perm
Voronezh
Kazan
Administrative 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
Russian 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
CONSTITUTIONAL GOVERNMENT

THE DIVISION OF POWERS
Powers must not be concentrated in the hands of
one person or the institution
 POWER MUST BE DIIVIDED AMONG THE
LEGISLATIVE, EXECUTIVE AND
JUDICIAL BRANCHES
 CLEAR DELINEATION OF
RESPONSIBILITIES AND A SYSTEM OF
CHECKS AND BALANCES
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
GOVERNMENT
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 Power
International organization
participation
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:
71.83 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
3
2,3
1,7
4,2
7,5
JanFeb
11,4
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
Federal Government
Balance, %GDP
GDP and Industrial Production

Structural composition has changed (Table 2)
 Construction – rapid growth
 At least part of the decline in 2006 –
exceptionally cold winter
 Different competitiveness level compared to
foreign goods
 Significant growth in consumer electronics
(lower import tariffs on parts)
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
3
4,5
9
Immovable property operations, leasing
and services provisions
Growth in employment in selected sectors, 2005
Agriculture, hunting, forestry
Extraction of mineral resources
Manufacturing
Construction
Trade and other services
Hotels and Restaurants
Transport and communication
Finance
Real Estate and Leasing
Government Administration and social security
-11,9
-2,3
-4
-1,4
9,7
2,6
-2,1
7,4
-0,5
7,2
Total 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 Debt
Two trends:
1. A substantial reduction in sovereign debt
2. Rapid increase of debt accumulated in
corporate and private sector
3. IMF Debt = 0
Influence:
1. Relatively low interest rates
2. High oil prices
Russia's International Reserves
(US $ bln.)
(Bank of Russia's current cross-rates as of
reporting date)
Year
Volume
31.12.04
124.5
01.07.05
151.8
23.09.05
156.2
National Projects (2005)
2006
2007
Total (06-07)
Health
88,4
120,5
208,9
Education
25,3
31,2
56,5
Housing
Agricultur
e
35,4
46,2
81,6
16,2
18,7
34,9
Total
165,3
216,6
382