Econ Test 2 Essay 4

  1. Optimist's view of Russia’s economic future
    • Believe that Putin has done a goods job
    • Russia is on the right track to economic success
    • Russia could become like Canada in the long run (a diversified economy baded on a mix of commodities, high tech manufacturing, and services like info technology)
  2. What policies do optimists point to?
    • Law and order: Putin reduces the amount of violence and crime
    • Free market thinking: think that Putin is a believer in the free market overall
    • Economic reforms: lower taxes, privatizing agricultural land, use of international accounting standards, plan to break up and partially privatize railroads and electricity
    • Growth of the middle class
    • Potential for long term success: allowed to join the WTO in 2012
  3. Pessimist's view of Russia’s economic future
    • Believe the Russain train has left the tracks, heading for a disaster
    • Disaster not just for Russia, but for the world
    • Russia will suffer due to lack of economic diversification, a bad legal environment, and political dictatorship
  4. Pessimist's arguments (economic problems)
    • Not enough economic diversification: very dependent on natural resource exports (oil, natural gas, wood, gold). Economy booms whenever oil prices are high, and suffers when they are low
    • Re-nationalizations: gov't took control of major commodity producers that had been privatized before.  Did this because gov't was worried about getting enough tax revenue so they just purchased them.  Never knew when your business would be attacked for political reasons
    • Russian financial crisis (2008-2010): high oil prices meant high income for many Russians, but they did not save much money due to little trust in banks.  Businesses relied on foreign money for their financing.  World recession cut off foreign money, drove down oil prices
  5. Pessimist's arguments (political problems)
    • Dictatorship: no change in political views and leadership
    • Intimidation of neighbors: believe that Russia is overcontrolling of what happens in neighboring countries, slowing the other country's growth.  Invasion of Georgia in 2008
    • Terrorism: encounter terrorism primarily because of the Chechen enthnic group's desire for independence
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Econ Test 2 Essay 4
Econ Test 2 Essay 4