Thursday, October 22, 2015

Russia's Transitioning Economic System

Russia's New Economic System

Russia’s economy has changed drastically since the fall of the Soviet Union. This massive country has switched from a strict command-style economy to one that is transitioning toward introducing more free market elements such as international banking and trade, particularly of oil by large private corporations such as LUKoil. In fact, article from the Center for Strategic and International Studies claimed that “Never in its history has Russia been more prosperous or integrated into the global economy than it is now. Seemingly, this is a positive development and the achievement of one of the core goals of U.S. policy toward Russia since the Soviet collapse.” The complete article can be viewed here.

Recently in economics we have discussed how countries’ economic systems, or how they choose to answer the economic questions of production, are never completely centrally planned or free market. They are always somewhere in-between on the continuum. Furthermore, we have discussed how economic systems can change over time in responses to changes in leadership style or economic necessity. Russia is a perfect example of such an economic transition. Since the fall of the Soviet Union in 1991 Russia has abandoned its pure centrally-planned and isolationist economy in favor of a system that promotes international trade and some private entrepreneurship.Russia has goals set by the Ministry of Economic Trade that would put it at the top in Europe and fifth in the world, by 2020. Russia is still quite far from being completely free market as government oil firms still exist, however Russia’s economy is far more free than it used to be as it has transitioned to a mixed system of free markets and some government intervention.

Ethan Duval, Russia, Period 4

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