Лекция: ECONOMY OF THE RUSSIAN FEDERATION

More than a decade after the collapse of the Soviet Union in 1991, Russia is now trying to establish a market economy and achieve more consistent economic growth. Russia saw its comparatively developed centrally-planned economy contract severely for five years, as the executive and legislature dithered over the implementation of reforms and Russia's agro-industrial base faced a serious decline.

After the breakup of the USSR, Russia's first slight recovery, showing the signs of open-market influence, occurred in 1997. That year, however, Asian financial crisis culminated in the August depreciation of the ruble in 1998, a debt default by the government, and a sharp deterioration in living standards for most of the population. Consequently, the year 1998 was marked by recession and intense capital flight.

Nevertheless, the economy started recovering in 1999. Then it entered a phase of rapid economic expansion, the GDP growing by an average of 6.7% annually in 1999-2005 on the back of higher petroleum prices, weaker ruble, and increasing service production and industrial output. The economic development of the country, however, has been extremely uneven: the capital region of Moscow contributes a third to the country's GDP having only a tenth of its population.

The recent recovery, made possible due to high world oil prices, along with a renewed government effort in 2000 and 2001 to advance lagging structural reforms, has raised business and investor confidence over Russia's prospects in its second decade of transition. Russia remains heavily dependent on exports of commodities, particularly oil, natural gas, metals, and timber, which account for about 80% of exports, leaving the country vulnerable to swings in world prices.

The country's GDP shot up to reach €1.2 trillion ($1.5 trillion) in 2004, making it the ninth largest economy in the world and the fifth largest in Europe.