The purpose of the course is to bring the basic knowledge on the specific aspects of Russian economy that had significant impact on the latest development trends in Russia. This course will provide you with knowledge on: 1) the basics of economy; 2) understanding the role of market reforms in developing the key features of modern Russian economy; 3) understanding specific aspects of Russian economy; 4) cause-effect relationship of the most significant trends in Russia’s economic development; 5) instruments for analysis of Russian economy; 6) business climate in Russia and skills required for doing business in Russia. Currently, different aspects of economy have some influence on us and our behavior - e.g. currency exchange rates, inflation and other things define the way in which we distribute our income between savings and investments. In order to understand these principles it is required to have the basic knowledge on economics. So it is not only a lecture on Russian economy. Another main objective of the course is to develop knowledge on the basics of economy as such. So the course will disclose universal patterns by analyzing trends in Russian economy. FAQ: Q: What is targeted audience for this course? What are the course prerequisites? A: The course is mainly developed for students pursuing their master’s degree in the field of international economy and for those who have professional interest in Russian economy. It requires basic knowledge of economic terms. Q: What are the minimum requirements to pass the course? A: In order to pass the course and receive a Course Certificate you will need to have at least 80% of correct answers in each quiz. Welcome to the course “Understanding Russian Economy. Problems of Transition”!
The golden decade 1999-2008
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From the course by National Research University Higher School of Economics
Understanding Russian Economy. Problems of Transition
134 оценки
National Research University Higher School of Economics
134 оценки
From the lesson
Understanding the golden decade and the subsequent crisis
Welcome to the Week 5! We continue to analyze Russian economy in transition. This week we pass on to an extremely interesting period of Russian economic history. We will look at the decade of steady growth, which can be called the golden decade for Russian economy. Economic crisis in 2008 in Russia will be the second important point of this week.
Meet the Instructors
Vladimir ZuevProfessor
Department of Trade Policy
[MUSIC]
Hello, everybody.
Once again, we continue to understand the Russian economy and transition.
And today, we pass on to the extremely interesting
period in Russian economic history.
The one, which I call the golden decade.
We will make the analysis of the golden decade where Russian economy
had a very fast rise and then it all ended up by economic crisis again.
So those two major events in economic history
of Russia will be treated within this topic.
So the golden decade, [COUGH] that's
the period after the crisis of 98 and
til the second crisis of the year 2008.
So, that was really a decade of very fast rise and rapid economic growth.
You can see here the figures.
[COUGH] Initially, GDP grew at a very fast pace.
More than 30% on the annual basis and
then about 7% a year growth,
which is also a very high growth.
Since the year 2000, the National Russian
budget was positive balanced, no deficit.
[COUGH] Public debt, which use to be great.
Remember, we analyzed the situation with Gekko
with heavy public borrowing and enormous external and
domestic debt of the Russian federation.
This time, public debt lowered from
85% of GDP in 99 to just 28%
already at the end of the year 2003.
Investments grew at a pace even higher than
the overall GDP growth, about 10% a year,
which means that economic growth was quite good.
Inflation decreased from three-digit figures,
from three-digit numbers to two digits ones.
Well, two digit numbers of inflation is also high.
Problem on inflation still is a serious problem for the Russian economy and
we will treat as a special topic, as a special challenge in a particular
part of this presentation, but
here's just to mention that within this period of time?
Russian government managed somehow to control inflation.
Very important for the population of Russia that economic growth
finally had positive effects on well-being of the nation,
which was reflected in the rise of real incomes.
Real incomes rose about 11% a year,
still more than the GDP rise, more than investments grew.
So, this was a really happy year for
many citizens of Russia.
They have produced positive results for them.
You can see here the figures that starting from the year 2006,
as many as 20 million tourist a year traveled from Russia and
traveling from Russia is not an easy thing to do.
It's not like in Europe, you just go several kilometers
away from your village and you are in the next country.
Distances are much greater between Russia and other popular destinations.
You have to have much more money in order to let you travel abroad.
And that is already some important indicator of the new well-being
of the nation, if so many tourist started to travel abroad.
That's the way we can treat this indicator and
another indicator of the rise in real incomes
is a number of the cars sold at the Russian market.
Russia bypassed Germany and
became the number one market for cars in Europe.
You can see here the pre-crisis figures,
pre 2008 crisis figures.
You can see that as many as more than one and
a half million cars were sold in Russia
at that period of time while Germany
became second in number of the cars sold.
And well, buying a car, a foreign made car that's already.
Clearly, an educator over a new well-being for
a Russian customer, for a Russian citizen.
There are some figures on further development of the sales and cost.
But well, that's irrelevant for the period we are analyzing.
We just made so far the analysis up to the crisis of the year 2008 and
the are fact that Russia became number one in terms of cars sold matters a lot.
So some more figures, you can see here
exactly what were the numbers of GDP growth.
Before the crisis of 2008, that was
quite a fast rise of GDP growth and Russia became
15th economy in the world by GDP volume.
GDP volume is good, but normally a more accurate assessment of
real comparative strength of a certain economy
is GDP calculated on per capita basis.
Well, unfortunately, with this indicator, Russia still
lagged behind many economies of the world.
You can see here, the GDP on per capita basis
in Russia was only ranked somewhere as 57th in the world.
You can see the figures for the 2004 and
if you compare the pre-crisis GDP of Russia
calculated on per chasing power operative,
then you can see that in Russia, the indicator was
roughly around $12,000 on per capita basis.
While in France, nearly three times more roughly 30,000.
In the UK, 3500.
And in the US, $43,000 on per capita basis.
So Russia had a lot to do to move forward to be on
par with major economies of the world, but
still as a result of the fantastic economic
developments within this golden decade.
Russia managed to slightly catch
up with the rest of the developed world.
Apart from that, we had spectacular financial results of
the development of the economy within those years, within this decade.
You can see here that the budget
surplus since 2004 became
roughly of 74 billion rubles.
You can see that there was a rapid increase
in the central banks of Russia had currency
reserves starting from $65 billion in the year 2003,
we managed to increase those reserves
to up to over $400 billion in just
a short period of time just in four years.
And then before the crisis in the summer of the year 2008, they became even bigger.
There was a record of nearly $600 billion
of hard currency reserves in Russia, accumulated in Russia and
that was roughly ten times rise within this decade.
So, that was really quite a spectacular increase.
You can compare it with China.
[COUGH] China was much better in that
more than 1.200 billion of reserves,
which is roughly 2 times the amount in Russia.
Russia was the third largest country in the world by the amount of
currency reserves and that really meant that Russia progressed
substantially in getting better on its financial external position.
That's for sure and apart from hard currency reserves, we should
take in account yet another financial instrument, which has been created and
then in a rapid increase during this decade the one of stabilization fund.
You can see here, the figure that stabilization
fund grew at a pre-crisis level of something like
of 3 trillion rubles roughly at the exchange rate
of rubles to dollar at that time that was roughly $117 billion.
And that was another yet, important
financial pillow to support Russian economy
in case hard times come and they came.
Well, but that's in a little while.
[MUSIC]
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