After the Economic Rebound in Russia — the Importance of a Pro–Active Policy

Abstract

Russia has recently made significant progress in building a ‘normal economy’. Structural reforms, which remained inadequate under Boris Yeltsin’s rule, have been given a new start with the Government’s social and economic programme of 2000, revised in July 2001. Structural reforms will receive further impetus from the Government’s medium–term reform programme for 2002–2004, which puts the main emphasis on conditions for business creation and definition of a clear and stable legal framework, covering, among other points, judicial and fiscal reform, a labour and retirement code, and land ownership (Brunat and Soos (2002)). At the same time, tighter control by the federal state over the country, Parliament and the oligarchs has brought political stability, which is beginning to have an effect on the behaviour of various economic agents. The Russian economy has experienced new growth since the 1998 crisis, but has so far failed to install a sustainable growth mechanism due to its structural weaknesses. Establishment of a government programme of structural reforms (see Government of the Russian Federation (2002)) is an important step, but not sufficient in itself. While opening of the Russian economy, notably by accession to the WTO, is indispensable for its integration with the world economy, other political decisions will surely be necessary to overcome inertia effects and deal with difficulties in adaptation to a modern market economy.