Economy of Russia

The Russian economy belongs to the industrial-agrarian type with elements characteristic of post-industrial economies. According to some macroeconomic indicators, Russia is on a par with developing countries. At the same time, for example, the share of services in the gross domestic product (GDP) exceeds 50%, which is typical for developed countries. This combination of different features is typical for many countries of Central Europe and Eastern Europe, which, like Russia, according to the UN classification, belong to the category of countries with economies in transition. In terms of GDP, calculated in US dollars at purchasing power parity, Russia in 2001 ranked 10th in the world, producing approx. 2.25% of world GDP. In terms of GDP per capita, Russia was in the 8th ten countries, lagging behind the world leaders by more than 4 times.

Market relations in the Russian economy began to take shape in 1992, when prices were liberalized. In the same year, a mass privatization program was launched, during which, from 1992 to

In 2001, 137.8 thousand state and municipal unitary enterprises, or 47% of the total number of enterprises registered in the Russian Federation in 1991, changed their form of ownership. In addition to privatized ones, new private enterprises began to actively appear in the country. At the end of 2002, out of 3.6 million enterprises of all forms of ownership registered in Russia, more than 3/4 were private.

The transition from a planned economic system to a market one turned out to be very painful for a number of reasons, among which the protracted crisis of the USSR economy in the last years before its collapse, as well as the severance of economic ties between the former Soviet republics, played a significant role. In 1998, Russia’s GDP at constant prices fell to a minimum of 60% of the 1991 level (on average for the 12 CIS countries, the minimum GDP was 53% of the 1991 level). In subsequent years, an economic recovery began in Russia: in 1999, the GDP growth rate was 6.4%, in 2000 – 10%, in 2001 – 5%, in 2002 – 4.3%, in 2003 – 7.3%. By the end of 2002, the level of GDP was 77%, the level of industrial production in real terms was 65.2%, and agricultural production was 73.4% of the 1991 level.

Key economic indicators. According to the State Statistics Committee of the Russian Federation, Russia’s GDP in 2003 amounted to 13.305 trillion. rub. at current market prices. The dynamics of the main economic indicators for 1995–2002 is presented in Table. 7.

Table 7. The real volume of the produced and used GDP of the Russian Federation at average annual prices in 2000 (billion rubles, before 1998 – trillion rubles)

1995 1996 1997 1998 1999 2000 2001 2002
Gross domestic product at basic prices* 6042.51 5875.05 5957.88 5653.74 5974.17 6530.40 6846.80 7144.60
Including production of goods 2698.63 2538.13 2556.67 2368.59 2614.54 2939.60 3130.50 3233.00
Of them:– industry –
agriculture
– construction
1763.43
403.73
467.75
1717.46
382.61
389.08
1756.80
392.33
367.87
1672.91
318.42
344.74
1844.00
372.90
365.17
2049.20
420.20
428.80
2149.70
467.40
471.30
2229.40
474.80
484.10
Service production 3343.92 3337.13 3401.45 3285.49 3359.78 3590.8010 h 7 min ago

Nature clearly “came off” on these seals

More

224

101

400

3716.30 3911.60
including market services 2819.23 2793.97 2874.99 2743.94 2808.27 3041.30 3170.00 3352.60
Of them:– transport and communications
– trade (wholesale, retail), public catering and procurement
556.67
1406.54
531.72
1432.44
521.81
1507.15
504.04
1406.54
552.57
1378.65
586.40
1545.50
617.80
1605.90
654.60
1735.80
Non-market services 521.40 534.92 524.96 531.72 542.03 549.50 546.30 559.00
Gross domestic product at market prices 6748.17 6504.89 6594.64 6242.24 6638.58 7305.60 7674.40 8004.40
Including final consumption expenditures, total 4381.13 4264.77 4383.28 4291.06 4238.05 4476.80 4786.50 5127.10
Of them:– households
– government agencies
– non-profit organizations serving households
3280.62
1030.99
78.78
3118.36
1063.15
79.10
3274.69
1038.18
78.45
3164.39
1048.02
79.10
3071.42
1080.18
77.80
3295.20
1102.50
79.10
3622.30
1083.60
80.60
3933.60
1109.30
84.20
Gross capital formation, total 1850.47 1591.28 1525.08 835.10 779.60 1365.70 1590.90 1617.80
Of them:– gross fixed capital formation**
– change in inventories
1543.72
298.55
1216.62
360.37
1119.72
388.64
980.78
-130.82
1042.82
-241.04
1232.00
133.70
1360.90
230.00
1401.40
216.40
Net export 364.27 444.64 419.10 970.39 1740.25 1463.10 1263.60 1207.00
Export
Import
Statistical difference
2512.20
1902.93
0.00
2605.86
1928.14
0.00
2593.85
1935.34
0.00
2641.89
1598.89
0.00
2939.10
1326.24
0.00
3218.90
1755.80
0.00
3336.20
2072.60
33.40
3675.40
2468.40
52.50
Nominal GDP at current market prices 1428.5 2007.8 2342.5 2629.6 4823.2 7305.6 9039.4 10863.4

