Economic History of Russia
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Russia is a country that focuses on creating regional policies that will benefit nationalistic and strategic ideals, along with the improvement of economic resources. However, there is a low demand by the government to reduce regional differences in standards of living. Millions of ethnic minorities are located in territories controlled by the Russian State, so striving to correct these differences would be a straining task. Vladimir Lenin was a former Russian communist and stated that the Russian Empire was a "prison house of nations." The Soviet Union followed to be the same, and today, the Russian Federation is the same. For the Russian leader, it seems vital to obtain and hold onto pieces of real estate and the people who occupy them. It is costly for the Russian people in both state funds and in terms of their children who end up as "cannon-fodder" for the excruciating military campaigns required.
In 1991, Russia's conditions were weak. The state budget deficit was 30% of GDP, or gross domestic product. GDP in the fourth quarter of 1991 was down 21% from its level in the fourth quarter of 1990. The constituent republics refused to pay taxes to the government, and the Soviet Union ran out of external credit and failed to fulfill on international payments. Russia was a centrally planned government- they still are, but they are making a slow conversion to a free market- so state stores, were practically empty because the fixed state-mandated prices were out of line with market values. In the past, Soviet planners wanted to acquire the best land, labor, and capital to armed forces and heavy industry to maximize their outputs, which should have increased GDP.
However, this kind of industry required large capital investments. It produces goods such as chemicals or steels to be used in other industries, but fails to give consumer goods any quality ingredients. Because of this, shortages were common since the goods were limited and poorly made. Agricultural problems also faced the public. Farmers had to work large, state-run farms, and all the materials were supplied, along with set wages. Russia had been a major exporter of wheat, but the Soviet Union could not even always produce grain to feed its own people. Workers lacked the motive to work, and economic competition was discouraged, since either way, innovation would not often be rewarded. The original goal of this system was to distribute goods and services fairly, but government officials and people in specific career choices often made more money and had a wider variety of goods to choose from, while middle-class citizens had the bear with shortages and mediocre goods.
On average, Russia had a GDP of 876.86 USD billion from 1989 until 2015. The all time high was 2230.63 USD billion in 2013, and the record low was 195.91 USD billion in 1999. During 2013, Russia generated growth because of favorable oil prices, at the time in which Europe was in a recession. Data showed that the ruble was deteriorating less than the decline of other developing markets. For the record low, the Russian stock, bond, and currency markets had collapsed. In 1997, Russia's economy started to look positive for a change, but the fixed exchange rate and its fiscal position came to appear fragile when international markets were affected by financial distress elsewhere in the world. Fears of ruble devaluation and a fail on domestic debt formed, and had arisen in previous months because of ongoing interest rate rises, capital outflows, and decreasing investor confidence in upcoming markets. Yields on ruble-denominated bonds had risen to more than 200%. Stocks lost more than 75% of their value.