Russia's Economic Future

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Russia's economic future

Nowadays, Americans always come up with the rise of China and India as new economic powerhouses on the global stage. It’s easy to forget that another superpower in Asia - Russia - occupied the central spot in our nation’s foreign policy consciousness for almost five decades after World War II. But Russia still matters. In August, global wheat prices surged to two-year highs after Prime Minister Vladimir Putin announced a ban on exports due to weather-driven supply shortages there. And the country remains a dominant supplier of oil and natural gas to the world market. Unlike China, however, the former Soviet Union has not been nearly as successful in making the transition from the communist era to a more market-based economy. According to Russia expert Bruce Parrott, not even the Russians are sure just what they want to be going forward. Although, the Russian economy faces serious challenges. Russian industry is not likely to regain an important role in a global economy that demands peak efficiency. Consequently, the export of primary commodities and raw materials is likely to remain the bulwark of economic development. Primary commodity markets are relatively more susceptible to fluctuations than are industrial markets. Russia is likely to continue to be influenced by economic trends that it cannot control. International investors, including the major investment banks, commercial investors, and companies interested in expanding their businesses in world markets have remained on the sidelines, scared off by Russia's long-standing problems with capital flight, reliance on barter transactions, corruption of government officials, and fears of organized crime. The Russian government and leading economists in the country have developed an agreement on the need for various kinds of administrative changes. Failures such as corruption are not moral failures, but a failure of administrative structure. There is a consensus that the country...
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