* Gross domestic product at basic prices (excluding indirectly measured financial intermediation services), unlike GDP at market prices, does not include taxes, but includes subsidies on products.

** Including net acquisition of valuables.

1st half of 1990s There was a significant increase in the share of services in GDP – from 1990 to 1995 it increased by 20% and exceeded 50% of GDP. Since the 2nd half of the 1990s. the structure of produced GDP stabilized: about 40% came from the production of goods, about 50% from services, and about 10% from net taxes. In the structure of Russia’s GDP by types of income, the main part is wages. In 2002, its value (including hidden wages) amounted to 5037 billion rubles, or 46.2% of GDP (in 1991 – 43% of GDP). Gross profits of enterprises (revenues minus costs and net taxes on production and imports, but including property taxes) and gross mixed incomes (incomes of unincorporated entrepreneurs, inseparable from their wages) in 2002 amounted to 4352 billion rubles, or 40% of GDP in current prices (in 1991 – 50% of GDP). The remaining 13.6% of GDP (US$1,474 billion) rub. at current prices) accounted for net taxes on production and imports.

The bulk of GDP used was household consumption, which accounted for about 50% of its value. Falling from 40% of GDP in 1991 to 32% in 1992, this share rose steadily until 1998, after which it declined slightly. The share of public consumption in 2002 accounted for 17% of GDP, as in 1991 (in the mid-1990s, this share was slightly higher and exceeded 20% of GDP). The share of gross fixed capital formation steadily declined from 23% in 1991 to 15% of GDP at current prices in 1998, after which it increased again to 21% of GDP by 2002. Russian imports in 2002 were about 0.6% of world imports and 24% of the level Russia’s GDP at current prices. In recent years, the volume of Russian exports has been higher than the volume of imports – in 2002 it amounted to about 1.6% of world exports and 35% of GDP.

The processes of transformation of the Russian economy from planned to market were accompanied by high inflation rates. Thus, in 1992 consumer prices rose 26 times, and in 1993 another 9.4 times. This led to a depreciation of real incomes, a decrease in investment activity, instability in the public sector and, ultimately, to macroeconomic instability. In the mid 1990s. thanks to the tight monetary policy of the Central Bank and the limitation of government spending, inflation rates were reduced to a level of about 20% per year, but as a result of the 1998 crisis, there was a new surge in inflation associated with the devaluation of the ruble. In subsequent years, the policy of the Central Bank was aimed primarily at controlling inflation, so the real exchange rate of the ruble gradually grew. In parallel with this, the refinancing rate was reduced,

Table 8. Price indices, indicators of money circulation and credit and financial sphere

Year CPI year on year Annual Producer Price Index Money supply M2 at the end of the period, billion rubles (before 1998 – trillion rubles) Official average annual exchange rate, rub. for 1 US dollar (before 1998 – thousand rubles for 1 US dollar) Average annual refinancing rate of the Central Bank Average annual interest rate on
loans deposits
1995 231.3 275 213.9 4,554 185 147.4 71
1996 121.8 125.6 288.3 5.126 99 91.4 44.4
1997 111 107.5 374.1 5.785 31 32 16.8
1998 184.4 123.2 448.3 9.695 60 41.5 18.9
1999 136.5 167.3 704.7 24.623 57 40.1 13.7
2000 120.2 131.6 1144.3 28.135 32 23.4 6.5
2001 118.6 110.7 1602.6 29.172 25 17.9 4.2
2002 115.1 117.1 2119.6 31.351 23 15.7 4.5

Financial stabilization also made it possible to restore gold and foreign exchange reserves, which in 2003 exceeded the 1998 figure by more than 7 times and amounted to more than 60 billion US dollars.

