Topics: Economics, Investment, Russia Pages: 12 (4162 words) Published: May 28, 2013
Russia and the Global Economic Crisis – The Causes and Coping With The Crisis

Russia and the Global Economic Crisis – Causes and Coping With The Crisis

Nearly after 20 years and the fall of the Soviet Union, the shape of Russia, its principal successor state, remains unsolved. As well as Russia’s relationship with the West. Though the intense U.S.-Soviet competition of the Cold War is over, Russia has not become the permanent partner that many on the outside hoped would emerge after the Cold War’s end. The United States and Europe have taken issue with many elements of Russia’s domestic path, regional and international posture, including its democratic exercise, energy-related activities in Europe, pose on Iran’s nuclear program, and war in the 2008 due to the Russia-Georgia conflict. A principal factor enabling this assertiveness in recent years has been Russia’s strong economic growth. Since 2008, though, Russia, like many other countries, has experienced a deep economic crisis. The main problem here is how the crisis affected Russia and how the Moscow interfered to help Russia stabilize and stand against this crisis and overcome it.

Economics is the study of how people choose to use resources. The time and talent people have available, the land, buildings, equipment, and other tools on hand, and the knowledge of how to combine them to create useful products and services are all main type of resources. In short, economics includes the study of labor, land, and investments, of money, income, and production, and of taxes and government expenditures (Macroeconomics). Economists try to measure and to learn how the well-being may rise over time, and to evaluate the well-being of the rich and the poor. Although the practices of individuals are important, economics also study the group behavior of businesses and industries, governments and countries, and the globe as a whole. Microeconomics starts by thinking about how individuals make decisions. Macroeconomics considers aggregate outcomes. The two points of view are essential in understanding most economic phenomena (1). As in any system, there are booming and trough periods, booming happen due to growth and trough due to economic problems, long term troughs may happen due to a financial crisis. The term financial crisis is commonly known to a variety of situations in which some financial institutions or belongings suddenly lose a large part of their money value. In the beginning of the 20th centuries, many financial crises were associated with banking fears, and many recessions coincided with these fears. Other situations that are often called financial crises include stock market collapses and the bursting of other financial bubbles and currency crises. Financial crises directly result in a loss of paper value; they do not directly result in changes in the real economy unless a recession or depression follows (2).


Russia and the Global Economic Crisis – Causes and Coping With The Crisis

Different countries are affected by any international economic crisis, but those few unlucky ones face a very painful dimension of it. In the current crisis, Russia is confronting virtually all the negatives at once, steeply declining export income from energy and metals, over-leveraged corporate balance sheets and a chorus of bailout appeals, a credit crunch and banking failures, a bursting real-estate bubble and mortgage defaults, speeding capital flight, and unavoidable pressures for devaluation (3). In this report, we discuss the 3 main elements that led to an economic crisis in Russia: it begins with a financial crisis Russian banks and firms hit, a steep decrease in the price of Russia’s principal export commodities, and a recession marked by low domestic demand. We then talk about the crisis’s implications for Russia’s political dynamics and foreign policy. All of this makes Russia less able to compete with the international order and...
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