Economy in Russia Essay Example | Topics and Well Written Essays - 2000 words

Economy in Russia - Essay Example Russia has to deal with persistent economic problems, which include: The consensus and eventual policy position taken in Russia was that in order for the Russian economy to develop and benefit from the increasing integration of the global market and trade, policy reforms must be instituted. These reforms should directly address the challenges cited above. The past few years saw policy pronouncements that include price reform, the privatization of enterprise, macroeconomic stabilisation and fiscal decentralisation. Beginning in 1992, the government began instituting economic reform in these areas and based on the trajectory of growth of the Russian economy up to the present, it is clear that some of the governmental policies have worked. Terterov (2004), for example, cited how investments to the country has overtaken capital flight, which has been the pattern in the past. As a result the economy has received a substantial boost, particularly in manufacturing and industrial sector, helping to create jobs and revenue for the state (Terterov 2004). Empirical research has also shown the positive link between governmental reform and wage increase and unemployment (Gerber 2006). Wolf and Lang (2006) in a study for the RAND Corporation reported that the recent impressive economic performance can be attributed to decentralized decision-making and the change in resource allocation from the previous state and bureaucratic allocation to the resource allocation through the market. During Vladimir Putin’s administration, Russia was finally recognized as a market economy. The United States and the European Union declared this in June 2012. This is important for Russia because being classified as one means better opportunities for trade with other countries. For example, as a result of the recognition, the United States has removed several restrictions and guidelines that govern the US trading relationships with nonmarket economies