In 2002, the average monthly economically active population was 71.9 million people, of which 65.8 million people, or 91.4%, were employed in the national economy, and 6.2 million people, or 8.6%, were permanently or temporarily unemployed according to the ILO methodology. At the same time, the share of unemployed registered in employment centers was several times lower, which indicates a high share of structural and hidden unemployment. The nominal average monthly wage in 2002 in Russia as a whole amounted to 4414 rubles. per month, which exceeded the same indicator for 2001 by 34.6% in nominal terms and by 16.2% in real terms. This figure is more than 2.3 times higher than the official subsistence minimum, which in con. 2002 was 1893 rubles. per month (equivalent to $60) national average. Compared with the minimum level of 1998, real wages increased by more than 1/4, and the average per capita money income of the population – by almost 15%. Despite this, in real terms, both the level of wages and the average per capita income in 2002 were only about 57% of the 1991 level (Table 9).

Table 9. Dynamics of wages and average per capita income in R., 1991-2002

Year Average nominal salary fee, rub. per month (until 1998 – thousand rubles) Real wage index (1991=100) Average per capita monetary income of the population, rub. per month (until 1998 – thousand rubles) Real Money Income Index (1991=100)
1991 0.548 100.00 0.465 100.00
1992 5.995 67.30 3.975 49.32
1993 58.663 67.57 45,200 57.22
1994 220.351 62.16 206.300 64.66
1995 472.392 44.81 515,500 54.95
1996 790.210 47.49 770,000 55.49
1997 950.200 49.91 942.100 58.75
1998 1051 43.19 1012 49.37
1999 1523 33.69 1659 43.21
2000 2223 40.72 2281 48.34
2001 3240 48.82 3061 52.48
2002 4414 56.74 3887 57.66

The indicator of uneven distribution of income (Gini coefficient) in Russia at the beginning of the 21st century. was slightly less than 0.40, which approximately coincides with both the global average and the indicator of a number of developed countries (for example, the United States), but higher than in most countries of Europe and the CIS. In 2002, the top quintile (the richest 20% of citizens) received 45.8% of all monetary income, while the bottom quintile (the poorest 20% of citizens) received only 5.9% of all income. In the same year, 25% of the Russian population had incomes below the official subsistence level (in 1999 this figure was almost 30%).

The transformational recession also affected the dynamics of investment in fixed assets. Throughout the 1990s. their level did not exceed 60% of the 1992 level and 20% of the current GDP, in 2002 they amounted to 1660.5 billion rubles, or 15.3% of GDP. The indicators of foreign investments also remained low. From 1991 to 2002, their total amount was 42.9 billion dollars.

USA, and the volume of direct investments – 20.3 billion US dollars, i.e. only about 0.3% of global foreign direct investment and less than 1% of Russia’s current GDP. In recent years, there has been some recovery in investment activity: from 1998 to 2002, investments grew by 31%. St. 40% of the total investments of large and medium-sized industrial enterprises were made in industry (including about 20% in the fuel industry, about 4% in the electric power industry, and about 5% in metallurgy). Of the other sectors, transport enterprises (19.1% of the total volume of investments in 2002) and housing and communal services (15.4% of investments) showed the greatest investment activity.

Due to geographical and climatic features, the economic development of the regions of the Russian Federation is uneven. Thus, 72% of the population lives in the European part of Russia and 68% of the total gross regional product (GRP) of Russia is produced (according to the methodology of the State Statistics Committee, the total GRP of all regions does not coincide with the GDP of Russia, since it does not take into account the value added of non-market collective services (defense, public management, etc.)). At the same time, 47% of agricultural land and 75% of forest resources are concentrated to the east of the Urals, over 70% of oil, 85% of coal and 90% of gas are produced there.

More than 37 million inhabitants, or 25% of the country’s population, live in the Central District, and produce about 1/3 of the total GRP of the subjects of the Federation (Table 10).

