Russian Roulette: Russia's Economy in Putin's Era — John Shaqi
Russian Roulette: Russia's Economy in Putin's EraVaknin, Samuel
History
Russian Roulette: Russia's Economy in Putin's Era
Vaknin, Samuel
Putin, Vladimir Vladimirovich, 1952-; Russia (Federation) -- Politics and government -- 1991-
In Russia it is often "Moscow proposes - but the governor disposes" -
but decades of central planning and industrial policy encouraged
capital accumulation is some regions while ignoring others, thus
irreversibly eroding any sense of residual solidarity. In an IMF
working paper ("Regional Disparities and Transfer Policies in Russia"
by Dabla-Norris and Weber), the authors note that the ten wealthiest
regions produce more than 40% of Russia's GDP (and contribute more than
50% of its tax revenues) - thus heavily subsidizing their poorer
brethren. Output contracted by 90% in some regions - and only by 15% in
others. Moscow receives more than 20% of all federal funds - with less
than 7% of the population. In the Tuva republic - three quarters of the
denizens are poor - compared to less than one fifth in Moscow. Moscow
lavishes on each of its residents 30 times the amount per capita spent
by the poorest region.
Nadezhda Bikalova of the IMF notes ("Intergovernmental Fiscal Relations
in Russia") that when the USSR imploded, the ratio of budgetary income
per person between the richest and the poorest region was 11.6. It has
since climbed to 30. All the regions were put in charge of implementing
social policies as early as 1994 - but only a few (the net "donors" to
the federal budget, or food exporters to other regions) were granted
taxing privileges.
As Kathryn Stoner-Weiss has observed in her book, "Local Heroes: The
Political Economy of Russian Regional Governance", not all regions
performed equally well (or equally dismally) during the transition from
communism to (rabid) capitalism. Political figures in the (relatively)
prosperous Nizhny-Novgorod and Tyumen regions emphasized stability and
consensus (i.e., centralization and co-operation). Both the economic
resources and the political levers in prosperous regions are in the
hands of a few businessmen and "their" politicians. In some regions,
the movers and shakers are oligarch-tycoons - but in others,
businessmen formed enterprise associations, akin to special interest
lobbying groups in the West.
Inevitably such incestuous relationships promotes corruption, imposes
conformity, inhibits market mechanisms, and fosters detachment from the
centre. But they also prevent internecine fighting and open,
economically devastating, investor-deterring, conflicts. Economic
policy in such parts of Russia tend to be coherent and efficiently
implemented. Such business-political complexes reached their apex in
1992-1998 in Moscow (ranked #1 in creditworthiness), Samara, Tyumen,
Sverdlovsk, Tatarstan, Perm, Nizhny-Novgorod, Irkutsk, Krasnoyarsk, and
St. Petersburg (Putin's lair). As a result, by early 1997, Moscow
attracted over 50% of all FDI and domestic investment and St.
Petersburg - another 10%.
Public-domain text, read in full here on John Shaqi.
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