Quote from Martinghoul:
Well, I see no reason to assume that Russia will always necessarily be what it is today. The changes that the country has gone through since the 90s are truly astonishing and there's no reason to believe that they stop. I confess to being somewhat biased, but I don't think one should write Russia off.
Moreover, according to the latest data, the Russian demographic crisis is, more or less, over. The natural rate of population decrease was merely 131k in 2011, which contrasts with averages consistently in the 700k - 1mil range between 1993 and 2006. Moreover, there's been an increase in net immigration, which means that the Russian population is growing. The total fertility rate has risen to 1.60 in 2011, which is pretty much in line w/developed economies (EU average 1.59, Canada 1.67). Life expectancy at 70.3 in 2011, while low by Western standards, has never been higher (previous peak was 1986-87 at 70). Deaths due to suicide, homicide and alcohol poisoning are below 1990 levels for the first time.
To me, this all indicates that, while the Russian economy has certainly benefitted from higher oil prices, with everything that entails, there's also a secular trend component that indicates an ongoing improvement in the quality of life (see, for instance, the UNDP HDI data here: http://hdr.undp.org/en/data/explorer/). So, while all sorts of problems persist, I believe there's quite a bit of hope.
Sorry, in the whole crazy controversy over here about that Florida killing I completely forgot I'd participated in this thread.
So, to reply: you're missing the point. The stats reflect improvements, no doubt, but you'd expect improvement in an era when commodities in general are doing well.
There's a common thread here with the eurozone. The ECB winds up setting its interest rates, which of course go directly into setting the euro exchange rate, based mostly on what's happening in Germany, because Germany dominates the eurozone. This puts everyone else in the eurozone at a huge disadvantage, since that means interest and exchange rates, or to put it in a single phrase, the price of money, has only a coincidental relationship to the state of their economies.
So too in Russia, in a different way, but a way which is very typical of supply regions. The price of money there will be set according to the needs of the commodity sector, simply because it dominates everything (
export statistics by sector are here; notice that crude oil and petroleum are more than ten times higher than exports of machinery): high when commodities are riding high, low when they're not doing well. This starves the industrial and services sectors, killing the chances that the economy might have of developing other exports besides unfinished commodities.
In the eurozone, Germany dominates and distorts the price of money. In Russia, commodities do it. In both cases, there isn't any other way it could be.
In the US, the resources sector makes the country more self-sufficient, but it doesn't dominate everything. The US's biggest export is capital goods, which is thrown off naturally by the advanced state of development of its cities, not soybeans or corn or oil or natural gas. That means the industrial and services sector sets the price of money, and that means the US can develop new industries and new and more advanced services unimpeded by its very large commodities and agricultural sectors.
Russia can escape its resources curse, but only if it does the following things:
1 - Establishes a truly competitive political environment.
2 - Establishes a tariff regime that favors the development of its industrial and services sectors.
3 - Controls its currency so as to assist that tariff regime; that means keeping the currency weak, which of course will minimize the returns from the commodities sector.
4 - Relaxes those tariffs at the point in the reasonably distant future when the industrial and services sectors start to dominate over the commodities sector.
The chances of this happening? Not very high. It will be much much higher if the first condition is met, but that condition is very hard to meet in an economy dominated by raw commodities, because of what I said in my first post: the folks who sit on top of those resources aren't going to give up their domination easily.
But if they don't, you can never get this process started.
In the US, the Civil War destroyed the cotton, rice, and tobacco farmers in the South, allowing the industrial North to dominate and allowing the country to truly develop its economy.
That's pretty much what it takes. Rivers of blood, years of darkness. Sorry, but that's just the way it is.