Table 10. Some indicators of the economic development of the federal districts of the Russian Federation in 2000 (billion rubles)

Central Northwestern Southern Volga Ural Siberian Far Eastern
Gross regional product 2079.9 615.0 488.0 1120.5 939.7 715.2 319.3
The volume of investments in fixed assets 303.9 116.6 161.4 261.8 346.2 130.6 86.2
The cost of fixed assets 4358.8 1789.5 1794.8 3570.3 2495.3 2310.9 1444.2
Number of registered enterprises in 2002, thous. 1347.3 435.5 440.4 542.7 267.8 410.8 149.2
Retail turnover 994.4 213.6 293.6 498.9 231.6 335.0 121.8
Volume of foreign investments, mln USD 4671 1714 1246 673 944 1133 577
Export, mln USD 32261 10005 3581 15910 20646 11422 3632
Import, mln USD 15546 4667 1751 2858 2041 2297 670

The largest center of business activity is the metropolitan metropolis (Moscow and the Moscow region), where St. 10% of Russia’s population In the Central District there are large enterprises of the petrochemical, manufacturing, light, food industries, agriculture is developed (especially in the central black earth zone). More than 32 million people live in the Volga Federal District. and produces almost 18% of the total GRP. Here are located such industrial centers of the all-Russian scale as Nizhny Novgorod, Kazan, Samara, Saratov, Ufa, Perm. Energy, machine building, chemical industry, as well as oil production are developed in the district. The third in terms of GRP (15% of the total Russian) is the Urals Federal District (12 million inhabitants), here are located both the mining and machine-building enterprises of the Urals (in the Sverdlovsk and Chelyabinsk regions), and the largest oil and gas fields in Western Siberia – in the Tyumen region with districts. In the Siberian (11% of the total GRP and more than 20 million inhabitants) and the Far East (5% of the GRP and 7 million inhabitants) districts, due to harsh climatic conditions, only relatively small areas of the territory have been developed, however, the largest not only in Russia, but also in the world reserves of water and forest resources, as well as a number of minerals – from the coal of Kuzbass to the diamonds of Yakutia. In addition, the manufacturing industry and a number of agricultural sectors are developed in the Siberian District, and the maritime economy (fishing and maritime transport) is also developed in the Far East. To the Northwestern Federal District (10% of GRP and 15 mln.

St. Petersburg and a number of northern regions and regions of the European part of Russia, where mechanical engineering, metallurgy, forestry, as well as some extractive industries and transport, incl. nautical. Finally, in the Southern Federal District (7% of GRP and more than 22 million inhabitants) there are not only the largest agricultural lands in the Don and Kuban basins, but also a number of industrial centers, among which Rostov-on-Don and Volgograd stand out.

The social development of the regions is uneven. Thus, in 2002 the subsistence minimum was the highest in the regions of the Far North (in the Koryak Autonomous Okrug – 5032 rubles per month, in the Kamchatka region – 3700 rubles), and only in 9th place was Moscow (2918 rubles). The “cheapest” regions are the republics of the North Caucasus (in the Republic of Dagestan the cost of living was 1420 rubles per month, in the Republic of North Ossetia-Alania – 1445 rubles) and the regions of the Central Black Earth Region (Lipetsk region – 1480 rubles, Tambov region – 1509 rubles.).

Branches of the national economy. Industry plays a leading role in the structure of the Russian economy, in the sectors of which in 2001 almost 23% of the employed population worked and 38% of the total output of goods and services was produced. Next come trade and public catering (17.5% of the total output and 15.4% of the total number of employees). A significant share of the employed is also in agriculture, education, culture and art, but the share of these industries in GDP is noticeably more modest. The service sector (including trade, catering, transport and communications) accounts for St. 45% of the cost of goods and services produced and St. 53% of the total number of employees.

The funds and structure of the industry of the Russian Federation were formed back in Soviet times. The main industries are mechanical engineering and metalworking, fuel, food industry and electric power industry. In the 1990s Russian industry experienced a recession, the depth and duration of which varied by industry. So, if in the electric power industry the decline in production did not exceed 25% from the level of the pre-crisis 1990, then the output of a number of light industry sub-sectors fell by almost 90% and, despite the rise in recent years, still has not reached 30% of the 1990 level. 2002, the only industry in which the pre-crisis level was surpassed (by 1%) was the food and flavor industry, whose growth was stimulated by the devaluation of the ruble in 1998.

