Russian Economy
The transformation of Russia into a market economy has been damaged by controversy in both Russia and the West. Things took a drastic turn with the events that happened in the Soviet Union on August 19-21, 1991. These three days ended the era of communism in the USSR. Three big transitions were made simultaneously in those three days, the emergence of Russia as a free state, the building of democracy, and the transition to a market economy. For seventy years its communist government sheltered the economy of Russia, but with the dissolution of the Soviet Union the economy was left without the guidance for which it relied so heavily. Control of the economy was thrust into the inexperienced hands of the general population, who had lived for three generations under a system in which they had no need to make decisions about business (Aslund, 1995). In July 1990, leaders of the Group of Seven industrial nations and the president of the European Community asked the International Monetary Fund (IMF) and other United Nations economic agencies to study the Russian economy and propose a more effective method of reform for their economy. The committee strongly suggested that the Russians immediately release price controls on almost
Russia must now build on the achievements of its stabilization policies, which are aimed at alleviating the economic confusion immediately following the reforms of the economy. In 1999 the GDP was valued at about $158 billion (with an official exchange rate of 28. In order to promote investment, management must eliminate excess manpower to reduce costs so that excess capital can be redirected to needed investment. The world economy is being swept by a wave of globalization and each countries economic activities are carried out within a network of interdependent trade and investment relations with other countries, it is unrealistic to suppose that Russia alone can remain a closed economy. However, many of the corporations are now owned by employee shareholders and so there are no externally imposed incentives to regulate the activities of these companies. Efforts to promote investment will be aided to the new relatively political stability and the fact that Russia has become increasingly self-sufficient economically (Russian and Eurasian Program, 2000). High oil prices on international markets accounted for most of the remainder.
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Acceptance Essays
