Development Progress in Russia

Russia has been a prime mover in the organization of the BRIC group of nations. The BRICs, originally a Goldman-Sachs conception, comprise the leading developing economies in their respective regions, with Russia central among the Eurasian emerging economies. In response to the question, “Can the BRICs be the drivers of world economic growth?,”we briefly explore Russian economic performance and structure, and the prospects for Russia to become a driver of the world economy in the coming decade. 1 The Resurrection of Russia Russia emerged from the collapse of the Soviet Union a disorganized and greatly shrunken economy, struggling through a ‘transformational depression’from 1991 through 1998, when Russia defaulted and its emerging financial markets collapsed. To the surprise of many, the economy ‘bottomed out’ in the 1998 financial crisis and a strong recovery began, a recovery that coincided with the first Putin Presidency, beginning with appointment by the resigning Boris Yeltsin on 31 December 1999, and then his first round election victory, 26 March 2000. Driven by a four-fold devaluation of the ruble and subsequent import substitution opportunities, tight fiscal and monetary policies, and renewed structural reform, the macro economy grew rapidly during Putin’s first presidential term, overcoming the transitional depression by 2004 (Ericson, 2009). Putin’s second term as President, 2005 —2008, witnessed new economic growth and a significant and sustained, if unequally distributed, rise in the Russian standard of living. This growth of GDP, at a rate over 7% per year 2003 —2008, made Russia the fastest growing as well as the largest economy in its region, and evidently a driver in regional, and indeed world, economic development. The performance indicators, presented in Table 1, gave credence to the Goldman-Sachs (2003) conceptualization of the BRIC economies as presenting significant investment opportunities in emerging markets, with Russia as the Eurasian regional anchor. ∗East Carolina University