Home > Analysis, Economic impact > Impediments to Russia’s Economic Growth

Impediments to Russia’s Economic Growth

At an international conference in Moscow, Deputy Prime Minister Igor Shuvalov, who also happens to be the head of Russia’s anti-crisis program, mentioned two impediments to Russia’s economic development: lack of private property rights and an over dependence on oil and other raw materials to drive economic growth.

US Ambassador to Russia John Beyrle included these challenges in his speech at University of Michigan’s Ford School of Public Policy last week. Ambassador Beyrle cited corruption and the lack of rule of law in Russia as impediments to both foreign investment and the development of a democratic society.

On corruption, Ambassador Beyrle said,

Russia is still a very tough place to do business. The combination of bureaucratic and administrative obstacles intertwined with pervasive corruption in Russia still constitutes a pretty significant risk premium for American investors and American businessmen who want to enter the Russian market or grow their businesses.

And on the rule of law in Russia, he said,

Corruption in the Russian government and especially in the judicial system…is still rampant in Russia. The road ahead for Russia is not completely clear.

What both Deputy Prime Minister Shuvalov and Ambassador Beyrle recognize is reflected in the Heritage Foundation’s Index of Economic Freedom out this week. Russia’s overall rating in this measurement of economic openness, regulatory efficiency, the rule of law and competitiveness, dropped 10.5 points to 50.3 this year. Ten different components make up the overall score and Russia’s three lowest scores are in the Investment Freedom, Property Rights and Freedom from Corruption categories.

‘The problems of systemic corruption, abuse of property rights and legal nihilism are well known and recently publicly discussed by top US and Russian officials. The question is what, if anything, are they going to do with these impediments to Russia’s economic growth? Besides talking about “reset” or “modernization,” do they have the political will to find solutions to these issues?

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Categories: Analysis, Economic impact
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