Russia Economy Relationship
Russia
Russia became one of the powerful countries because Russia has all the potential to develop and grow although there are many problems in Russia. The strong county is characterized as a politically stable, economically powerful country possessing a significant potential in education. Russia started their transition from communist dictatorship regime to a democratic regime and market economy after the Soviet Union collapsed. I guess Russia is developing more and Russia will be the more strong country in future. I will think about the challenges of Russia and relationship between Russia and other countries.
First is the challenge of Russia. Russia is facing the challenge of economic growth since Soviet collapsed. Business has not always been good in Russia, largely due to economic hardship. Russia had a long-standing history of poorly managed finances, so much so that it was nearly bankrupt in 1998 (Gaddy). In 1999, Vladmir Putin became Prime Minister, faced with a dire economic situation. Since then Russia has experienced resurgence in the economy and is now in a much more stable situation. The most important factor in Russia's remarkable recovery lies in rising oil and gas prices, of which Russia has a vast supply (Gaddy). However, other sectors of the economy are growing as well. For instance, the Russian economy has experienced a surge in real estate, construction, and consumer goods.
In 2007, the Russian economy achieved a six-year record high of 7.9% (Economist Intelligence Unit Viewswire). Growth in construction, manufacturing and trade continue to lead the growth (Economist Intelligence Unit ViewsWire). Much of the attention in the Russian economy has been on the growth of oil and gas as important export commodities. The boost it economy is being fed by growth in investment. In addition, Russians are experiencing a new financial freedom that they have not experienced in years. Consumer spending is up as much as 13% in 2007 (Economist Intelligence Unit ViewsWire). This increase in consumer spending translates into an increased demand for imported goods. Imported goods were up 38% in the first fiscal quarter of 2007, as exporters struggle to increase volume to meet this growing demand (Economist Intelligence Unit ViewsWire). Russian consumers now have greater access to consumer credit, which continues to increase demand. Individual loans rose by 75%, as Russians took advantage of the economic boom (Economist Intelligence Unit ViewsWire). Russian economy is growing now to use its natural resources, and because of demand of people although Russia still has many economic problems. The demand of oil expects growing more in the world. Therefore, I expect Russian economy will grow more in future. And also, how Russia confronts an issue of the gap between rich and poor in economic development is also important.
And also, Russia is facing challenge of new leader now. Mr. Dmitry Medvedev was elected President of Russia on March 2, 2008. According to BBC news, Russia's new President Dmitry Medvedev is the country's first leader in decades with no known links either to the former Soviet Communist party or secret services. In a campaign speech, Medvedev advocated private property, economic deregulation, low taxes, an independent judiciary, anti-corruption, and defending personal freedoms. How Medvedev will deal with these factors is important for future of Russia. And, according to BBC News, Medvedev's candidacy was supported by former President Vladimir Putin and pro-presidential parties. The relationshop between President Medvedev and Putin is good now. However, the struggle between Mr. Medvedev and Putin might happen in future. Therefore, how Madvedev will take the reins of government with Putin is important in future of Russia. And, the relationship between President Medvedev and the next U.S. President is important. Both U.S. and Russia need good relationship for economic development. Therefore, both countries need relationship such as Bush and Putin, Clinton and Yeltsin and Bush Senior and Gorbachev.
Second is relationship between Russia and other countries. First, I will think about relation ship between U.S. and Russia. Historically, Russia was not considered a major trading partner with the US. Mistrust that developed out of the Cold War remains in the background of trade relationships with Russia. Since the end of the Cold War, the US and Russia worked hard to develop a relationship built on trust and mutual benefit. Trade between the US and Russia represents only a small portion of US exports, but for certain commodities, the US is a major supplier for Russia. The following will explore the development of trade, in terms of volume between the US and Russia from 1998 to present. It will support the thesis that current expansion in US exports to Russia will continue to grow and potentially increase in the medium to short-term future.
As a whole, the US stake in the future of the Russian economy is small. Other markets, such as South American and Asia are more viable business prospects for US goods at this time. The US does not depend on Russia to secure their economic interests in the future. However, that is not to say that the US has so significant interests in the export potential that Russia hold. The major interests in Russia from an export perspective are in the agricultural sector. For example, the Russian market for chicken in the largest in the world (Gaddy). Russians consume 25% of all chicken exported by American producers (Gaddy). In terms of total imports, Russia consumes less than one half of one percent of the total US exports, which is less than small countries such as the Dominican Republic and Puerto Rico. However, for the agricultural sector, Russia is big business. Therefore, Russia needs good relationship with U.S. not only economically but also politically. As I mentioned above, the key factor of relationship between Russia and U.S. is future relationship between Medvedev and new president of U.S. If this relationship will be good, Russia will be growing more.
Second is relationship between EU and Russia. Relationship such as economic relationship between EU and Russia is stagnant now. EU still perceives Russia as a country with different values. For historical reasons, Poland, the Baltic nations and Russia have all had a complicated relationship. Currently many disputes have arisen from central and eastern European countries. Due to the negative views of Russia, the EU cannot implement positive policies on Russia. For example, Poland's veto has prevented the EU and Russia from conducting concrete talks on establishing new partnerships. To help each other and cooperate together on issues is important both Russia and EU countries because EU and Russia are neighbors. Although they have never been true friends, they have formed a type of close, mutually dependent relationship. In the foreseeable future, the EU will still depend on Russia for energy and Russia's energy market. This means that the two sides must avoid the deterioration of bilateral relations and seek cooperation.
It is expected that Russia will continue to maintain high economic growth and plentiful foreign exchange reserves in the future. It is the rise in the oil prices that has enabled the substantial increase of the foreign exchange reserves and provided the basis for the stability of the nation. Maybe Russia will not be typical democracy in the world. But, I hope Russia will be new form of democracy in future through economic growth. Russia needs to cooperate with U.S., EU, and Asian countries for economic development and stable development toward democracy.
Reference
Economist Intelligence Unit ViewsWire. Russia's booming economy. June 18th 2007. The Economist. <http://www.economist.com/research/articlesBySubject/displaystory.cfm?subjectid=349002&story_id=9354403>.
Gaddy, C. Issues in the U.S.-Russia Economic Relationship. October 17, 2007. Brookings. <http://www.brookings.edu/testimony/2007/1017russia.aspx>.
Products Marketing Association (PMA). International Resources: global Market Profile: Russia. <http://www.pma.com/cig/intl/russia.cfm>.
Sweeney, P. Exports to Russia Grow. Business Information Service for the Newly Independent States (BISNIS). <http://www.heritage.org/research/russiaandeurasia/bg2077.cfm>
US Census Bureau. Information on the Collection and Publication of Trade Statistics. 2007. <http://www.census.gov/foreign-trade/reference/guides/tradestatsinfo.html>.
Workman, D. Top Russian Exports & Imports. June 10, 2007. Suite 101. <http://internationaltrade.suite101.com/article.cfm/top_russian_exports_imports >
BBC News. May 7, 2008. <http://news.bbc.co.uk/2/hi/europe/7136556.stm>.
BBC News. December 10, 2007. < http://news.bbc.co.uk/2/hi/europe/7136347.stm>
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