The share of electric power industry in the total volume of industrial production in 2002 was 8.5%, 970 thousand people were employed in the industry. 1.6 thousand enterprises functioned. On horseback In 2001, 891 power plants operated in the country, of which 578 were thermal, 176 hydroelectric power plants (75% of their total capacity is accounted for by Russia’s largest power plants of the Angarsk-Yenisei and Volga-Kama cascades) and 137 nuclear power plants. The total installed capacity of power plants was 214.8 million kW, of which 147.4 million kW accounted for thermal power plants, 44.7 million kW for hydroelectric power plants, and 22.7 million kW for nuclear power plants. In 2002, enterprises of the electric power complex produced 889 billion kWh of electricity to the amount of 669 billion rubles. Imports and exports of electricity in the Russian Federation are small and account for 1 and 2.8% of the total volume of domestic production, respectively.

The natural monopoly in the industry is the United Energy Systems of Russia Joint Stock Company (RAO UES), which controls 72.5% of the industry’s capacities, which produce about 70% of all electricity. In 2001, a reform of the industry was launched, aimed at increasing its efficiency by creating competition between enterprises producing electricity. The general strategy of the reform and its main parameters are defined in a package of laws that came into force in April 2003. At the beginning of the 21st century. fuel industry enterprises produced about 20% of Russia’s industrial output (in 2002, worth 1,122 billion rubles) and made more than half of all investments in fixed assets. About 770 thousand people worked at the enterprises of the industry. In this industry, Russia is one of the world leaders, ranking first in the world in gas production (in 2002 – 595 billion m3), 2nd place in oil production (in 2002 – 380 million tons, including gas condensate) and 5th place in coal production (in 2002 – 253 million tons), and oil production from 1998 to 2002 increased by 25%. The industry leader is the oil industry, which employs about 350 thousand people. and which in 2001 produced products worth 655 billion rubles. More than 2/3 of Russian oil is produced in the Tyumen region of Western Siberia, 22% – in the Middle Volga region (the oil reserves of this region are distinguished by a higher sulfur content and, accordingly, lower quality). At the current fields by the beginning of the 21st century. about 60% of oil reserves have already been taken, and the exploration of new deposits has slowed down significantly in the last decade. Despite this, oil continues to be one of Russia’s main export commodities: From 1998 to 2001, crude oil exports grew by 17% and amounted to 138 million tons, while oil revenues reached $21.6 billion and accounted for more than 1/5 of the country’s total export earnings. The structure of Russian energy exports is dominated by products with low added value. Oil production in Russia is carried out by competing oil companies, the largest of which are Yukos and Sibneft (together 29% of production in Russia), LUKOIL (20% of production), Surgutneftegaz and TNK-BP (13% each). % of production), Rosneft, Tat-neft, etc., and some of them are under state control.

Natural gas is produced mainly in Western Siberia (Nadym-Pur-Taz region in the north of the Tyumen region). The industry employs 70 thousand people, and the value of manufactured products in 2002 exceeded 112 billion rubles. Most of the development (88% of production in Russia) is carried out by a natural monopolist – OAO Gazprom, which controls St. 60% of Russian and 20% of world natural gas reserves. Coal in Russia is mined mainly in Siberia (the Kuznetsk basin in the Kemerovo region provides more than 45% of the total production), as well as in the Komi Republic, the Krasnoyarsk Territory, and the Irkutsk Region. The coal industry is the least efficient of all branches of the fuel industry: with an employment level equal to about 1/3 of the total number of employees in the fuel industry (over 100 thousand people), less than 10% of the added value of the industry is produced here. There are 1.2 thousand ferrous metallurgy enterprises registered in Russia, which employ 690 thousand people. In 2002, these enterprises produced products worth 472 billion rubles, smelted 46.3 million tons of pig iron, 59.8 million tons of steel, and produced 48.7 million tons of finished rolled ferrous metals. From 1998 to 2002, output in physical terms increased by almost 50%, and export production was especially developed – in 2002 alone, more than 10 million tons of iron and steel were exported. The main enterprises of the industry are OAO Severstal (Vologda Oblast), OAO MMK (Chelyabinsk Oblast), OAO NLMK (Lipetsk Oblast), OAO Mechel (Chelyabinsk), OAO NTMK (Sverdlovsk Oblast).

Economy of Russia

Tags: