Russia as a RE-emerging Economy: Continuity and Change Since 1992

• In Event: Global Economic Integration - The Post-Socialist Experience

Abstract

In 2001, including Russia among the BRICs made a lot of sense, as Russia’s annual growth rates matched those of the most dynamic emerging economies. But, subsequent to the 2009 GDP contraction (of -8 percent), however, the narrative quickly changed. Virtually overnight, the stories about the Russian economy changed drastically, with references to crumbling Soviet-era infrastructure, flailing petrostate, and a stagnant economy being stifled by the state. This chapter argues that it was a mistake to view Russia’s growth in 2000-2008 as indicative of its success as an emerging economy, and that it is a mistake now to view the ups and downs since 2009 as evidence of irredeemable economic weakness. Russia’s economy had already “emerged” in the Soviet era, at least insofar as having reached a level of economic and social development that was closer to the lower-ranked advanced industrial economies of the European Union than to other countries seen as emerging economies. Looking ahead, too, Russia’s long-term economic trajectory is likely to track more closely with advanced post-industrial western economies than with non-western emerging economies. And, on many key indicators, while Russia cannot match China or India, it can certainly match the West, including the size of its foreign reserves (which reached the top five before sanctions were applied) and significant investments in gross fixed capital investment (which ranks in the top ten in absolute terms). Over the long run, the Russian economy may experience periods of stagnation or even contraction, but can still sustain an economy that is capable of generating living standards closer to the post-industrial West than to the emerging rest.

Author

• Rudra Sil, University of Pennsylvania