Economy Of Russia Essay, Research Paper

The phase in the business cycle that Russia is in is Prosperity.

Prosperity is the high point of the business cycle. The Gross Domestic

Product is 796 billion dollars. Russia is partners with Germany in

exporting and importing. The number of imports is 33 billion and the

number of exports are 66 billion. The National Budget is 56.6 billion

dollars. They have 1 radio per 2.9 people. They also have 1 Telephone per

5.9 people. Russia s education is free and compulsory through ages 7 to

17. The unemployment rate is 8 percent. The inflation rate is 85 percent

and possibly more if monetary policy is relaxed. Russia was mostly an

agricultural country until the late 19th century, when industrialization

began, in European Russia. Economic development was then interrupted

by World War 1 and the Civil War that followed. Modern development

was initiated by Stalin, whose frantic industrialization drive in the 1930 s

made the Soviet Union an industrial giant. Under Stalin and his

successors, the less settled frontier regions of Central Asia and Siberia were

developed. Several of the world s largest dams were built on in the former

Soviet Union, and the world s first atomic station was opened in 1954. By

the 1980 s about 40 nuclear reactors were operating in the Soviet Union.

In the late 1970 s the economic backwardness of the Soviet Union had

become so self evident that no amount of political propaganda could

obscure it. Western developed countries began to enter the Information

Age, introducing new communication technologies and electronic links

among institutions and individuals. The Soviet Union still relied on the

rigid planning and pervasive controls, leaving no room for initiative and

inventiveness. When Mikhail Gorbachev became head of the party in

1985, the huge country began to move. Gorbachev surrounded himself

with a number of reform-minded economists and soon formulated the

main pillars of economic restructuring called perestroika. The major goals

of perestrioka were to make Soviet enterprises more self-governing and to

give them more freedom, while at the same time, more responsibility for

their performance. In the planned economy before perestroika, all

enterprises were totally dependent on central planners, who determined

where to buy materials, what to produce, and where to sell it. This system

encouraged inefficiency, because the companies did not have to compete

with any other companies. In addition since the workers could not be

fired , they did not work very hard. A number of new laws were made to

proclaim that it was possible for individuals or small groups to start their

own enterprises. Restaurants, taxis, recycling centers and repair shops

were opened in many places, but party bureaucrats often hampered these

new initiatives. Another goal of peresroika was to fight against cheap

products. Better quality control was introduced in many companies, but

it was often resented by workers and led to drops in production (Which

would be recession.)